One Year of Trump 2.0: The Civil War Within Western Capital – Explaining History

As we close out 2025, Nick takes stock of the first year of Donald Trump's second term. While some liberal commentators hold out hope that the upcoming 2026 midterms will curb his power, Nick argues that the real conflict isn't between Left and Right, but between two factions of capital: the liberal-democratic establishment and the nativist, protectionist forces embodied by Trump.We explore the failure of the Democratic Party to offer a meaningful alternative to neoliberalismSupply Side Economics Full Description:Supply-Side Economics posits that production (supply) is the key to economic prosperity. Proponents argue that by reducing the “burden” of taxes on the wealthy and removing regulatory barriers for corporations, investment will increase, creating jobs and expanding the economy. Key Policies: Tax Cuts: Specifically for high-income earners and corporations, under the premise that this releases capital for investment. Deregulation: Removing environmental, labor, and safety protections to lower the cost of doing business. Critical Perspective:Historical analysis suggests that supply-side policies rarely lead to the promised broad-based prosperity. Instead, they often result in massive budget deficits (starving the state of revenue) and a dramatic concentration of wealth at the top. Critics argue the “trickle-down” effect is a myth used to justify the upward redistribution of wealth., the rise of "America First" as a tool for personal enrichment, and the alarming normalization of far-right rhetoric in Europe. From the hollowing out of the British state to the potential end of the globalized order, this episode asks: If Trumpism is a symptom of a broken economic system, what happens when the opposition refuses to fix it?Key Topics:The Schism of Capital: Liberal globalism vs. conservative protectionism.The 2026 Midterms: Will a Democratic victory save democracy or just delay the inevitable?The Failure of Centrism: Why Hillary Clinton and Keir Starmer failed to stop the drift to the right.Trump as CEO: Viewing the presidency as a mechanism for personal wealth extraction.Explaining History helps you understand the 20th Century through critical conversations and expert interviews. We connect the past to the present. If you enjoy the show, please subscribe and share.▸ Support the Show & Get Exclusive ContentBecome a Patron: patreon.com/explaininghistory▸ Join the Community & Continue the ConversationFacebook Group: facebook.com/groups/ExplainingHistoryPodcastSubstack: theexplaininghistorypodcast.substack.com▸ Read Articles & Go DeeperWebsite: explaininghistory.org Hosted on Acast. See acast.com/privacy for more information.

Headline: The Great Fracture: Reflections on 2025 and the Civil War of Western Capital

It is December 15, 2025. We are nearly a year into Donald Trump’s second term, and the world looks very different from the one promised by the optimists of the liberal center.

In this week’s podcast, I attempted to synthesize the current moment, drawing on the analysis of commentators like Robert Reich and looking at the deeper structural forces at play. We are witnessing a low-level civil war across the West, but it isn’t the traditional battle between socialism and capitalism. Instead, it is a conflict between two factions of capital itself.

The Two Factions

On one side, we have the Liberal Faction. Represented by the Democratic Party in the US, the Remainers in the UK, and the centrist establishment in Europe, this group believes in the post-1989 order: free trade, globalization, and technocratic management of the economy. They view Trumpism as an aberration, a “glitch” in the system that will eventually correct itself.

On the other side is the Conservative/Nativist Faction, spearheaded by Trump and the alt-right. They correctly identified that globalization has fractured, leaving behind the working class of the Rust Belt and other depressed former industrial heartlands. However, rather than offering a genuine solution, they offer protectionismProtectionism Full Description:Protectionism involves the erection of trade barriers ostensibly to “protect” domestic industries from foreign competition. As the global economy contracted, nations panicked and raised tariffs to historically high levels in a desperate attempt to save local jobs. Critical Perspective:This created a “beggar-thy-neighbor” cycle of retaliation. When one dominant economy raised tariffs, others followed suit, causing international trade to grind to a halt. Instead of saving industries, it choked off markets for exports, deepening the crisis. It illustrates how the lack of international cooperation and the pursuit of narrow national interests can exacerbate a systemic global failure., nationalism, and a “thuggish America First” stance that serves primarily to enrich a different set of oligarchs.

The Failure of the Opposition

The tragedy of 2025 is that the opposition to Trump has learned nothing from 2016. Figures like Robert Reich correctly diagnose the symptoms—stagnating wages, inequality, the hollowing out of communities—but they fail to indict their own party’s role in creating them. The Democratic Party, under Bill Clinton and Barack Obama, was the architect of the very neoliberal project that alienated the working class.

When given the chance to offer a transformative vision, the center-left instead offers “competence.” In the UK, Keir Starmer’s Labour government talks of “growing the economy” while meeting with BlackRock to privatize state functions. In the US, the Democrats ran Kamala Harris on a platform of business-as-usual, failing to explain how deregulating Wall Street helps a family in Michigan.

When people want a Coke, they buy a Coke. When voters want disruption, they vote for the authentic disruptor (Trump), not the “managerial lite” version offered by the center.

The Economic Reality of Trump 2.0

Trump’s first year has been a masterclass in self-aggrandizement. He treats the presidency not as a public service, but as the CEO role of “America Inc.,” where the goal is to extract value. His tariffs and isolationism may play well with his base, but as we look toward 2026, the economic reality is biting.

The Daily Beast recently suggested that 2026 could be the year Trump meets catastrophe. His tariffs are set to increase the cost of living just as the midterms approach. If the Democrats can capitalize on this, they might secure a reprieve for democracy. But if they return to power only to offer the same old neoliberal formulas, the cycle will simply repeat.

Conclusion

We are living through the fragmentation of globalization. The old rules no longer apply. China is rising, the BRICS nations are asserting themselves, and American soft power has been shredded. Whether the West is led by a nativist populist or a technocratic liberal, the underlying economic model is broken. Until a political movement arises that is willing to address the fundamental inequalities of capitalism, rather than just managing them, the drift toward authoritarianism will continue.

Transcript

Nick: Hi there and welcome again to the Explaining History podcast.

It is the 15th of December, 2025. We are ten days out from Christmas. While this is a history podcast, I am tempted to put forward some thoughts about what next year will be like, based on a mental roundup of what other commentators are saying.

The thing that captures my thinking at the moment is the low-level civil war being fought across the Western world. It isn’t between the Right and the Left; it is between two branches of the dominant political-economic formula that has ruled for the last 100 years: the Liberal and Conservative factions of capital.

The Conservative factions of capital have gone in the direction of Trump and the alt-right. The Liberal factions—the Democrats in the US, the center-ground in British politics, the Remainers—hold a relatively similar economic view of markets and capital.

Trumpism accurately predicts the fragmentation of globalization, whereas liberal capitalism thinks it still has life in it. It will be interesting to see, when Trumpism eventually fades, what Democrats would do with a world economy where China is on the rise, the BRICS countries are assertive, and American soft power has been damaged. You can’t just recreate The West Wing.

There are two broad liberal views emerging: one is that Trump has had his year, but by 2026 he’s done for. The other is a liberal pessimism that Trump will sweep aside constitutional safeguards and establish himself as a dictator, requiring mass mobilization to stop him.

Part of Trump’s popularity is that he channels the immense discontent generated by the right of the Democratic Party, which prioritized Wall Street over the needs of Rust Belt America.

I look at commentators like Robert Reich, who argue that Trumpism is a horrendous aberration that will right itself. Reich presents a compelling picture of why Trumpism exists, but he doesn’t give the Democratic Party enough ownership of the problem. His former boss, Bill Clinton, was one of the chief architects of the neoliberal project. I don’t get the sense that, short of a political revolution in the Democratic Party, any meaningful remedy is possible.

The Daily Beast suggested yesterday that 2026 might be the year Trump meets catastrophe. Many of his tariffs will only bite after Christmas, reflected in declining living standards. Trump operates on the principle of making promises he never intends to honor—a tactic he used in real estate, telling banks, “You have a choice between a bad deal and a terrible one.”

As President, Trump acts as the CEO of America Inc., creating conditions for asset classes to prosper. But unless you ensure rising living standards for ordinary Americans, the post-war social contract breaks. For a generation, living standards have stagnated. These are the people who voted for Trump for a second time in 2024.

There are midterms coming up in 2026. While the Republicans may try to cheat, it doesn’t look like the mechanisms are sufficiently in place to negate the danger of a Democratic win. It may well be that the midterms effectively end the active part of Trump’s presidency.

If Trump is paying attention, there are unattractive portents. Marjorie Taylor Greene, the most vocal voice in the MAGA sphere, seems to be positioning herself for a presidential run in 2028. Trump will be over 80 by then.

If 2026 turns out to be an extraordinarily bad year for working-class Americans—with rising tariffs and massive inequality—living standards will decline. It is possible the Democrats could fudge the victory Trump hands them by offering a “managerial” candidate like Hillary Clinton or Kamala Harris, telling people, “Things are actually fine, we just had bad leadership.”

Hillary Clinton was making million-dollar speeches to Goldman Sachs while Trump was visiting Pennsylvania. The Democrats might hand Trump a reprieve if they fail to offer a genuine alternative. Obama sounded like a guy with a plan, but his program shielded financial capital and created austerity for the many.

Americans may have seen through this. Trying to explain how the deregulationDeregulation Full Description:The systematic removal or simplification of government rules and regulations that constrain business activity. Framed as “cutting red tape” to unleash innovation, it involves stripping away protections for workers, consumers, and the environment. Deregulation is a primary tool of neoliberal policy. It targets everything from financial oversight (allowing banks to take bigger risks) to safety standards and environmental laws. The argument is that regulations increase costs and stifle competition. Critical Perspective:History has shown that deregulation often leads to corporate excess, monopoly power, and systemic instability. The removal of financial guardrails directly contributed to major economic collapses. Furthermore, it represents a transfer of power from the democratic state (which creates regulations) to private corporations (who are freed from accountability).
Read more of Wall Street improves life for a small town in Michigan is a tough gig.

The British center-ground does roughly the same thing. Keir Starmer’s Labour government has no real plan other than to “grow the economy” by handing over state functions to American private equity companies like BlackRock. This transatlantic centrist consensus says, “We can’t change the system, but we can manage it so it’s not too terrible.”

In the post-2016 world, centrist politicians seem to think they need to speak to extreme right views to win power. But when people want a Coke, they buy a Coke—they don’t buy the imitator. They buy the authentic product, and Donald Trump knows this.

It is a complicated outlook. Part of me thinks the midterms will present democracy with a reprieve, but considering who the “B Team” is on the Democratic side, I have my doubts.

I would love your thoughts—post them below or on the blog. I’ll be doing more of these reflections later in the week. Take care, all. Bye.

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