Identity Capital and the Return of Geopolitics: Understanding Statecraft in an Age of Fragmentation

Summary

In the ongoing strategic rivalry between the United States and China, much attention has been paid to tariffs, export restrictions, industrial policies, and the reconfiguration of global supply chains. But these advances cannot be explained solely in terms of material or economic factors. These phenomena arise not only from the struggle over material resources but also reflect more profound tensions over issues of identity and sovereignty. The notion of “identity capital”, as identified in my book Shaping Nations and Markets: Identity Capital, Trade, and the Populist Rage, helps us understand the importance of narratives of nationhood in shaping economic and geopolitical dynamics.

In the case of the United States, identity capital is one of the mechanisms behind Donald Trump’s commercial protectionism. As I explain in my book, at least since the early 2000s there were White-dominant constituencies and economic sectors demanding some sort of protection against globalization. Yet, neither Republicans nor Democrats listened to them. Once Trump emerged as a contender in the Republican primaries about a decade ago, those constituencies rallied around him and his MAGA project as it addressed not only economic demands, but also symbolic ones, namely the return of a White-centric, Christian-based narrative of national identity to replace the movement towards a multicultural and eventually a post-racial America that had started in the 1960s with the Civil Rights Movement.

MAGA implies a return to the pre-Civil Rights Age as depicted in the movies about the 1950s that portray a thriving White, Christian middle class dependent on relatively high-paid industrial jobs. As Whites recovered their identity capital under Trump, industrial policy is back again with the goal of empowering them, notwithstanding the fact that in a world structured around global value chains the reindustrialization Trump has promised looks more like a rhetorical artifact rather than a politically feasible goal. However, at least it helps to motivate MAGA’s grassroots.

In China, I would apply the logic of identity capital to the fact that Beijing wants reunification with Taipei, which also has a Han majority. Self sufficiency seems to be the goal that will allow in the near future the reunification de facto and de jure of the Chinese nation as suggested by the narrative of national identity put forward by the Chinese Communist Party. The full potential of Han's and, hence, China's identity capital will not be achieved unless reunification occurs. The danger for Asia, however, is if after reunification with Taiwan the Chinese leadership decides to mobilize the identity capital of the diaspora in South-East Asia. We could therefore witness the return to a Japanese-style of imperialism, a kind of sphere of prosperity grounded on the ethnic empowerment that lies behind the concept of identity capital. This is a movement that Russia has already taken with the war against Ukraine, which has been justified – among other factors – on the grounds of protecting Russian speakers from Kiev’s supposed genocidal actions.

These developments also suggest that identity capital is becoming increasingly central to the way the United States constructs its external economic strategy. The battle Trump and his MAGA allies face is twofold. Internally, the goal is to crush the identity capital of Non-White and Non-Christian groups, thus paving a return to a White-Anglo-Saxon-Protestant (WASP) America. Externally, the target is the construction of an international order based on spheres of influence that are less based on military balance of power than on civilizational affinities.

However, rather than a multipolar world, this new order would have the United States as a primus inter pares – a first among equals – rooted on both symbolic and material considerations: Whiteness and the maintenance of economic, particularly financial, centrality in the world. The civilizational and identity-based sphere of influence led by Washington comprises both Western Europe and Latin America. No wonder why White/Christian-centric movements in the Western hemisphere, like Bolsonarism in Brazil and leaders such as Milei, Kast and Bukele, have received support from Washington. In this vein, I would expect the incorporation of the Latino community in the US – at least those who classify themselves a White Hispanics who are Conservative Christians – into the MAGA movement under the leadership of the Secretary of State Marco Rubio. Alongside vice president J. D. Vance, he is Trump’s MAGA apparent heir.

Questions surrounding war, sanctions and energy realignments further illustrate how identity-based politics may be reshaping contemporary societies. Although it is hard to make predictions amidst such a changing international environment, I would hypothesize that the more scarcity a society faces due to energy realignments, the more likely it is to generate disputes around identity capital with gains for majorities against minorities.

That is the case of Europe. Far-right populism tends to flourish more and more as energy shortages increase. East and South-East Asian nations may follow such a trend as well – just consider the current stage of Japanese politics. Likewise, ethnic conflict shall rise again in Sub-Saharan African states that rely on imports of energy and food.

Conversely, the more sanctions a sovereign state faces, the more likely it is to be successful in fostering a narrative of national identity that favours unity between the majority and the minority. In the context of the trade war, this is what happened in Canada and Mexico after Trump’s tariffs in 2025. Iran’s case fits such a narrative as well, where the theocratic regime gained an afterlife due to US-Israeli military actions.

Brazil is an exception given the fact that there has been a dispute around the meaning of the nation well before Trump’s rise due to the religious transition from a Catholic majority to a would-be Evangelical-dominated country. Nevertheless, Washington’s recent actions to favour the far-right candidate Flávio Bolsonaro may lead centrists to rally around Lula, who may get a fourth term in office this year, but without a landslide.

The fragmentation of global supply chains and the rise of “friend-shoring” are likewise often presented as questions of economic efficiency. Yet identity dynamics are also at work. In this case, the dynamic of identity capital is less internal than external. For instance, in the case of the United States, the Biden administration partially engaged in friend-shoring and near-shoring as a kind of response to MAGA-leaning constituencies. That is, if reshoring would be impractical due to high costs, the second-best choice to address protectionist demands consists of removing investment from political foes such as China.

It is worth noting that the perception about who is a political foe or not does not arise just from economic and military competition. A world in which China and other non-Western rising powers are at the top is also a world in which certain symbolic markers, such as the persistent conception of White supremacy, would no longer hold water. As well before I published the book other authors often mentioned, there is a kind of White anxiety manifested in the fear of living in a world where the West is no longer at the centre. The concept of identity capital, however, captures the power dynamics that lie behind those fears and their consequences to markets and the global order, not just to nations.

Such developments also help explain why populism and securitisation have become defining features of contemporary geopolitics. Disputes around identity capital may be triggered due to transformations in the field of society, such as the rise of Evangelicals in Latin America or migration to Western Europe. The mobilization of identity capital itself emerges as part of securitization processes as majorities – such as Whites and Christians in the West, Hebrews in Israel under Netanyahu’s rule, or Hindu Nationalists in India – reclaim centrality in the nation to defend it from the supposed danger minorities would pose to societal cohesion and, hence, the very existence of a given country.

Consequently, the tectonic shifts in geopolitics are largely grounded by dynamics contingent upon the distribution and redistribution of identity capital at the domestic level. As defined in the book, populism arises when identity capital is instrumentalized once disputed narratives of national identity are projected onto party politics. Therefore, the current populist rage is at the roots of the return of geopolitics and the securitisation of issue areas ranging from trade to climate change. People fear not only the redistributive effects of wealth and material welfare between and within nations. The status and symbolic power identity capital represents, as the relative value of belonging to the nation, also generate anxieties that happen to be instrumentalized by leaders of all feathers.

For scholars seeking to understand the intersection of statecraft, nationalism and global economic fragmentation, new analytical tools will be necessary. The responsible use of AI tools such as large language models (LLMs) has the potential to bring down the boundaries that limit interactions between fields of knowledge that are contiguous, as is the case of subareas of Political Science such as International Relations, Comparative Government, and Political Economy.

For instance, LLMs shall allow scholars to scrutinize whether public opinion manifested in social networks is related to certain patterns of consumption and production and to what extent those narratives shape leaders' views and vice versa. I would also suggest that scholars resort to traditional methodologies, like comparative historical analysis, which should comprise not only comparisons between most similar cases, such as advanced industrial democracies, but also cross-regional comparisons like the ones I did in Shaping Nations and Markets. In this vein, AI offers opportunities that were unforeseeable until a few years ago, such as the translation of texts and data gathering for comparative purposes.

Last but not least, more than analytical tools, we do need more intellectual work to refine concepts. For instance, all debates on weaponized interdependence and statecraft are incomplete in my view unless we problematize the sources of power that drive outcomes in reshaping economic and political linkages within and between sovereign states and, hence, the future of multilateralism and the overall global order.

Insofar as identity creates power asymmetries, it can no longer remain ignored by the so-called interest-based approaches that prevailed in different versions, whether realist- or institutionalist-leaning. Identity capital serves such a purpose as it contributes to tear down the wall between material- and ideational-based accounts of power.

Disclaimer: Views expressed are of the author(s) and do not necessarily reflect the views of The Statecraft Institute.