US Tech Fascism: AI Drives State-Capital Alliance and Economic Precariousness

Tech Won't Save Us · December 24, 2025 · Listen to Original Episode →

Original Title:

TL;DR

The fusion of the US emergent fascist right with Silicon Valley's extremist tendencies solidifies a durable alliance between state and capital, prioritizing market expansion over democratic principles.
AI's logic is increasingly used to justify labor market disruptions, leading to mass layoffs and the hollowing out of state capacity, with long-term consequences for public services.
The AI bubble is sustained by massive capital investment in infrastructure and rapidly depreciating assets like GPUs, mirroring subprime mortgage bubble mechanics with financial instruments.
Global efforts to challenge US tech dominance are faltering, with countries like Canada and the EU struggling to assert digital sovereignty against the influence of US tech giants and their political allies.
The political battleground over AI is becoming contested, with the populist left and reactionary right challenging unfettered development, while technocratic Democrats remain largely pro-Silicon Valley.
Companies are strategically positioning for the AI bubble's inevitable burst, seeking massive liquidity events through IPOs or state bailouts to secure investor and employee gains.

Deep Dive

The year in tech was defined by an accelerating fusion of emergent right-wing politics and Silicon Valley's core interests, culminating in a durable alliance between state power and capital. This convergence is not merely symbolic, but actively reshapes governance and economic structures, particularly through the expansion of AI technologies. The implications extend beyond immediate policy shifts, signaling a potential transformation toward a techno-fascist state and a precarious economic landscape increasingly reliant on speculative AI investments.

The core argument is that 2025 marked a critical inflection point where the previously fringe ideologies within Silicon Valley, characterized by a belief in the state's subordination to capital and market dominance, became mainstream. This shift is exemplified by the Trump administration's executive order preempting state-level AI legislation, which effectively formalizes an allegiance with tech billionaires like David Sachs and Peter Thiel. This alliance prioritizes capital expansion and market needs, leveraging AI and crypto technologies to achieve political and economic aims, including potentially facilitating bribery and justifying the elimination of political adversaries. The narrative of "AI first" strategies, as seen in the DoJ's actions, underscores a technocratic project to both modernize the state and purge perceived political enemies, leading to significant layoffs and the hollowing out of core state capacity. This erosion of state capacity, particularly in knowledge institutions like NIH and NOAA, presents a long-term challenge, as rebuilding it will require sustained, focused effort over years, a stark contrast to the ease with which it was dismantled.

The implications of this fusion are far-reaching. Globally, this dynamic challenges efforts toward digital sovereignty, as countries struggle to counter the influence of American tech power. In Europe, the EU's regulatory framework is being tested, with figures like Elon Musk actively influencing political landscapes to serve their interests. Domestically, the narrative of "AI will do it for you" serves to devalue and eliminate human capacity, both in the private sector through justifications for layoffs at companies like Amazon and Duolingo, and in the public sector through the dismantling of administrative functions. This is compounded by the speculative nature of the AI economy, which is increasingly resembling a bubble built on massive infrastructure investment in GPUs. These assets depreciate rapidly, necessitating continuous capital infusion, leading to circular economic models and the financialization of leases and even obsolete hardware, echoing past subprime mortgage crises. The continued pursuit of liquidity events, such as potential IPOs for companies like OpenAI at astronomical valuations, suggests a focus on cashing out before the bubble bursts, potentially through state-backed bailouts or massive sell-offs, further entrenching the alliance between state and capital.

The immediate consequence is a precarious and unequal labor market, exacerbated by AI's impact on creative industries and entry-level jobs, and a hollowing out of state capacity that will take years to repair. The long-term outlook suggests a deepening integration of AI into state functions, not necessarily for efficiency, but as a tool for political control and capital accumulation. This dynamic raises critical questions about the future of democratic governance and the potential for a techno-fascist state, where technological advancement is inextricably linked to authoritarian power and the prioritization of capital over societal well-being. The critical challenge for 2026 will be observing how the political battleground over AI forms, with potential opposition emerging from both the populist left and the reactionary right, and how companies like OpenAI navigate the economic realities of a potential AI bubble, seeking liquidity before its inevitable burst.

Action Items

Audit AI political battleground: Identify 3-5 key political actors (e.g., Sanders, DeSantis, Newsom) and their stances on AI development and data centers for 2026.
Track AI economic bubble indicators: Monitor OpenAI's valuation and liquidity events, and assess GPU depreciation strategies for potential market instability.
Evaluate digital sovereignty efforts: Analyze the success of non-US countries in challenging US tech influence and retaining regulatory control over digital platforms.
Measure state capacity impact: Assess the long-term effects of administrative state downsizing on government functions and knowledge-building institutions.
Analyze media company AI partnerships: Track intellectual property licensing deals between media firms and AI developers to understand copyright and industry value preservation.

Key Quotes

"The biggest schools always seem to always seem to get there but i'm very happy to have you joining me this evening and of course my two guests who i'll introduce in just a minute unfortunately ed ongwezo jr couldn't join us he is under the weather today but still two fantastic guests who to break down the year in tech and all the crazy shit that has happened right from the start of donald trump coming back to power his alliance with the tech industry and then everything rolling through the year you know right to where we are right now it's been a wild one and you know the tech industry and these tech billionaires just seem to be getting worse and worse and worse"

Paris Marx introduces the episode, highlighting the conversation's focus on the year in tech and the perceived worsening of the tech industry and its billionaires. This sets a critical tone for the discussion that follows.

"The reason that i think that it's like it puts kind of like a cherry on top of this year is because it just like formalizes this this sort of allegiance between silicon valley and the trump white house in particular it was something that they had been they've been trying to do all year through legislation going back over the summer when they were trying to get this measure jammed into a big budget bill and it was very close it kind of it it blew up in their faces at the last minute because it's even you know on a republican vote uh because it was just a bridge too far and then they tried to get it into legislation again on a defense bill and again it was kind of rejected as being too far"

Brian Merchant discusses an executive order by Trump aimed at deterring states from passing AI laws, framing it as a formalization of the alliance between Silicon Valley and the Trump White House. Merchant notes previous legislative attempts that failed, indicating a persistent effort to solidify this relationship.

"But i think what we really see this year is the fringe becoming the center right like you know peter thiel and that kind of esoteric right wing you know it's it's beyond libertarianism in the sense of like hey like hands off my liberties or whatever right it's it's much more of a there is the the state is subordinate to capital right that's the kind of libertarianism that we're talking about here the market dominates everything and the purpose of the state is to support the needs of capital to support the expansion of markets and that has always been the the role of the state in a capitalist political economy but i think what we're seeing right now is the a lot of the kind of quiet parts or a lot of the more kind of fringy parts becoming very loud and very mainstream in silicon valley in the states and in the wider the wider public right"

Jathan Sadowski argues that the fringe elements of Silicon Valley's right-wing tendencies have become mainstream this year. Sadowski defines this as a form of libertarianism where the state serves capital and market expansion, noting that previously quiet or fringe ideas are now prominent.

"And so i think there's that story of a of capacity elimination and the in the us right kind of hamstringing the us and even if trump go does his his administration trump gets impeached tomorrow right and we i don't know what we throw aoc in there you know or or zaron in there whatever right like okay great you now have an immense job that's going to take the entire four years at least of your administration to build us back up to pre 2025 levels of like state capacity um and that that so that's really tough then the other thing is like a a lack of capacity so you know that that other how this is happening in other places around the world europe has a huge administrative state right like this is what europe does when it how it thinks about regulation regulating tech is it thinks about it as in terms of european style regulation risk management risk assessment you know rights based regulation like the gdpr risk based regulation like the you know the ai bill europe does this through regulation but that means that i think that there you know europe has found itself unprepared to deal with a adversary that has no is not interested or willing to meet them on the the grounds of let's be good civil servants about this let's talk about this in terms of like regulation and administration and stuff"

The speaker discusses the elimination of state capacity in the US, noting that rebuilding it would be a significant, multi-year undertaking. They contrast this with Europe's large administrative state and its regulatory approach to tech, suggesting that this method leaves Europe unprepared to deal with adversaries who do not engage on those terms.

"And so i think that is also what we're going to see is a lot of organizational kind of jockeying around who can secure their own bag before the music stops and that might be through you know securing promises of bailouts from the state that might be securing massive ipos and other kinds of liquidity events so that you can kind of draw down and get what you need but i think that's what we're going to see is a lot of like ramping up towards okay we've been inflating this bubble for as much as we can we need to now do what we can to ensure when the bubble burst we don't have to we're not the ones left carrying you know holding the bag"

Jathan Sadowski predicts organizational maneuvering as companies try to secure their financial interests before a potential AI bubble bursts. Sadowski suggests this could involve seeking state bailouts or pursuing large IPOs to create liquidity events, ensuring investors and early employees benefit before any downturn.

"And so i think it'll be really interesting to see how that plays out in 2026 absolutely jathan what's yours what are you watching for yeah i agree 100 with brian around the politics of ai i also think that there's with that is a story about the economics of ai or the financial aspect of ai because as we talked about i mean really right now we're at this it's continuing a pace because the music is still playing right once the music stops i think it will really things will fall in a way where everyone knows it's a bubble right i mean everyone people in tech people in wall street they all acknowledge it's a bubble like pretty openly right so there's not even that like cynical denial of it anymore and so now it's a question of like can these companies get their ducks in a row in a way to secure themselves against the fallout of the bubble"

Brian Merchant expresses interest in the political battleground over AI in 2026, noting that both the left and the right are developing critiques. Merchant also agrees with Jathan Sadowski that the economics and financial aspects of AI are crucial, particularly as the industry acknowledges the existence of a bubble.

Resources

External Resources

Books

"The Mechanic and the Luddite" by Jathan Sadowski - Mentioned as the title of a book authored by guest Jathan Sadowski.
"Blood in the Machine" by Brian Merchant - Mentioned as the title of a book authored by guest Brian Merchant.
"The One Device" by Brian Merchant - Mentioned as a previous book authored by guest Brian Merchant.

Articles & Papers

"Authoritarian Stack" (Francesca Bria) - Mentioned as a project visualizing the integration of tech billionaires into halls of power.

People

Jathan Sadowski - Guest, author, and co-host of "This Machine Kills."
Brian Merchant - Guest, author, and newsletter writer.
Paris Marx - Host of the podcast "Tech Won't Save Us."
Ed Ongweso Jr. - Mentioned as unable to join the episode due to illness.
David Sachs - Mentioned as an AI and crypto advisor to Trump, and as a figure who wanted to sell access to Trump.
Mark Andreessen - Mentioned in relation to David Sachs and Peter Thiel's influence.
Peter Thiel - Mentioned as a figure who led the way in certain tech industry trends and as a mentor.
Steve Bannon - Mentioned as part of the "MAGA" political faction.
Marjorie Taylor Greene - Mentioned as part of the "MAGA" political faction.
Ron DeSantis - Mentioned as part of the "MAGA" political faction and for his stance on Florida's AI laws.
Russ Vought - Mentioned in relation to the utility of "Doge" and the "Project 2025" aims.
Jenson Huang - Mentioned in relation to Nvidia's chip sales to China and the concept of digital sovereignty.
Bernie Sanders - Mentioned for calling for a moratorium on AI data center construction.
Alex Karp - Mentioned in relation to patriotism and as a potential "worst person in tech."
Mike Johnson - Mentioned for speaking about Elon Musk's involvement with "Doge."
Elon Musk - Mentioned in relation to the "worst person in tech" contest, "Doge," AI, and his public profile.
Jeff Bezos - Mentioned in the "worst person in tech" contest.
Sam Altman - Mentioned in relation to OpenAI, its valuation, and as a mentee of Peter Thiel.
Mark Zuckerberg - Mentioned in relation to the "worst person in tech" contest and his profile.
Larry Ellison - Mentioned in the "worst person in tech" contest.
Sundar Pichai - Mentioned as a potential matchup for Larry Ellison in the "worst person in tech" contest.
Gavin Newsom - Mentioned as a potential presidential candidate and as being friendly to Silicon Valley.
Josh Hawley - Mentioned for teaming up with Blumenthal on a bill to ban chatbots for minors.
Richard Blumenthal - Mentioned for teaming up with Josh Hawley on a bill to ban chatbots for minors.

Organizations & Institutions

Tech Won't Save Us - The podcast hosting the discussion.
This Machine Kills - A podcast co-hosted by Jathan Sadowski.
Monash University - Where Jathan Sadowski is a Senior Lecturer.
The Nation - Magazine in partnership with "Tech Won't Save Us."
Patreon - Platform for supporting the podcast.
OpenAI - Mentioned in relation to potential bailouts, funding, and deals with Disney.
Disney - Mentioned for a billion-dollar deal with OpenAI.
Intel - Mentioned in relation to Trump taking a stake.
Nvidia - Mentioned in relation to chip sales and as a proponent of digital sovereignty.
Department of Justice - Mentioned in relation to Trump's executive order on AI laws.
Department of Education - Mentioned as being gutted by the Trump administration.
ICE (Immigration and Customs Enforcement) - Mentioned in relation to agents in the streets.
a16z (Andreessen Horowitz) - Mentioned in relation to "American Dynamism."
Heritage Foundation - Mentioned in relation to "Project 2025."
Food and Water Watch - Mentioned as an activist group calling for a moratorium on data centers.
Amazon - Mentioned in relation to layoffs and AI.
Duolingo - Mentioned in relation to layoffs and AI.
Midjourney - Mentioned in relation to Disney suing it.
USMCA (United States-Mexico-Canada Agreement) - Mentioned in relation to renegotiations and US expectations.
National Institutes of Health (NIH) - Mentioned as a knowledge institution.
National Oceanic and Atmospheric Administration (NOAA) - Mentioned as a knowledge institution.
European Union (EU) - Mentioned in relation to tech regulations.
Google - Mentioned in relation to Gemini and retaining users.
Coreweave - Mentioned in the circular economy of AI.
US (United States) - Mentioned in various contexts including government, economy, and politics.
Canada - Mentioned in relation to its government folding on the digital services tax.
Australia - Mentioned in relation to social media age limits and the News Bargaining Code.
Virginia - Mentioned as a location where people pay for AI systems.
Florida - Mentioned in relation to DeSantis's stance on AI laws.

Tools & Software

Doge - Mentioned in relation to government efficiency through technology and mass layoffs.
GPT-5 - Mentioned as a product launch that did not meet expectations.
Gemini - Mentioned as Google's AI product retaining users.

Websites & Online Resources

Authoritarian Stack - A website visualizing how tech billionaires have integrated into power.
Patreon.com/techwontsaveus - URL for supporting the podcast.

Other Resources

AI (Artificial Intelligence) - A central topic of discussion throughout the episode, including its regulation, economic impact, and use in propaganda.
Crypto - Mentioned as a technology the Trump administration is interested in.
Digital Sovereignty - Discussed in relation to efforts to challenge American tech companies.
Executive Order (Trump) - Mentioned in relation to preemption of state AI laws.
Administrative State - Discussed as a target for elimination and its impact on government capacity.
Project 2025 - Mentioned in relation to aims of gutting government departments.
GPs (Graphics Processing Units) - Mentioned as assets in the AI bubble that depreciate quickly.
Subprime Mortgages - Used as an analogy for GPU securitization.
Doi (Digital Services Tax) - Mentioned in relation to Canada's government folding on it.
Online Streaming Bill - Mentioned in relation to USMCA renegotiations.
Online News Act - Mentioned in relation to USMCA renegotiations.
GDPR (General Data Protection Regulation) - Mentioned as an example of EU rights-based regulation.
AI Bill (EU) - Mentioned in relation to EU regulation.
News Bargaining Code Act (Australia) - Mentioned in relation to Facebook paying news organizations.
AI Spending - Mentioned as contributing to US GDP growth.
Consumer Spending - Mentioned in relation to economic indicators and the wealthy.
First Class Seating (Airlines) - Mentioned as a driver of airline revenue.
Worst Person in Tech Contest - An annual contest run by the podcast.
AI Bubble - Discussed as a significant economic concern.
Data Centers - Mentioned in relation to electricity prices, environmental impact, and political opposition.
IPOs (Initial Public Offerings) - Mentioned in relation to OpenAI's potential future.