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Herzog's claim to be a proven descendant of King David is completely absurd. He has a name that originated in Europe and any cursory check will show that the existence of David is debatable. Just as significantly, the historical role this king is supposed to have played is unsupported by any evidence outside of the scriptures. Indeed, Herzog's own claim is based on rabbinical writings.
This use of religious myth as if it were serious historical evidence is something that the Zionist movement and the Israeli educational system has concentrated on to a huge degree. Moreover, while Herzog's claim would be met with hoots of derision throughout the Global South, such has been the level of support for the Zionist political ideology in the West that he is taken seriously when he lets fly with this nonsense.
Such irrationality isn't the unique preserve of Zionism and its colonial project of course. All forms of settler-colonialism have based themselves on a claim (often divinely mandated) to take someone else's land on the basis of alleged superiority. The co-option of religious tradition created particular notions of return to a God given homeland but these ideas aren't fundamentally different to those used to justify dispossession in other places, including Canada.
It is inherently futile to debate religious ideas and, if the groundless belief that he is descended from a mythical ancient King who worked closely with the Supreme Being gets Herzog out of bed in the morning, good luck to him.
The problem arises when such ideas are put into effect at the expense of others. Herzog's role in the Gaza Genocide and the broader dispossession of the Palestinians show very clearly that he has crossed this line with terrible results.
The issue, then, isn't to focus on refuting the distorted and mythical elements of the Zionist ideology but to directly challenge the ethnic cleansing, apartheid and genocide that have resulted from their application. We need to take into our efforts to end Western sponsorship and material support that is so essential for Israel, a clear opposition to the criminal injustices that have arisen when this ideology has been put into practice.
How will Washington get Tehran to accept intrusive inspections beyond the JCPOA when Saudi is offered enrichment with no IAEA inspections?
Trita Parsi July 22nd 2026
AP Photo/Evan Vucci
A few points on the shocking U.S.–Saudi nuclear deal announced.
1. This reflects a weaker American bargaining position, not a stronger one.
The broader context is China. The Biden administration pursued a nuclear deal with Saudi Arabia, as part of a broader expansion of Trump’s Abraham Accords, in part to pull Riyadh closer to Washington and away from Beijing. But Washington’s position has deteriorated since then. The credibility of the U.S. security umbrella has weakened, GCC states have become more strategically autonomous, and Saudi Arabia has gained leverage by diversifying its partnerships.
The result appears to be that Washington had to offer substantially more to try to keep Saudi from drifting further toward China, while getting substantially less in return.
2. By any historical standard, this is an extraordinary Saudi victory.
Compared to previous negotiations, Riyadh has secured remarkable concessions. It no longer appears to have to normalize relations with Israel as part of the package. It is reportedly not required to sign a traditional Section 123 agreement that would deprive KSA of enrichment technology. And there are no comprehensive IAEA safeguards comparable to those Washington has long insisted upon elsewhere.
If these reports hold, Saudi Arabia has achieved what few thought Washington would ever accept.
3. Biden was going down the same path…
The Biden administration reportedly considered similar arrangements, but its efforts were derailed by the repercussions of the October 7 attacks.
Biden officials also understood the risks, although it did not prevent them from pursuing it and signalling willingness to offer Saudi major nuclear concessions. Some of the contingency ideas reportedly discussed bordered on the surreal: having American troops physically guard Saudi enrichment facilities from the Saudis themselves, or designing systems that would allow the United States to disable—or even destroy remotely—the facilities if necessary.
The fact that such safeguards were seriously contemplated should itself have been a warning. If your proposal requires extraordinary mechanisms to prevent your own ally from using the technology you are providing, perhaps the proposal is fundamentally flawed.
4. This may prove a stepping stone toward an even greater disaster: Security Guarantees for Saudi
As Rosemary Kelanic points out, this deal provides Riyadh with leverage it can use in the future to force Washington to provide it with security guarantees. Saudi Arabia can threaten to build nuclear weapons unless the U.S. offers it Article 5-level security guarantees - a disastrous move that would further entangle the US in the region militarily instead of allowing America to come home from the Middle East.
As Kelanic argues, there is ample historical precedent. South Korea and West Germany both advanced nuclear programs that alarmed Washington. Rather than allowing them to acquire nuclear weapons, the United States ultimately strengthened its military commitments and security guarantees in exchange for abandoning those programs.
As a result, this nuclear deal may prove to be a prelude to an even more damaging concession to Saudi down the road.
5. This likely weakens Washington’s negotiating position with Iran.
If there is eventually another U.S.-Iran nuclear agreement, today’s decision establishes an entirely new benchmark.
It becomes impossible to argue that Saudi Arabia may enrich uranium while Iran cannot, although Tehran was never going to accept zero enrichment in the first place. But proposals that earlier had been entertained - such as a 5- to 10-year moratorium on enrichment - may now also be out of reach.
Moreover, and perhaps more importantly, it becomes harder to insist on intrusive international inspections for Iran while accepting a far lighter non-IAEA inspection regime for Saudi Arabia. And it becomes much more difficult to portray enrichment itself as an unacceptable proliferation risk.
Washington has made the type of deal it wants from Iran more complicated.
Much attention will focus on the loss of the Saudi normalization card, which has been one of Israel’s strategic objectives.
But the more consequential issue may be that Saudi Arabia now appears to have a far more credible pathway toward a nuclear weapons capability should it ever choose to pursue one.
That represents a fundamental shift in Israel’s long-term strategic environment.
7. Is this about widening the war with Iran?
Possibly. One interpretation is that Washington made these concessions to secure greater Saudi cooperation in the current (or a future) confrontation with Tehran.
But Tehran itself does not appear particularly alarmed.
Saudi Arabia’s direct military contribution to a war with Iran would likely remain limited, and the Kingdom’s participation does little to alter Iran’s fundamental geographic advantages in the Persian Gulf. More importantly, Saudi leaders have spent years trying to reduce—not increase—the risk of becoming a battlefield in a U.S.-Iran conflict.
If that remains Riyadh’s strategic priority, this agreement is unlikely to fundamentally change the military balance in the war.
Taken together, it is difficult to see today’s announcement as advancing US interest, let alone being compatible with other existing efforts such as finding an acceptable resolution to the conflict with Iran. It raises further questions as to whether a cohesive Middle East policy exists.
As I pointed out yesterday, Pete Hegseth, the Secretary of Defense in the Trump administration, was questioned during a Senate Appropriations Committee hearing. The administration is seeking another $87.6 billion in military funding, arguing that increased spending is necessary to sustain the U.S. war against Iran.
The administration appears to have expected that its campaign of air strikes and the assassination of senior Iranian officials would quickly weaken the Iranian government and force it to capitulate. Instead, the conflict has intensified. As of July 21, U.S. forces had conducted air strikes for ten consecutive nights, while Iran had retaliated by attacking a U.S. military installation in Jordan.
The war is becoming increasingly unpopular at home as its financial costs and economic consequences are felt by American families. According to an Ipsos poll,71% of Americans think their country should not be involved in the Iran war and this rises to 79% for those aged 18-34.”. Globally, results are similar. Naturally one of the few countries that support it is Israel.
This growing public dissatisfaction is creating tensions within the Republican Party and providing political ammunition for Democrats ahead of the November elections.
Watching the committee hearing, however, it becomes clear that Democratic Senators Gary Peters and Jon Ossoff are not challenging the war itself. Their criticism is directed at what they regard as the Trump administration's failure to prosecute it effectively. Again and again, the focus is not whether the war should have been launched, but whether there is a coherent strategy for winning it.
Both senators begin by praising General Dan Caine, Chairman of the Joint Chiefs of Staff, and expressing condolences for the three U.S. service members killed when Iran retaliated against American bombing raids. Neither senator questions the legality of the war itself, argues that it was unnecessary, or calls for an end to it and an apology to Iran. They don’t even call for an immediate ceasefire and negotiations. Nor do they challenge Hegseth's claim that Iran is the principal sponsor of global terrorism a long time US foreign policy strategy when the US and the CIA is seen by millions of people around the world as the leader in that category.
In my view, this is the conclusion we need to draw from the hearing. The disagreements between the administration and its Democratic critics concern tactics and competence rather than the broader objectives of U.S. foreign policy. The debate is over how the war should be conducted, or managed, not whether it should continue. It’s basically more propaganda.
Peters, who frequently speaks about the importance of his Christian faith, and Ossoff, who has spoken publicly about his Jewish faith, express sympathy for American casualties but none for the suffering endured by ordinary Iranians. Whatever their religious convictions, humanitarian concern appears to stop at America's borders.
A conservative Christian friend of mine recently remarked that politicians are simply corrupt. Many trade union members express similar frustration with union leaders that they believe have become detached from the workers they represent and claim the reason is corruption, that they are in bed with the boss or receive bribes. While I understand that sentiment, I believe the problem runs deeper than individual corruption. It’s connected to their world view.
As far as the Democratic and Republican parties go, they represent different wings of the same economic system. Their disagreements usually concern how American capitalism should be managed rather than whether its underlying priorities should be challenged. Foreign policy is perhaps the clearest example. Peters, often described as a centrist Democrat, and Ossoff, generally regarded as more progressive, ultimately support the same strategic framework as Republicans, even while criticizing the administration's execution of it.
This point became especially clear during Peters' exchange with Hegseth. Peters praised the professionalism of American service members before criticizing the administration's handling of the war. Hegseth responded that such criticism undermined those risking their lives, insisting that the military operation was necessary to ensure Iran never acquired a nuclear weapon.
Whether one accepts that justification or not, the exchange illustrated the narrow limits of debate within Washington. The central assumptions of American foreign policy are not confronted; not even questioned.
It is this consensus that helps explain why so many Americans have become cynical about politics. Public dissatisfaction is often described simply as anger over corruption, but the deeper issue is that the political system rarely permits a fundamental discussion about whose interests government serves. During presidential campaigns, the debate is almost always confined to competing visions of how best to manage capitalism. The system itself is off limits.
Whoever occupies the White House after November, working people will continue to bear the costs of economic inequality, military spending, and foreign wars. Figures such as Steve Witkoff and Jared Kushner, Trump’s son-in law, are wealthy real estate speculators and Zionists negotiating on behalf of the American people. Let’s think for a minute that characters like these are quite prepared to invest in Gaza and build a fancy resort over the bones of perhaps hundreds of thousands of mur*dered innocent men women and children
I live in the richest and most powerful country in modern history. The American working class possesses enormous potential power, yet it also faces growing economic and political pressures. As capital operates increasingly through global institutions, working people will need institutions of our own that are independent of the two major parties and capable of acting across national boundaries. The US working class can play a major role in that but first we must settle accounts with our own rogue regime.
US Secretary of War, Pete Hegseth, was at the Senate Appropriations Committee today pleading for more money to continue the unprovoked and illegal war the Trump menagerie and US Congress are waging against the people of Iran.
I say the “people” of Iran as the US can’t be at war with the government or heads of state as the US rogue regime has mur*ered them. Apparently, the operation that was only supposed to last a day or so is not going as planned.
Hegseth said the cost of the war was $25 billion back in April but has risen $12 billion in two months and is now estimated at a cost of $37.5 billion. Apparently the Iranians are prepared to defend their country against US aggression, even those who oppose the present government.
The Trump regime is asking for close to $70 billion for what it said in June were “operational costs”. At that time it threw a few billion at US farmers and a billion to renovate Penn Station in New York City, but make no bones about it, the US is losing the war it instigated against Iran and is asking for more money to continue it and in some way save face. The US is bringing in more air power and its running low on military hardware and needs to increase production and“delivery of high demand munitions.”
Hegseth says the extra funding is needed to achieve what he calls, “peace through strength.”, in the region. These requests are in addition to the $1.5 trillion the Pentagon wants in the upcoming defense budget. Pouring more money down the drain but more profits for the investors in the defense and fossil fuel industries.
But we are at a point in the game now where the vast majority of the people of the world, including millions of Americans, understand that the main source of violence and instability in the region is the presence of the US and its settler colony, Israel. In addition, Iran’s has shown it has the ability to inflict some pain of its own, primarily against US bases in the Gulf States, regimes acting as US imperialism’s flunkies in the region.
Much of the damage to US military facilities in the region that cost the US taxpayer billions to install and maintain has been hidden from the US public. The many forever wars the US has waged over the past three or four decades killing a few million people and displacing millions more, have been tolerated by the American people because the body count has been relatively low. The sacrifice of these corporate ventures with regard to loss of life has been borne by a small section of American families.
One can only Imagine what we could do with that money here at home. Or even using it to help others in other countries as opposed to using it to destroy their infrastructure, kill their people and bomb them to the stone age.
Hegseth’s statement about peace through strength is the same old rhetoric. Peace doesn’t come from bullying and dominating others, but these are imperialist wars and US. Imperialism, albeit the most powerful military force in the world, is losing its influence on the world stage and is fighting to maintain its position.
Hegseth will likely get his way as the Senate Appropriations Committee is staffed by like minded people. Both parties of capitalism, Democrats and Republicans agree on foreign policy; they are both war parties. So what is actually happening is Hegseth is appealing to his colleagues for money, more accurately, our money. The US working class will foot this bill and desperately needed social services will suffer because of it. The Democrats will whine a bit given the opposition to this war among the public; some 64% are opposed to it from what I have read. But outside of taking to the streets we have no alternative in the political arena.
Hegseth said today that the Americans that died in an Iranian attack on a US military facility in Jordan, in response to 9 days of US bombing, “…should not be forgotten..”. What hypocrisy. These people do not care about the American people or young workers in the military. Hegseth, Trump and the warmongers in the US Congress are responsible for those deaths, Iran is not the aggressor here.
If this appeal for even more money for weapons of mass destruction, was a direct appeal to the millions of people in America whose living standards have been savaged by both Republican and Democratic administrations alike, Hegseth would walk away empty handed.
I listened to that famous speech today by Mario Savio at a protest in Berkeley in 1964. It’s a powerful statement and is as valid today as it was then, even more so.
“There's a time when the operation of the machine becomes so odious, makes you so sick at heart that you can't take part! You can't even passively take part! And you've got to put your bodies upon the gears and upon the wheels, upon the levers, upon all the apparatus -- and you've got to make it stop! And you've got to indicate to the people who run it, to the people who own it -- that unless you're free the machine will be prevented from working at all.” Mario Savio Berkeley 1964
A new State Department report on Cuba’s “campaign of subversion against the United States” is a virtual government blacklist against left-wing Americans and groups. Linked to last week’s Rubio-led summit on “political terrorism,” the report is unusually candid about the government’s targets.
“Many of the most significant upheavals in recent American political history — from the George Floyd riots to the rise of Antifa to the explosion of pro-terrorist activism on American college campuses — can be linked, in some way, shape, or form, to Cuban influence,” the report says.
As for who these supposed American agents of Cuba are, the report is remarkably explicit. It names people like Ben Cohen (of Ben & Jerry’s ice cream fame), Mayors Zohran Mamdani and Karen Bass, media figures like Amy Goodman and Hasan Piker, and organizations like the Democratic Socialists of America and the Amazon Labor Union.
The implication is clear: Secretary of State Marco Rubio thinks there should be a modern-day blacklist of the political left in America. In fact, the report explicitly mentions the “blacklists, McCarthy-era investigations and prosecutions” of the 1950s and their effectiveness at dismembering the Communist Party USA.
The 100-page report, titled “Cuba: The Capital of 21st Century Communism,” was released this morning.
An entire section of the report — numbering over three pages long — is dedicated to the Democratic Socialists of America.
“The Democratic Socialists of America (DSA) serves as a particularly potent illustration of the ideological victory of Cuba’s effort to position itself as the spiritual capital of Third Worldist Radicalism,” the report says. “This represents a significant advance for the Cuban influence operation: Havana no longer needs to rely solely on intelligence penetration or asset cultivation to exert influence over the United States.”
Though the report concedes that “DSA was not shaped by the direct and tangible influence of the Cuban government” and that it has “organic ideological commitments,” it insists that “None of that is to say that the group has no ties to the Cuban regime and its influence network.”
Instead, the report points to the group’s delegations to Cuba as evidence of Cuban influence.
“For more than six decades, the Cuban regime has been the leading sponsor of radical leftism and Third Worldism in the United States,” Secretary of State Marco Rubio said in a post on X/Twitter linking to the report.
Whatever you think of DSA, it is hardly fringe. It claims as members prominent politicians like New York Mayor Zohran Mamdani and has helped to nominate dozens of politicians like him to office in recent years. Senator Bernie Sanders identifies as a Democratic Socialist — having himself popularized the term — as do Reps. Alexandria Ocasio Cortez and Rashida Tlaib, who are card carrying members (as well as Mamdani).
The Cuba report follows last week’s Rubio-led international summit on “political terrorism.” That summit, as I reported, introduced the new term “Far-Left Terrorism” (abbreviated “FLT”), a term it never really defined.
A White House press release summarizing the event said that “far-left extremism will be treated with the same seriousness and ferocity the world has long reserved for jihadist terrorism.”
Speaking at the summit, Rubio vowed that further new terrorist designations for left-wing groups would be coming “soon.”
Jeremy Lewin, the Under Secretary of State for Foreign Assistance, linked last week’s political terrorism summit to today’s Cuba report, saying on X: “For seven decades, the Cuban regime has been behind both the ideological underpinnings of third worldism and subversive organizing structures of the new radical left political terrorists that @SecRubio called out with clarity last week.”
But virtually all the summit could do to substantiate the supposed scourge of political terrorism was to focus on groups that are almost comically dated — like the 70’s era Symbionese Liberation Army or the Weather Underground. The summit was vague about what are the equivalent groups today.
Today’s Cuba report, however, “names names,” in an obvious attempt to stigmatize American citizens who are very much politically active today.
In some cases these are even sitting politicians, from congresswoman Maxine Waters to Los Angeles Mayor Karen Bass.
I read the 100-page report and counted references to at least 43 contemporary American groups and individuals, which the report identifies as follows:
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Antifa: A decentralized group of self-described “Anti-fascist” political activists
Assata’s Daughters: A Chicago-based Black Lives Matter abolitionist offshoot that trains young activists in the radical spirit of Assata Shakur.
Association for Investment in Popular Action Committees (AIPAC):A California-based umbrella nonprofit that funds left-wing media and delegations to Cuba and Venezuela.
Bass, Karen: The current Mayor of Los Angeles and former Congresswoman who was a Venceremos Brigade organizer in the 1970s.
Benjamin, Medea (Susan Benjamin): A co-founder of Code Pink and Global Exchange who previously lived in Cuba and frequently organizes solidarity efforts for the regime.
Black Alliance for Peace: An activist group that maps U.S. military bases and police training facilities as targets for radical agitation.
Black Lives Matter (BLM) (including Global Network Foundation, Grassroots, and at School): A sprawling racial justice network whose leaders and offshoots express solidarity with the Cuban regime and radical figures like Assata Shakur.
Boudin, Chesa: The former District Attorney of San Francisco and son of Weather Underground member Kathy Boudin.
changingFrequencies: A Black Queer Feminist-led abolitionist project aiming to disrupt waht it calls the “Medical Industrial Complex”.
Claudia Jones School: A Washington, D.C.-based organizing collective that conducts popular education and pro-Cuba lobbying.
Code Pink: Women for Peace: A left-wing protest group that describes itself as anti-war and organizes solidarity delegations to Cuba.
Cohen, Ben: The co-founder of Ben & Jerry’s who attended the wedding of Neville Roy Singham and Jodie Evans.
de la Cruz, Claudia: The co-founder of the People’s Forum, IFCO executive director, and 2024 presidential candidate for the Party for Socialism and Liberation.
De Los Santos, Manolo: The co-founder and head of the People’s Forum who the report says maintains deep relationships with Cuban regime elites.
Democratic Socialists of America (DSA): A major socialist political organization that formally advocates for the Cuban regime and organizes official delegations to the island.
Ensler, Eve (V): A prominent playwright who attended the wedding of Neville Roy Singham and Jodie Evans.
Equality for Flatbush: A Brooklyn-based Black Lives Matter abolitionist group fighting gentrification, police, and ICE.
Evans, Jodie: The co-founder of Code Pink who married billionaire Neville Roy Singham and heavily praises anti-American foreign states.
Floyd, George: A man whose 2020 death sparked nationwide uprisings that were celebrated and supported by the Cuban regime.
Garza, Alicia: The co-founder of Black Lives Matter who credited Assata Shakur as a key influence in her organizing work.
Goodman, Amy: The host of Democracy Now! who the report notes attended the wedding of leftist billionaire Neville Roy Singham and Jodie Evans.
Haitian Women for Haitian Refugees: An activist group led by Black women that organizes to defend Black migrants and stop deportations.
Hirsi, Isra: A campus activist and daughter of Ilhan Omar who was suspended from Barnard College for organizing anti-Israel encampments before traveling to Cuba.
IFCO / Pastors for Peace: An ecumenical foundation that organizes aid caravans to leftist regimes and serves as a fiscal sponsor for numerous radical U.S. groups.
Larudee, Paul: A U.S. citizen based in San Francisco who serves as the North American coordinator for the pro-Iranian “Resistance Axis” coalition Al-Tajammu.
Mamdani, Zohran: Mayor of New York
National Lawyers Guild (NLG): An association of radical lawyers that provides legal defense and “legal observers” for various left-wing groups
National Network on Cuba (NNOC): A coalition of over 60 American groups dedicated to lobbying for the Cuban regime and coordinating nationwide direct actions.
Omar, Ilhan: A Democratic Congresswoman and mother of campus activist Isra Hirsi.
Party for Socialism and Liberation: A leftist political party that fielded a 2024 presidential candidate and conducts protests.
People’s Forum, The: An activist hub for anti-ICE and pro-Cuban agitation.
Thousand Currents: A progressive nonprofit that served as the fiscal sponsor for the Black Lives Matter Global Network Foundation.
Villaraigosa, Antonio: A former Mayor of Los Angeles and Speaker of the California Assembly who was a Venceremos Brigade alumnus.
Viva Palestina US: The American branch of an international network that, the report notes, previously provided convoys and funds to Hamas.
Waters, Maxine: A Democratic Congresswoman who, the report notes, once wrote a letter urging Fidel Castro not to extradite fugitive Assata Shakur.
Wilson, Diane: A co-founder of the anti-war protest group Code Pink.
Witness for Peace Solidarity Collective: An organization that runs recurring U.S. solidarity delegations to Cuba.
Guilt by association at its finest. But what exactly are they guilty of?
What the report shows isn’t that any of these people are knowingly taking directions from a foreign power — only that they disagree with the U.S. government on Cuba policy (or at most, agree with Cuba).
Their views can be wrong — aggressively, offensively wrong even — but it’s their goddamn right as Americans to hold them.
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Why is Europe falling behind in investment and growth compared with the US, let alone China and India? In a new report, Labour Squeezed, Investment Stalled – the renowned economist Mariana Mazzucato and a team at the UCL Institute for Innovation and Public Purpose, financed by the European Trade Union Federation (SETU), reckon that the EU’s declining competitiveness is not the result of too much regulation or the lack of cheap credit as mainstream economists and Mario Draghi is his report for the EU Commission argued.
Instead it is due to “falling investment and productivity caused by the hoarding of profits and higher payments to shareholders and CEOs rather than reinvested in production, innovation and good jobs”. The decline is the result of an emergence of a “capitalism of rent” in Europe, where income is increasingly captured not by producing anything, but by owning assets, financial positions and market power, and charging for access to them. Mazzucato concludes that Europe must switch from “an economy based on value extraction to one based on value creation”.
Mazzucato and and the IIPP show that headline profits have stayed healthy even as profitability in production have declined since 2000. They claim that’s because profits have been captured through ‘financialisation’ ie non-financial corporations are increasingly make more money through financial investment rather than in production. In study of over 300 EU corporations, they find that around one in six firms surveyed now draw more than 10 percent of earnings from financial rather than productive activity.
This rise in financial income has also been helped by the significant cut in corporation tax in the EU from an average 35% in 1995 to just 21% in 2023. The extra profit reaped from these tax cuts has not led to increased productive investment but just freed up more cash for shareholders, share buybacks and interest-bearing investments. As a share of net profits, dividends and share buybacks more than doubled, from 27 percent to 68 percent from 2000 to 2024. The entire non-financial corporate sector now saves more than it invests (€2.28 trillion against €2.18 trillion in 2024); hoarding has rocketed.
Mazzucato shows that the average return on invested capital in the surveyed companies fell from 13.4 percent in 2000 to 10.5 percent in 2024, a 22 percent decline; in other words the rate of profit on capital fell, “making each euro sunk into plant or R&D less attractive than its financial alternative”. So productive investment stock has shrunk to the point that investment is reduced to replacing the depreciation of old stock, with none left for new investment. Mazzucato finds that EU net capital formation (ie after depreciation) more than halved, from 3.7 to 1.6 percent of GDP. And 35 percent of firms report no R&D investment at all.
These are important results. In my view, they confirm the Marxist thesis that falling profitability drives a slowdown and even a fall in productive investment. But that is not how Mazzucato reads these results. She claims that the rate of profit has fallen ‘as a result’ of the switch to financial investment and hoarding – thus as a result of ‘financialisation’. But this is back to front. Profits are not the result of investment, as Kalecki and other post-Keynesian economists argue, but investment is the result of profits.
When profitability of capital invested in productive activities falls, then, as has happened in the last 30 years or so, capital hoards its cash or switches to more speculative but more profitable investment in financial assets, in what Marx called ‘fictitious capital’. But as Mazzucato says, value is not created in financial markets; that’s a fiction. “Value is created, now as ever, by human labour, by workers, by the knowledge and skills built up over generations.” And “rentier capitalism does not produce that value. It captures it and reroutes it upward.” But rentier capitalism is not ‘rent’ replacing ‘profits’, but profits being used to invest in fictitious capital. This is an important distinction from the Mazzucato and rents thesis.
Mazzucato argues that it is the ‘misdirection of capital’ that is the decisive reason for the decline in productive investment. But the evidence of her study does not back that conclusion. The key figure is the fall in overall profitability. From 2000 to 2024, she finds that the median gross profit margin of companies surveyed – “the most basic measurement of total revenue minus the cost of producing goods and services” – fell 15 percent, while the median net profit margin during this same period was up slightly, from 4.9 percent in 2000 to 5.5 percent by 2024. “In other words, the profits made available to shareholders have grown, even as the most basic measure of operational profitability has declined.”
Mazzucato finds that financial income as a share of total income at the median company surged from 1.1 percent in 2021 – when interest rates were at near-zero – to 3.7 percent by 2024, after interest rates were hiked. Around 1 in 6 companies now derive more than 10 percent of the median company’s financial assets, as a share of net productive assets. Among the top quarter of the most financialised corporations in the panel, financial assets now exceed the entire net value of their physical productive base (Figure 2).
At the EU level, interest and dividend income received by the non-financial corporate sector has far outpaced the growth of their operating surplus (Figure 3). The divergence is sharpest after 2020: in the four years to 2024 financial income rose twice as fast as operating surplus.
These data apparently justify Mazzucato’s conclusion that Europe’s capitalist corporations gain their income from ‘rent’ rather than ‘productive profit’ and this is why they are failing to invest to raise value for all.
But consider this evidence for a moment: financial income has risen faster than ‘core business profit; companies hold more financial assets (fictitious capital); and the very large companies now have more financial assets than productive assets. But financial income is still only 3.7% of total non-financial corporate income – tiny. The vast majority of corporate income is still in the form of profits from operations, not from investment in fictitious capital. And note in Figure 2, that Europe’s ‘largest companies’ may have had more than half their assets in financial instruments up to 2008, but following the global financial crash of 2008 and ensuing Long Depression, that ratio has fallen back below 50% up to 2024. So this piece of evidence suggests that ‘financialisation’ came to an end for even the largest companies after 2009.
Mazzucato concludes that “a substantial part of what is recorded as corporate profit is more accurately understood as economic rent: income derived from the ownership and control of assets, financial positions and market power rather than from new production.” This is not correct from her own data: income from fictitious capital has risen significantly, but it is not “a substantial part” and indeed only one in six companies get up to 10% of their income from this ‘rent’ from their financial holdings. This is not a ‘capitalism of rent’.
What is true is that corporate profits have risen sharply in recent years through the compression of the share of corporate income going to labour – what Marx called a rising rate of surplus value. Across the EU non-financial sector, compensation per employee grew 87 percent between 2000 and 2024 while non-financial corporate gross profit grew 151 percent. Average wages have lagged behind profit, and the nonfinancial corporate sector’s labour share of income is lower in 2024 (59.2 percent) than it was in 2000 (59.8 percent). And workers have been ‘double squeezed’. The tax wedge on the average single worker reached 35.1 percent in 2025, the highest since 2016. As Mazzucato correctly says at one point, the fall in profitability of productive capital “can be explained by compounding pressures such as increasing global competition and rising input costs”. This fall has been counteracted by squeezing the share of profits going to labour in the EU, as Marx argued in Capital could happen.
The cause of the relative decline in EU investment and productivity is not ‘misdirected capital’, as Mazzucato claims. What Mazzucato does not explain or ignores is why non-financial firms in Europe (and for that matter in the US) have increased investment in fictitious capital over productive capital in since the end of the 20th century – the reason is clear: the rate of profit on productive capital has fallen and with it there has been a slowdown in investment in productive activities and a consequent slowdown in productivity growth. This is particularly the case in the EU compared to the US after 2008.
Mazzucato says that “diverting profit to shareholders is not an accident or a failure of judgement, it is a strategy, and a deliberate one.” Exactly, it is the result of low or falling profitability in the productive sector. Because Mazzucato argues that what is wrong with growth, investment and productivity in the EU is ‘misdirected investment’, not the falling rate of profit in the productive sector (despite her own evidence), her policy proposals follow.
She says that the task now is “to steer capital towards production, innovation, decent work and resilience….. capital has been pointed in the wrong direction, and that direction has been set by policy. What policy has shaped, policy can reshape. The choice is not between competitiveness and social justice, but between a model that rewards extraction and one that builds the collective foundations of long-term prosperity”. Mazzucato argues that “the state, together with business and labour, can ameliorate entrenched inequalities of wealth and power and lay the stable, long term foundations on which sustainable innovation and growth are built.” As with all her policy conclusions, capitalism as a mode of production is to stay; it just needs to be ‘redirected’ towards productive social needs.
I have reviewed the work of Mazzucato in several previous posts. She has been deemed ‘the world’s scariest economist’ by some mainstream financial media. In her book, Mission Economy, Mazzucato sums up her view: “Mission Economy offers a path to rejuvenate the state and thereby mend capitalism, rather than end it.” In my view, that is a mission impossible. Can labour really work with business to reduce inequality and redirect resources to productive sectors without ending the private ownership of the key finance and productive sectors of the European economy and adopting an overall socialist plan? I think not.
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