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For want of a microchip the empire is lost

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the global microchip shortage is not an isolated accident but a symptom of a deeper, structural reversal of capitalist globalisation. The central claim is that the very factors which drove the post-war expansion of world trade and integrated supply chains — particularly the pursuit of efficiency through just-in-time production and the exploitation of cheap labour in newly opened markets — have now generated their own negation. Overproduction, intensified imperialist rivalry, and the growing political and economic instability of the world market are forcing each national capitalist class to retreat behind protective barriers, seeking self-sufficiency in strategic industries. The microchip is presented as the contemporary equivalent of the proverbial nail: a single point of vulnerability through which the entire edifice of US imperial power could be undermined. The argument is that this protectionist trend, if unchecked, risks a downward spiral of beggar-thy-neighbour policies reminiscent of the 1930s, with the crucial difference that nuclear weapons foreclose the historical resolution of world war.

Theoretical Grounding

The analysis is rooted in the Marxist theory of imperialism and the crisis-ridden dynamics of capital accumulation. It draws on Lenin's conception of imperialism as a system of rival national capitals competing for markets, raw materials, and spheres of influence, but updates this for the era of globalised supply chains and the rise of China as a rival imperialist power. The article implicitly deploys the Marxist critique of the nation-state as a barrier to the full development of productive forces: globalisation temporarily overcame this barrier, but the crisis has brought it back with a vengeance. The concept of overproduction — the success of capitalist methods generating their own crisis — is central, though not elaborated in terms of the tendency of the rate of profit to fall. Instead, the analysis focuses on the concrete mechanisms of just-in-time production, the brittleness of stretched supply chains, and the political logic of state intervention. The article sits within the Trotskyist tradition's emphasis on the impossibility of a stable, peaceful capitalist world order and the inevitability of interimperialist conflict, while also drawing on the classical Marxist insight that capitalism simultaneously creates a world market and fragments it through national competition.

Conjunctural Relevance

The article is written in April 2021, at a specific conjuncture defined by several overlapping crises:

  • The COVID-19 pandemic had just demonstrated the extreme vulnerability of global supply chains, from PPE to semiconductors. The article notes that 140 special trade restrictions were introduced by governments in response.
  • The microchip shortage was already hitting the US automotive industry hard, with 1.3 million fewer vehicles expected to be manufactured in the USA in 2021.
  • The Biden administration had just taken office and was pursuing a policy of reshoring and strategic self-sufficiency, including a 100-day review of all supply chains and a $2.5 trillion investment package with $50 billion earmarked for domestic semiconductor capacity.
  • The Ever Given blockage of the Suez Canal in March 2021 is used as a metaphor for the general fragility of global trade.
  • Vaccine nationalism was at its peak, with export controls on doses and key ingredients.
  • The rise of China as a technological competitor is a constant backdrop, with the article noting that China controls over 70% of mined rare earth minerals and refines over 90% of them, creating a strategic bottleneck for US and European high-tech industries.

The article connects these events to the longer-term trend of rising protectionism under Trump (average US tariffs rising from 1.7% in 2016 to 13.8% by 2019) and the intensification of interimperialist rivalry since the 2008 crisis.

Where the Argument Continues

The article leaves several threads open that are developed elsewhere in the IDOM corpus and broader Marxist literature:

  • The tendency of the rate of profit to fall is not explicitly deployed here, but the logic of overproduction and the risk of over-investment in semiconductor capacity points towards this deeper law of capitalist motion. This is developed in other IDOM articles on the law of value and the crisis.
  • The question of war and nuclear weapons is raised but not fully explored. The article states that nuclear weapons rule out direct US-China military confrontation, but this is a contested position within the Marxist tradition. Other IDOM pieces and Against the Stream episodes have addressed the danger of war more directly.
  • The role of the state in managing the crisis is described but not theorised in depth. The article notes that subsidies are the inverse of tariffs but does not develop a full analysis of state monopoly capitalism or the fiscal crisis of the state. This is taken up in other IDOM articles on the debt crisis and the limits of state intervention.
  • The environmental dimension is mentioned only in passing (rare earth deposits in Greenland and the Arctic), but the broader connection between imperialist rivalry and ecological destruction is a major theme in other Marxist texts.

Connections

  • Lenin, Imperialism, the Highest Stage of Capitalism — The theoretical foundation for understanding interimperialist rivalry and the drive for raw materials.
  • Trotsky, The War and the International — On the impossibility of peaceful capitalist development and the inevitability of war under imperialism.
  • Ernest Mandel, Late Capitalism — On the dynamics of globalisation, the international division of labour, and the crisis of overproduction.
  • IDOM articles on the law of value and the tendency of the rate of profit to fall — For the deeper theoretical underpinning of the crisis logic.
  • IDOM articles on the rise of China — For a more detailed analysis of China's role as a rival imperialist power and its internal contradictions.
  • Against the Stream episodes on supply chains and the semiconductor shortage — For ongoing discussion of the conjuncture as it develops.

Key Quotes

  1. "Suddenly the American ruling class has been thrown into panic as they realise just how much they depend on these little wafers of silicon, comprising billions of transistors. This isn't just a question of consumer goods but one of national security."

  2. "The factors which drove globalisation are now dragging it down. On the one hand, the crisis of capitalism – driven by overproduction flowing from the success of these methods – has intensified competition for markets the world over. On the other hand, the decline of US imperialism and the rise of China is further feeding imperialist rivalry."

  3. "Just-in-time production had been all about efficiency savings. There was no forward planning and no thought of building redundancy into the economy. This made the world economy exceptionally brittle."

  4. "The logic of the situation would push governments to protect newly built factories from 'temporary' fluctuations in the market – be it through further subsidies, tariffs or quotas. That is to say, one protectionist measure flows from the last."

  5. "We have before us the most incredible productive forces and unprecedentedly complex supply chains. We have a world economy based upon a worldwide division of labour, and complete international interdependence. Yet national antagonisms and rivalry have never been so severe. The attempt to turn back the clock on globalisation will only serve to intensify the crisis."

  6. "Only by putting the profit motive and the nation-state in the dustbin of history can humanity move forward. Only by abolishing capitalism can we throw out these barbaric relics of humanity's past."