By Humberto Rodriguez
China hit the pockets of Trumpist billionaires right from the start by using Marx’s Capital
A military attack on all physical headquarters of Nasdaq or Wall Street, or any building in the US, would not have resulted in as much damage as the launch of the DeepSeek-R1 AI model .
The Chinese launch immediately caused the largest loss ever recorded by a single company in the history of the NYSE. The most valued company on the planet, Nvidia (NVDA), lost $600 billion in market value. The financial shockwave immediately caused losses in almost all Big Tech companies besides Nvidia. All the billionaires who sat in the second row at Trump’s inauguration. Together, the loss reached $1 trillion.
But the biggest, most strategic, most financial, most geopolitical loss was to the morale of the Trump administration, which was born as a front man for the big tech billionaires, who are losing hundreds of billions of dollars in capital. How can we get the Trumpist masses and the entire West to believe that it is possible to make America great again, defeat the de-dollarization of the world market, and put Russia, China, and Iran in their place if we cannot even ensure the dominance of American hegemony in the technology sector, being the government that has the most billionaires linked to this sector of the world bourgeois economy?
It was “cowardice”, deliberate on the economic and political planes. China waited for the best moment to publicize its innovation, when the bourgeois high-tech companies had reached their highest market value, when the AI speculation bubble was most inflated and, lo and behold! it ran over Donald Trump and his protégés right at the start, in the second week of the new administration of the planetary imperialist system.
Four reasons caused the collapse of Big Tech capital. 1. The Chinese model has superior performance and is more efficient; 2. It has open source code, i.e., it is free; 3. It uses much less energy than the AI models of Big Tech multinationals; and, 4. The main reason, Deepseek was developed at an infinitely lower cost, something around 3% to 5% of the value of “Open AI” (whose code is closed, i.e., the only thing that is open is the name), the equivalent of less than US$ 6 billion.
The Chinese announcement hit the hearts and vital organs of the pockets of American billionaires, representatives and members of the Trump administration, in the second week of the government. The plan of Project 2025 of the far-right think tank Heritage Foundation was to regain the part of the world lost to the BRICS and reestablish US global hegemony in all areas by resorting to its supremacy in AI. Until then, the plan had worked and the sanctions imposed by the US, which prevented China from accessing Nvidia chips, established under the Biden administration, would keep the Asian giant behind in the technology race for a long time.
But China, just as it did with semiconductors, made a qualitative leap forward, operating using cheaper and more efficient methods. To reverse this, China invested massively in education and technology to have today approximately nine times more engineers than the US and perhaps 15 times more graduates in science and technology.
Another element is the power of economic planning controlled by the Chinese Communist Party, which has certainly exhaustively studied the critique of Marxist political economy and tried to contain the consequences of the market and capitalism in the Chinese economy. In this way, by making constant capital cheaper, China has taken the lead in the AI technological revolution. Despite any criticism of AI, the powerful Chinese counterattack, using a weapon that was developed in line with the sanctions policy, is an anti-imperialist and anti-monopoly counterattack on technology by imperialism.
As the UFC economics professor, Fábio Sobral, rightly pointed out, who earlier this week gave an interview to the Emancipação do Trabalho channel:
“And this blow will spread to other sectors, there is no doubt. It is likely that the Nasdaq stock exchange, which is a high-tech stock exchange, will plummet, because China works with the following rule of Marx: reduce the costs of constant capital. In other words, reduce the price of machinery. And by reducing the price of machinery, the competition between the US and China is already lost to the US, because, technologically, China has overcome this dispute.” ( Fábio Sobral: What is Donald Trump’s Economic Policy? )
In fact, the blow has hit and will continue to hit, in waves and with bursting bubbles of fictitious capital accumulation, various sectors of the imperialist economy on both sides of the Atlantic. By reducing the costs of constant capital for their companies, China’s technocrats are employing measures learned from studying Marx. In Book III of Capital, Marx lists six causes that counteract the law of the tendency of the rate of interest to fall. One of them, the third, is the cheapening of the elements of constant capital.
The law of the tendency of the rate of profit to fall is the most important in modern political economy, according to Marx. The rate of profit is measured by dividing the value of labor power by the value of the means of production. In Marx’s words, the “gradual increase of constant capital in proportion to variable capital necessarily results in a gradual fall in the general rate of profit.” (Marx, 2017, p.250).
The conscious implementation of measures that made it possible to reduce constant capital and the fact that Deepseek is so much cheaper than imperialist models, including in terms of energy consumption, are only possible in a government in which the State controls the capitalists, not when a bunch of billionaires, as is the current case of the Trump government, which has 11 billionaires, control the government, even without the knowledge of the entire US bourgeois class, as we will see more in the coming weeks.
It was no coincidence that Trump took advantage of the fact to teach his cronies a lesson. A slightly less imperial Trump than in the early days, he claimed to be experienced in dealing with the Deepseek problem: “In the last few days, I’ve been reading about Chinese companies. One in particular has come up with a faster and much less expensive method of dealing with AI. That’s good. You don’t have to spend that much money. I’ve done that as a boss.” (https://exame.com/ultimas-noticias/mercados/resposta-de-trump-a-deepseek-relatorio-da-vale-e-primeiro-dia-de-copom-o-que-move-o-mercado/)). Which points to claiming greater powers for himself in relation to other billionaires, such as the almost unstoppable appetites of Elon Musk.
The right wing is desperately trying to make up for the multiple losses, to contain the global rush to download the free Chinese app and, more than that, to undermine the offensive that would save the hegemony of the imperialist world system over the market and, above all, over the technological revolution. That is why they are now taking down and banning DeepSeek, as the Italian government did, spreading the tired fake news and Sinophobic and anti-communist prejudices, such as that the Beijing dictatorship will steal the data of Chinese AI users, that the AI censors and does not answer questions asked against the CCP government, or, even more laughably, trying to explain that the success of the app is due to Chinese entrepreneurship and the private sector.
The Chinese are developing the capitalist mode of production in their own way, what they call the “1,000-year NEP”. But, under the legacy of the 1949 revolution and thanks to the growing hostility of imperialism, they are putting a muzzle on the private accumulation of capital and their billionaires. They know that if they do not contain the costs of constant capital, they will enter a classic crisis of overaccumulation, motivated by the tendency to fall in the rate of profit. So, they kept the crisis in a tendency stage and imposed a financial tsunami on the US now, when Trump was starting his second term, bursting the big tech bubble.
