JPMorgan's $1.5 Trillion Plan and the Financial-Industrial State

The Architecture of American Capitalism

The United States has quietly built what I call the Financial-Industrial State: the government defines the mission, banks and funds package it, and the public absorbs the volatility.

JPMorgan Chase's new $1.5 trillion Security and Resiliency Initiative is the latest proof of this system in action. Announced as a ten-year commitment to finance strategic industries—semiconductors, defense, energy, and biomanufacturing—it was framed as private capital rising to meet public need. In reality, it marks the culmination of a transformation that began in 2008:

America's shift from a market-based economy to an intermediated one, where public money underwrites private profit and financial institutions serve as the administrative arm of state policy.

Only about $10 billion of the plan represents JPMorgan's own equity or venture exposure. The remaining $1.49 trillion is a facilitation envelope—including lending, underwriting, and client deployment—arranged through a dense web of public scaffolding: Department of Energy loan guarantees, transferable tax credits under the Inflation Reduction Act, state-level subsidies, and long-term offtake agreements with government agencies or regulated utilities. The system is efficient, legal, and self-reinforcing—and JPMorgan is its most transparent expression.

From Bailout to Blueprint

The Financial-Industrial State was born not in an act of planning, but in a panic. The 2008 financial crisis demonstrated that the U.S. government would socialize risk to protect the financial system—and the financial system never forgot it. The $700 billion Troubled Asset Relief Program (TARP), coupled with trillions in Federal Reserve emergency lending, not only rescued banks but also established a precedent.

The taxpayer had become the ultimate counterparty of last resort.

That principle—socialize losses, privatize gains—has since evolved from an emergency doctrine to a policy baseline. Each major economic intervention has expanded it. Between 2008 and 2010, bank rescues and quantitative easing normalized public absorption of financial risk. The 2020 pandemic stimulus extended the model to nearly every sector of the economy. From 2022 to 2024, the CHIPS Act, Inflation Reduction Act, and Infrastructure Act institutionalized it as industrial policy.

Unlike the great public works of the 20th century, where the state built assets it owned—the TVA's power plants, the Hoover Dam, the interstate highways—today's interventions use tax credits, guarantees, and credit facilities to make private ownership viable, while public exposure remains implicit. The state no longer builds; it backstops.

How America Once Built Differently

To understand the radical nature of this shift, it's worth recalling how America once financed national transformation. When Franklin D. Roosevelt took office in 1933, the economy was in a state of collapse. The government's answer was not to subsidize private intermediaries—it was to create public capital formation directly.

The New Deal's architecture combined emergency relief with structural investment. The Public Works Administration (PWA) funded major infrastructure projects—such as bridges, schools, hospitals, and water systems—through direct federal spending. Between 1933 and 1939, it financed over 34,000 projects. The Civilian Conservation Corps (CCC) employed millions of unemployed young men on environmental and infrastructure projects, ranging from reforestation to park development. The Tennessee Valley Authority (TVA) created a federally owned corporation to build dams, power plants, and transmission lines across the rural South, electrifying seven states and permanently altering the region's economy. The Federal Housing Administration (FHA) provided mortgage insurance that standardized housing finance and built the foundation for the postwar middle class.

These were not "guarantees" for private investors. They were direct investments that produced public assets—owned by the nation, operated in the public interest, and yielding durable returns in productivity, employment, and social mobility. Private enterprise participated, but within a framework where public risk created public benefit.

But perhaps the most democratic model of national finance came during World War II. Between 1941 and 1945, the United States funded the Arsenal of Democracy through war bonds—securities purchased by ordinary citizens through payroll deductions, school savings programs, and direct investment. This wasn't elite capital formation; it was mass participation. Factory workers, farmers, and schoolchildren became creditors to their own government, financing the industrial transformation that would win the war and define postwar prosperity. When victory came, millions of Americans didn't just celebrate—they collected. They owned actual claims on the productive capacity their investment had created. The model was transparent, participatory, and aligned risk with reward at every level of society.

A generation later, President Dwight Eisenhower's Federal-Aid Highway Act of 1956 launched the Interstate Highway System—a project that reshaped American geography and industry. But the financing structure was as revolutionary as the engineering. Congress established the Highway Trust Fund, financed by a dedicated federal fuel tax (initially 3 cents per gallon). This created a self-contained, pay-as-you-go system: motorists effectively financed the very infrastructure they used, through a stable and transparent public mechanism.

The federal government covered 90 percent of construction costs, with states paying the remainder. The federal share was not a loan or guarantee—it was a grant, backed by earmarked revenue. Private contractors built the roads, but the highways themselves were public assets, owned by the states and regulated in the national interest. The Interstate System demonstrates what might be called productive intermediation: private firms executed the work, but capital formation remained public, returns were widely distributed, and the asset base strengthened the entire economy.

Compare that with today's model: the government now subsidizes private capital formation, rather than the other way around. Risk has been flipped upside down.

The New Operating System of Capital

Since 2008, America's financial architecture has undergone a quiet inversion. The state no longer builds directly; it underwrites private balance sheets. Industrial policy is no longer expressed through public works; it is executed through public insurance.

This is the logic of the Financial-Industrial State: the government defines the mission—decarbonization, reshoring, national security—while banks and funds package it into investable vehicles, and taxpayers absorb the volatility through guarantees, credits, and subsidies.

It's an elegant mechanism for channeling global capital into strategic sectors. However, it also entrenches a form of financial dependency—where innovation, ownership, and even national capacity are contingent upon a handful of intermediaries whose primary loyalty is to fee generation, rather than nation-building.

The Innovation Paradox

The cost of this architecture is the Innovation Paradox: the more critical the infrastructure to national security, the less likely private capital is to finance its development. Everyone agrees we need next-generation nuclear, carbon capture, and intelligent grids—yet these are precisely the projects stuck in capital markets' dead zones. By making capital hyper-sensitive to risk, the system has starved the early stage of innovation—the messy, uncertain phase where new industries actually begin. The first 20 percent of the project risk.

That tranche includes site control, engineering validation, permitting, pilot data, and initial offtakes. It's where the United States once deployed public engineers and public capital. Today, it's a void no one wants to touch. Venture funds find it too slow. Infrastructure funds find it too uncertain. Government loan programs demand near-commercial viability before engaging. As a result, the technologies most critical to national security and climate resilience—such as fusion, grid modernization, advanced manufacturing, and intelligent autonomous infrastructure—stall in what's now called the "valley of death."

The Financial-Industrial State excels at scaling what has already proven effective; it is structurally incapable of creating what's new and innovative.

Extraction and Concentration

The consolidation of this model has also reshaped ownership. The top five U.S. banks now hold more than half of all banking assets. Private equity has tripled its assets under management since 2008. Institutional investors control most of the equity markets.

This concentration produces an economy where innovation is managed through financial intermediation rather than direct participation. Public programs deliver risk insulation, capital markets extract fees, and ordinary citizens—through their taxes and energy bills—underwrite systems they will never own. It's neither free-market capitalism nor socialism. It's extraction capitalism: a hybrid system that privatizes reward, socializes loss, and erodes the link between citizenship and ownership.

Re-Architecting American Capitalism

We're not the type to long for solutions of yesteryear. Because the New Deal and the Highway Act were effective in the past, it doesn't mean they are effective in the present.

We believe the future of American public infrastructure should be built on the principles of transparency, reciprocity, and shared ownership.

Several structural reforms could redirect capital flows while maintaining market discipline.

In industries where national interest and private enterprise overlap—such as semiconductors, clean energy, and intelligent infrastructure—federally chartered Public Benefit Corporations could strike a balance between profit and purpose. These vehicles would enable both institutional and retail investors to participate while incorporating fiduciary duties that align with measurable public outcomes. Unlike traditional corporations, PBCs are legally required to balance stakeholder interests, making them natural vehicles for infrastructure that serves both commercial and national purposes.

Expanding IRA and 401(k) eligibility to include qualified infrastructure and strategic-sector funds would reconnect household savings to the assets they help underwrite, turning passive savers into active investors in national prosperity. This approach could leverage existing financial infrastructure, regulatory frameworks, and investor familiarity while opening new channels for citizen ownership of strategic assets.

The market must develop vehicles to fund the first 20 percent of risk—engineering, validation, permitting, and initial deployment—where returns are highest but conventional capital fears to tread. Professionalizing this layer would convert uncertainty into an investable asset class, reducing dependence on federal guarantees. These aren't government funds, but private vehicles with a specific mandate. By specializing in project starts, they could develop expertise in navigating regulatory processes, validating new technologies, and structuring handoffs to traditional infrastructure capital.

The war bond model offers a template worth reimagining for modern infrastructure. Rather than relying solely on institutional intermediaries, new instruments could enable direct citizen participation in strategic investments—modern "innovation bonds" accessible through payroll deductions and retirement accounts, thereby creating millions of small stakeholders in America's technological future.

When federal tax credits or guarantees underpin private projects, citizens should receive traceable participation through dividends, reinvestment rights, or national funds that accumulate shared equity. Public money should create public balance-sheet value. Our goal is to catalyze experimentation with financial structures that better serve both private returns and public benefit.

Reclaiming the Future of Intelligent Infrastructure

JPMorgan's $1.5 trillion initiative will almost certainly succeed in building projects. But it also signals a deeper truth: the Financial-Industrial State has matured to the point where innovation itself is intermediated through financial design. The very infrastructure of the 21st century—AI-driven logistics, autonomous energy grids, smart industrial systems—is being built atop an architecture that no longer distinguishes between public purpose and private rent.

If taxpayers underwrite the foundation, they should share in the ownership of the superstructure. Otherwise, the Machine Economy—the fusion of AI, automation, and physical industry—will belong not to citizens but to the institutions whose balance sheets are publicly insured.

America has done this differently before. The New Deal built assets that belonged to the nation. The Interstate Highway System built networks that belonged to everyone. Today's challenge is to reimagine that civic contract for a digital-industrial age—to rebuild capitalism so that public risk once again produces public wealth.

If we could finance victory in 1945, we can finance innovation in 2025. But only if we stop pretending the Financial-Industrial State doesn't exist—and start designing it for the citizens who already fund it. The next time a bank announces a trillion-dollar "initiative," ask the simple question: Who owns it? If the answer isn't "the people who are underwriting it," then we're not building capitalism. We're building something else entirely—and we should at least be honest about what it is.