The so-called Washington consensus that touted the benefits of free trade and fiscal discipline looks headed for the dustbin of history.
That’s as President Donald Trump has launched a stunning trade war and pushed through a tax-and-spending bill with Republican support that will add trillions to the deficit.
Meanwhile, Democrats are still grappling with their own message as they continue to reel from Trump’s brand of populism that returned him to the White House. The turmoil points to a clash between competing visions for a new economic consensus.
Mark Blyth, a political economist at Brown University, sees the economy heading for an epochal change, though a dominant economic order has yet to fully take shape.
“The global economy is getting a hardware refit and trying out a new operating system—in effect, a full reboot, the likes of which we have not seen in nearly a century,” he wrote in the Atlantic last week. “To understand why this is happening and what it means, we need to abandon any illusion that the worldwide turn toward right-wing populism and economic nationalism is merely a temporary error, and that everything will eventually snap back to the relatively benign world of the late 1990s and early 2000s.”
Such churn was on display this weekend as top tech leaders Elon Musk and Sam Altman signaled their dissatisfaction with the current two-party system.
On Saturday, Musk announced he is forming a new political party, after feuding with Trump over the mega-bill that was just signed into law.
“When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy,” Musk posted on X on Saturday. “Today, the America Party is formed to give you back your freedom.”
The CEO of Tesla and SpaceX had earlier warned of “debt slavery” from the tax-and-spending bill and criticized the its treatment of EV and solar energy tax credits versus oil and gas incentives.
Similarly, OpenAI CEO Sam Altman posted on X on Friday that Democrats had lost their way and that he is now “politically homeless.”
He also appeared to refer to New York City mayoral candidate Zohran Mamdani, who said last week “I don’t think that we should have billionaires.” Altman said, “I’d rather hear from candidates about how they are going to make everyone have the stuff billionaires have instead of how they are going to eliminate billionaires.”
At the same time, he advanced his own vision.
“I believe in techno-capitalism,” Altman wrote. “We should encourage people to make tons of money and then also find ways to widely distribute wealth and share the compounding magic of capitalism. One doesn’t work without the other; you cannot raise the floor and not also raise the ceiling for very long.”
In Blyth’s view, a new economic order is not yet discernible, because the governing idea is still being debated.
He described the MAGA vision as a combination of 1950s manufacturing, 1940s immigration and workforce trends, plus a touch of 19th-century, mercantilist “spheres of influence” foreign policy.
Then there’s the “Dark Enlightenment” wing of the tech sector where “Silicon Valley billionaires imagine an economy that runs not as a return to hard-hat industry’s glorious past but as a posthuman future of automation and space exploration,” according to Blyth.
Meanwhile, the Democrats still seem to represent the institutionalist status quo, he added, though Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders are pushing another option of left-wing populism.
A third Democratic vision is the “abundance” agenda, which seeks lower-regulation, pro-growth policies for renewed economic vigor.
The intra-party crosscurrents were highlighted recently when Mamdani, a self-described democratic socialist, stunned the Democratic establishment last month when he won the city’s primary with his own brand of populism that includes making bus service free, freezing rents on rent-stabilized apartments, nearly doubling the minimum wage to $30, building city-owned grocery stores, and hiking taxes on the top 1% of earners in the city.
By contrast, California Gov. Gavin Newsom and Democratic allies in the liberal bastion passed reforms to a landmark environmental law last week that will make it easier to build more housing, as state leaders acknowledged the need to boost supply in the face of high costs.
“A new economic order is forming—which means that it is not yet fixed and can still be shaped,” Blyth wrote. “But time is running out. As jumbled as the regressive modernization is, it could win the day if we do not come up with a different governing idea of what the economy is and whom it is for.”