Top Traders Unplugged – GM94: When Capitalism Reboots and Crashes Again ft. Mark Blyth

Release Date: January 14, 2026
Host: Alan Dunn (Guest-hosting for Niels Kaastrup-Larsen)
Guest: Mark Blyth – Professor of International Economics and Public Affairs at Brown University; Author of Inflation, Austerity: The History of a Dangerous Idea, Angrynomics

Episode Overview

This episode features political economist Mark Blyth in a sweeping conversation about the evolution, cyclical crises, and rebooting of capitalism—specifically, the "crashes" that lead to new political-economic regimes. Blyth tracks the system's repetitive hardware (institutions) and software (ideology/policy) upgrades, reflects on the current post-neoliberal uncertainty, and spotlights looming issues: structural deficits, the revival of industrial policy, the affordability crisis, demographic headwinds, and the rise of 21st-century great power conflict. The discussion brims with historical analogy, candor, and skepticism toward conventional macro dogma.

Key Discussion Points & Insights

1. How Mark Blyth Became an Economist and His Perspective on the Field

• Began as a critical observer during the monetarist-Keynesian transition of the 1980s (04:44)
• Views economics as an “engine driving events, not a camera recording them” (07:05)
• Sees the discipline as a means to frame policy debates and wield power, not just to explain markets

Quote:

“Economics isn’t just a camera passively recording events, it’s an engine driving them. And when you get to define how the economy works...that’s an astonishing political resource. That’s what I’ve been interested in.” — Mark Blyth, [07:05]

2. From Neoliberalism to Uncharted Territory: The Laptop Metaphor

• Capitalism as “laptop”—institutions are hardware, ideology is software (09:22)
• Every regime sows the seeds of its own demise:
  • Gold Standard: bug = deflation → global upheaval
  • Mid-century welfare capitalism: bug = inflation
  • Neoliberal globalization (1980s–2007): bug = inequality-driven financial fragility (13:00)
• Current period is post-crash, pre-new order: “We are nearly 20 years out of that equilibrium...going through the uncertain 20s and into the revolutionary 30s.” (14:59)

3. Symptoms of Systemic Crisis: Populism, Great Power Rivalry & Carbon Politics

• Right-wing populist reaction prevails over leftist (15:32, 30:24)
  • Cites Trump weaponizing economic decline as anti-elite grievance politics (16:13)
• Climate policy as a geopolitical dividing line:
  • US doubles down on carbon, sees “hydrocarbon continent” as competitive hedge
  • China pursues solar/E.V. dominance globally (17:00)
  • “Europe is naked and defenseless...” — Mark Blyth, [22:26]
• Revival of 19th-century imperialist logic and a move toward regional power blocs

Quote:

“We are literally turning the corner into the rebirth of 19th-century imperialism. We’re closer to great power conflict than we’ve been in a very long time.” — Mark Blyth, [22:26]

4. Deficits, Austerity, and the Limits of Bond Market Discipline

• Austerity in crisis “doesn’t work—Europe lost a decade of growth” (19:59)
• Longstanding warnings about unsustainable deficits have not materialized catastrophically:
  • “I can’t tell you the number of times people have said...the deficit is unsustainable. We’ve been saying this for 40 years. Are we going to do this again?” (21:53)
• “Markets just want a credible growth story...fiscal space is about credibility, not numbers” (50:40)
• Tensions for countries without monetary sovereignty (especially in the Eurozone)

5. The Affordability Crisis: Why Macro Misses the Real Pain

• “It’s high prices, not just inflation, that’s the problem...groceries have gone up 24% since the pandemic and they don’t go down.” (24:39)
• Economists focus on changes (delta), not the painful new levels of basic costs (26:53)
• Structural failure in global housing, built only for those who can afford (25:20)
  • Canadian housing anecdote as emblematic of global misallocation
• Disconnection between elite “admin class” and real median experience (27:28)

Quote:

“We don’t see it...a grocery basket going up 25% with stagnant wages is a huge societal problem—we’re just blind to it.” — Mark Blyth, [28:11]

6. Structural Stalemates: Demographics, Migration, and Distribution

• Rising fiscal pressure from aging, healthcare, and dementia care (30:48; 34:57)
• Tension between the generational asset-holding elderly and younger, asset-poor workers (32:45)
• Neither left nor right offers a credible fix:
  • The left is paralyzed by deficit dogma, the right never cares about deficits in power (35:43)
  • Populism on right gains traction through anti-migration, nationalism (32:45)

Quote:

“The reaction to big economic collapses tends to be on the right...because the right can more easily pull on the notion of the nation...being betrayed by elites. This is a very old story—we have lived this history before, and we seem to be living it again.” — Mark Blyth, [14:11]

7. Industrial Policy and the ‘Project State’

• Re-emergence of state-led industrial policy worldwide: “You’re seeing the reassertion of different types of national sovereignties and the desire to rebuild industrial capacity.” (45:17)
• Defense and housing as strategic sectors, especially for the UK (46:10)
• Revival of public investment not just economically vital, but existential (48:38)
• Skepticism that a “1980s-style” deregulatory or market-only approach could solve current malaise

8. Global Order: US Grand Strategy, Currency, and Regional Realignment

• The US “hydrocarbon continent” strategy as a deliberate rivalry with China’s green tech push (54:33)
• Move away from multilateralism:
  • “We’re not big believers in the post-war democratic rules-based order. We think that’s part of the problem.” (54:33)
• Implications for the dollar, reserve currency status, and capital flows:
  • US wants a weaker dollar; no feasible alternative for global reserves (59:20)
• Europe’s challenge: needs to pivot industrial structure toward internal consumption

9. Are There Solutions? Prospects for Renewal

• Historical pattern: crises only resolved by “plague, famine, pestilence, or war,” but hopes for peaceful redesign (35:43)
• To fix the system requires “breaking the concentration machine” and large-scale redistribution—yet political will is missing
• Risks: continued stagnation, asset bubbles in AI/tech, and sudden tipping points from unpredictable “events” (60:52)

Notable Quotes & Memorable Moments

| Time | Speaker | Quote | |-----------|-------------------|-------| | 07:05 | Mark Blyth | “Economics isn’t just a camera passively recording events, it’s an engine driving them...” | | 14:59 | Mark Blyth | “We are nearly 20 years out of that equilibrium. We are basically doing what happened after WWI—going through the uncertain 20s and into the revolutionary 30s.” | | 16:13 | Mark Blyth | “The great paradox at the moment...Trump has weaponized this the best...the global elite, they don’t care about you, they’ve run off with everything.” | | 22:26 | Mark Blyth | “Europe is naked and defenseless. We’re literally doing what they did in the 1930s...” | | 24:39 | Mark Blyth | “Groceries...have gone up 24% since the pandemic...and they don’t go down...That’s the crisis.” | | 28:11 | Mark Blyth | “We don’t see it...a grocery basket going up 25% with stagnant wages is a huge societal problem—we’re just blind to it.” | | 50:40 | Mark Blyth | “Fiscal space is about credibility, not numbers...what markets want is a credible growth story.” |

Timestamps for Key Segments

• [04:44] Blyth’s “origin story” in economics and macro debates of the 1980s
• [09:22] Capitalism as hardware/software; regime cycle explainer
• [14:59] Historical parallels: collapse and reset cycles
• [22:26] Warnings on 1930s-style appeasement and imperialism’s return
• [24:39] Economics’ disconnect from lived reality: prices vs. inflation
• [32:45] Asset holders vs. young/migrants: intergenerational & social divides
• [45:17] Rationale for industrial policy, defense, and housing in the UK
• [54:33] US grand strategy, the hydrocarbon play and implications for global order
• [59:20] The dollar, reserve status, and the new “suck it and see” approach

Book Recommendations and Further Reading

• Appeasing Bankers: Financial Caution on the Road to War by Jonathan Kirshner [22:26]
• The State We’re In by Will Hutton [63:00]
• Passions and the Interests and The Rhetoric of Reaction by Albert Hirschman [63:34]
• The Project State by Charles Maier [46:18]
• Mark Blyth’s own works: Inflation, Austerity, Angrynomics

Final Thoughts

Blyth’s prescription? The world is “loading the chamber of events” with uncertainty. Capitalist systems always reboot—but the next software patch is elusive. The most urgent dangers are not just economic, but political and social: divergence between elite fixation (deficits, rules) and lived reality (affordability, inequality); demographic and migration crises without thoughtful policy; and an emergent return to raw power politics. The fundamental risk may be that the system won’t reset peacefully this time.

Summary compiled and structured for clarity and accessible reference. For more in-depth episodes, visit Top Traders Unplugged.