The Market Was Never Neutral

By: Nishan Vense

In 1994, the last time the US hosted the World Cup, a shipping container moving from Shanghai to Los Angeles traveled freely through a Strait of Hormuz that nobody thought about. The price of that indifference was zero. It was simply background.

This summer, that background closed.

The Strait of Hormuz — 21 miles wide at its narrowest — carries roughly 20% of the world’s oil supply. When the Iran war effectively shut it down, nearly 200 tankers rerouted around the Cape of Good Hope, adding up to 20 days of transit. Ocean freight rates spiked 50% for US importers. Brent crude jumped 15% in days. The IEA called it the largest supply disruption in the history of the global oil market.

Most coverage framed this as a crisis. It’s actually something more uncomfortable: a revelation.

What’s Actually Happening

Two things happened this month that are worth holding together.

First, the Strait closure. When a single chokepoint can trigger global inflation and force the OECD to revise GDP forecasts downward, it means the “free” in free trade was never free in any meaningful sense. It was subsidized — by US naval presence, by decades of political arrangements that kept shipping lanes open, by a specific configuration of global power that everyone benefited from and almost nobody acknowledged.

Second: the Quad — the US, Japan, Australia, and India — formalized a Critical Minerals Initiative in May, mobilizing $20 billion in public and private capital to build rare earth supply chains outside of Chinese control. China currently processes 87% of the world’s rare earth materials. 68% of global silicon. 58% of lithium. These aren’t niche inputs — they’re the foundational materials for semiconductors, electric vehicles, and defense systems.

Both stories are being reported separately. They’re the same story.

The Fiction

Karl Polanyi argued in 1944 that the market economy isn’t natural. It’s constructed — and it only works because political arrangements make it work. His term was “embedded”: economic life is always embedded in social and political relationships, not separate from them. The appearance of neutrality is itself a political achievement, not a baseline condition.

The post-Cold War trading order was built on a specific fiction: that markets, left alone, would self-organize toward efficiency. That supply chains would route toward the best price. That states could step back and the system would run itself.

The fiction was useful. It lowered transaction costs, created a shared language for international institutions, and gave everyone an excuse not to ask who was actually maintaining the conditions that made the whole thing work.

Nobody asked who was guaranteeing the sea lanes. Nobody asked what happens when one country controls 87% of the processing capacity for materials every other economy depends on. The assumptions were so stable they started to feel like nature.

They weren’t nature. They were policy.

What the Minerals Race Admits

When four governments commit $20 billion to deliberately build supply chains that prioritize political alignment over price efficiency, they’re not acting as market participants. They’re admitting something: that the market cannot solve this, because the problem is political, not economic.

This is being called the new mercantilism — the critics aren’t entirely wrong. There’s a real risk that “strategic necessity” becomes a blanket justification for protectionism, that every industry claims it’s too important to subject to competition, that the logic of security swallows the logic of exchange entirely.

But the critique misses what’s actually being acknowledged. When China restricts rare earth exports to extract foreign policy concessions — which it has already done — what looks like a market relationship is functioning as a political weapon. Comparative advantage, in its textbook form, assumes neither party can hold the other hostage. That assumption doesn’t hold when one actor controls the processing of everything the other needs to build its military.

Recognizing this isn’t abandoning markets. It’s reading the terms of trade carefully enough to notice when the terms have changed.

The Question

The Strait of Hormuz and the critical minerals race are not exceptions to the liberal trading order. They’re what the liberal trading order looked like underneath — once the political conditions that sustained it started to fray.

States are now intervening more in markets. That part is settled. The open question is whether they’re being honest about why, and whether the new arrangements they’re building will be more durable than the fiction they’re replacing.

The market was never neutral. We just stopped paying for the people who kept it that way.

This article first appeared in The Interregnum at nishanv.substack.com.