The Importance of Being Obsolescent

The central problem is paradigm obsolescence across mainstream economics and Wall Street.

Tooze and co as bright as they are, are still applying an engagement-era economic paradigm, a market-centric model designed for a world China is actively replacing, to a system of continuous strategic competition.

That paradigm rests on assumptions that no longer hold: markets are largely separate from state power; trade integration moderates geopolitical rivalry; capital flows are politically neutral; efficiency is more important than industrial control; and persistent losses or overcapacity must eventually be corrected by market discipline.

China is operating under a different paradigm. Production is power. Scale is leverage. Technological capability is sovereignty. Market access is conditional. Dependency can be weaponised. Commercial activity, industrial policy and national strategy are not separate domains.

This creates a fundamental category error. Economists and Wall Street continue to interpret a state-directed contest for productive power as a collection of market distortions, trade imbalances and investment opportunities.

They see excess capacity where Beijing sees strategic scale.

They see cheap imports where Beijing sees the displacement of foreign production.

They see low returns where Beijing sees long-term capability acquisition.

They see economic interdependence where Beijing may see asymmetric dependence.

Their language of rationality is obsolete, though in their denial they continue to retry the pieces

Wall Street’s problem is also structural. Its incentives reward access, transactions, asset flows and short-term returns.

A framework that treats China primarily as a market preserves fees, deals and investment opportunities. A framework that treats China as a strategic competitor forces recognition that some profitable transactions may weaken the productive and technological base on which Western power depends.

The result is a systematic mispricing of strategic risk.

The institutions interpreting the data are using a conceptual model designed for the world China is actively replacing.

It is not a shock. It is not an imbalance, an overcapacity problem, a growth-model distortion, or any of the other economically neutral terms still used to describe it.

Those words belong to a paradigm that treats state power and markets as separate domains and therefore they can't register what is actually happening.

When industrial capacity is deliberately concentrated, rivals’ production bases are systematically displaced, and technological and commercial tools are deployed without traditional limits, the correct description is unrestricted warfare.

The blast has already crossed the bow. Continuing to analyse it in the language of temporary market disturbance is not just caution/polite; it is conceptually neutralising a form of aggression perpetrated by a rival.

It's a form of constructive blindness