{"id":95894,"date":"2026-09-23T07:18:03","date_gmt":"2026-09-23T06:18:03","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=95894"},"modified":"2026-09-23T07:18:31","modified_gmt":"2026-09-23T06:18:31","slug":"krugman","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2026\/09\/23\/krugman\/","title":{"rendered":"Who will constrain the power of capital?"},"content":{"rendered":"

In a video Paul Krugman published on his Substack<\/a> yesterday, which I recommend subscribing to, although I by no means agree with everything he says, he argues that cryptocurrency has largely failed as an economic innovation but has succeeded spectacularly as a means of buying political influence in the United States. I think he is right about much of this.<\/p>\n

As most reasoned observers note, crypto has still found remarkably little legitimate economic use. It has not transformed payments, banking or commerce in the way its advocates once promised. What it has created is enormous speculative wealth, and some of that wealth is now being used, as Paul Krugman notes,\u00a0 to secure political power and favourable regulation.<\/p>\n

That matters because the crypto industry spent heavily in the 2024 US elections and, Krugman argues, is preparing to spend even more in the 2026 midterms. Its strategy has been straightforward: politicians who threaten its interests can face heavily financed opposition. The purpose is not simply to win individual elections. It is to make politicians afraid of challenging the industry at all.<\/p>\n

This is where Krugman\u2019s argument matters far beyond cryptocurrency, and where I particularly agree with him. What we are seeing is concentrated private wealth being converted into political power. Crypto is simply an unusually blatant example of a much bigger problem.<\/p>\n

There is also an important distinction between crypto and artificial intelligence. Whatever concerns there might be about AI, companies are actually attempting to use it to produce things and provide services. Crypto has achieved nothing remotely comparable. Its economic significance remains overwhelmingly speculative, and it is almost always deeply disruptive, while its political significance has become enormous.<\/p>\n

That imbalance should concern us. Wealth generated without corresponding productive activity can still acquire extraordinary political power. Indeed, the ability of rentier wealth to capture political decision-making is one of the key defining problems of our age.<\/p>\n

The forthcoming US midterms therefore pose a much bigger question than whether the crypto lobby gets the regulation it wants. The question they ask is whether democratic politics can withstand the power of concentrated wealth when that wealth is deliberately deployed to influence who can realistically hold office.<\/p>\n

Krugman describes the coming contest as one between a potential electoral wave and a wave of plutocratic money. I think that framing is substantially right. The issue is ultimately not crypto. It is whether democracy can survive when those with extraordinary wealth are permitted to use it to acquire exceptional political power.<\/p>\n

We have been here before: at the beginning of the 20th century, extreme wealth threatened democracy in the USA. President Teddy Roosevelt set out ot beat it, and he did. The power of capital was constrained. But my question is, who in politics will do that now?<\/p>\n

That question matters in the United States, but there is no reason to think the influence to which it refers stops at its borders.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a video Paul Krugman published on his Substack yesterday, which I recommend subscribing to, although I by no means agree with everything he says,
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