How To Expropriate An Artificial Intelligence Oligarchy

An industry whose bubble is set to burst is crucial to U.S. national security, you say? 

Edited by Sam Thielman

IN JULY, the Defense Department put its money where its rising contractor class is: in artificial intelligence.

The Pentagon awarded contracts each worth up to $200 million to OpenAI, Google, Anthropic and xAI, expressly to deepen AI integration into warfighting. As Defense Department contracts go, $200 million is chump change—compared to, say, billion-dollar submarine-construction contracts; and as well, FOREVER WARS friend Ed Zitron reports that the burn rate of companies like OpenAI is in the double-digit-billions of dollars. But the contracts still represented a material advance of the Biden-era catechism that the U.S. needs to subsidize the AI industry as a matter of prevailing in a Great Power Competition with China. When the Pentagon announced the contracts, its chief digital and AI officer framed the delivery of public money into private (and private-equity) hands as a matter of "maintain[ing] strategic advantage over our adversaries."  

That's a triumph for the new class of venture capitalists-turned-defense contractors, even if the early Pentagon investment in AI is relatively small. That class, characterized by figures like Palantir death-philosopher Alex Karp and Oracle's Larry "Citizens Will Be On Their Best Behavior" Ellison, has portrayed artificial intelligence as something more ennobling than an economic concern: a national security imperative, if not a civilizational enterprise. "If the U.S. were to lose the AI race," PayPal Mafioso-turned-White House special AI adviser David Sacks said in June, "it would alter the balance of power in the world in a very unfavorable way." It's been as self-serving as, in the eyes of a credulous media and with the aid of a purchased Congress, it has been successful.

Only now the bubble looks set to burst. And while the AI industry, cognizant of the deep anger over the Great Recession bank bailouts, is publicly adamant that it doesn't seek bailouts, leading figures within it are clearly softening the terrain for their financial falls down to earth. Earlier this month, OpenAI's chief financial officer spoke of a government "backstop—the guarantee, that allows the financing to happen" for its chip and other AI infrastructure purchases at scale. Sacks—who swears he is absolutely not looking for a bailout, no sir—posted this week that U.S. economic growth is so caught up in AI that reversing the overwhelming capital influx into the industry "would risk recession." [Just a quick interjection from me: It’s not necessarily true that Anthropic and Microsoft are as vital to the global economy as, say, credit-default swaps full of bad mortgages were in 2008, but these guys are trying to make it true. As a longtime business reporter, I would like to state categorically that there is no situation in which you want to pour cash into a company that seems likely to become patient zero in a cross-market contagion. You want to take the money out. You can’t set your house on fire to keep it from burning.—Sam.] 

The continued "backstopping" of public money into AI seems to be at work in this week's White House announcement of "the Genesis Mission," a goofy name for providing AI companies with public datasets to train their models on. 

When the bubble bursts and the bailout packages start wending their way through Congress, you can be certain that the oligarchs who seek to be made whole with your money will rely on the "national security" arguments they've been making. You shouldn't think about it in terms of your tax dollars being redistributed to the wealthiest capitalists in California and Texas. You should be grateful you paid Sam Altman and Larry Ellison and Elon Musk and the rest of them to recoup their investment in technologies that will destroy your job or career. That's your contribution to ensuring that the Pacific Ocean isn't a Chinese lake and so forth. 

They've put a whole lot of money into that perception, as Jacob Silverman details in his recent book Gilded Rage. And they're nowhere near finished buying legislators, as different factions of the AI industry are in a spending race for the 2026 midterm elections. Whatever else this political financing is, it's a hedge for when the bubble bursts. 

But their propaganda can be a double-edged sword. Or, if you will, a guillotine. 

IF ARTIFICIAL INTELLIGENCE, and the data (and water) infrastructure necessary for it, are indeed imperatives for U.S. national security, then the enterprise is too important to be kept in the hands of the 0.00001 Percent. (Larry Ellison is like the third richest person alive.) 

The cadre of tech billionaires and investors who make up the AI sector in particular comprise a reactionary oligarchy. To have them control what they themselves portray as a strategic resource—something Sam Altman has compared to the development of the atomic bomb—is to render quaint what passes for democracy in the United States. ("Some A.I. proponents also believe that the industry should not accumulate too much power, fearing that society will become beholden to the companies’ business interests," reports the New York Times in a sympathetic story about the industry's political spending.) The only commensurate power is that of the state—the same state that the tech oligarchs are seeking to make dependent on AI. 

Enter the Defense Production Act (DPA) of 1950. 

It's a messy law. Passed in the crisis atmosphere of the Korean War, the DPA is vague and its powers have expanded over the years. To summarize a very complicated set of authorities, it gives the president substantial powers to commandeer commodities, services and infrastructure in the civilian economy for the purpose of national security. The Defense Department (and Energy Department) can become priority customers of a given resource should the president decide that there isn't enough of that resource available for national-security needs. There are provisions to punish recalcitrant companies. As it happens, it needs congressional reauthorization this year.

While long stretches of time have passed without invocation of the DPA, there has been recent, predictable drift. The Clinton administration used the DPA to prop up the California energy supplier PG&E during the state's 2001 energy crisis. The Obama administration used it to subsidize biofuel production and acquisition in a failed attempt to build a green Navy. The Trump administration used it at the dawn of COVID-19 to create a federal stockpile of PPE, ventilators and other medical equivalent, which ended up creating shortages in the most harshly afflicted states. The latitude it gives the president to manage the economy in the name of "national security" once led Sen. Phil Gramm to call the DPA "the most powerful and potentially dangerous American law." 

The DPA isn't an absolute authority. In a 1952 case known as Youngstown Steel, the Supreme Court told Harry Truman he couldn't seize the domestic steel industry, then beset by inconvenient striking, to compel steel production. And the following year, Congress declined to re-authorize a tantalizing provision, Title II, that let the president "requisition materials and property." But even the constraining language in the DPA has workarounds, according to this law-review article: "The President can surmount the limiting provision so long as he or she deems a resource to be 'scarce,' 'critical,' or 'essential,' requiring only a unilateral executive determination in the form of a Presidential Order or memorandum to succeed. Once the designation occurs, the executive can set the priority and allocations provision into motion and facilitate federal disruption of the civilian market."

You see where I'm going with this. When the AI bubble bursts and the companies seek their bailout, the U.S. government will have enormous leverage over the industry to set contract rates that are just pennies shy of confiscatory.The companies can themselves come under government receivership. With the stroke of a pen, the Pentagon's new and obscure Office of Strategic Capital can become one of the most important economic positions in the country. We don't have to believe their propaganda to weaponize it against them. AI is just too important to national security to permit industry insolvency, just like Altman and Ellison and Karp said. The venture capitalist sells us the rope to hang him with. 

Maybe you can't pull off outright nationalization under the DPA. (Although it would help if a clever congressional staffer slips a return of the original Title II back into the DPA reauthorization.) But who knows how close to nationalization creative lawyering can push? The courts, throughout the War on Terror, proved themselves reluctant to intervene in cases invoking national security. We can expect the tech oligarchs to fight both legally and politically to keep what they misguidedly think of as "their" property—property that, at bottom, relies upon data that you generated. By taking control of their infrastructure, we force them to fight on our terms: an uphill struggle to reverse legal and material facts on the ground created by the DPA and unfolding through the concerted advance of a military that has operational control over the soon-to-be-underfinanced data centers and so forth. Perhaps the threat of court-packing will convince the Supreme Court that the better part of valor is to let Youngstown Steel be as disposable a precedent as, say, Roe v. Wade was. Perhaps it will take actual court-packing to do that, so let's make the permissibility of legal action against the oligarchy a litmus test for appointments.

Obviously with the balance of political forces the way they are, there is little political support for my proposal at the moment. But you could have said the same thing about a rent freeze in New York two years ago. Frame DPA exploitation as a choice between expropriation or bailout—frame it as a matter of national security—and it's a mechanism to organize around, and build power toward. 

I don't have a full programmatic agenda for the DPA here. The purpose of this newsletter edition is to show that the DPA is a rug-pull available under the feet of an oligarchy that is unambiguously anti-democratic. The force of the pull is nothing less than the contentions made by that oligarchy of how thoroughly the U.S. needs artificial intelligence, and you will hear a whole lot about that when the oligarchy seeks its bailout.

Now that socialists are starting to wield power again, it's time to think creatively and ambitiously about how to use the sprawling growth of presidential authority against the oligarchy. The preservation and advance of democracy—which is the only nonviolent political means for regular people to defend their freedom and expand their prosperity against the predatory power of a small and overmighty capitalist class—is how socialists should reconceptionalize "national security." 

We need socialist defense intellectuals—I see you, Van—to come up with white-paper blueprints for a near-confiscatory applications of the Defense Production Act. Maybe near-confiscation of the AI industry can spearhead defense conversion. At the very least, it can keep AI sprawl from destroying the rungs on the ladder from the working class to the middle. But we can think even bigger than that. Maybe the DPA can force defense conversion in the surveillance/AI industry—and from there, who knows? Let's make Phil Gramm's nightmare come true. 

And with that, Happy Thanksgiving. Talk about the Defense Production Act's potential to take the power back from the oligarchs around the table. 

THIS WEEK, by executive order, Trump began a process intended to lead to the designation of the Muslim Brotherhood as a foreign terrorist organization. If successful, it will be a mechanism to persecute and criminalize Islam in this country far more than previously experienced, thanks in part to the amorphous nature of the Brotherhood. Sahar Aziz explained this in 2019.

THIS WEEKEND, al-Jazeera's show The Listening Post will air a 20-minute piece on Trump's assault on Venezuela that will include some of my analysis. Since I don't know what will make the final cut, let me say here that the contortions undertaken to link Maduro to the cartels is the 2025 equivalent of saying Saddam Hussein was in league with al-Qaeda. Anyway, I gave some spicy quotes, so check that out—I'll surely post it in a forthcoming edition. 

FINALLY, with the holiday shopping season upon us, let me put in a plug for a favorite recent comic book series of mine, Aubrey Sitterson and Jed Dougherty's FREE PLANET. It's a sci-fi story about what comes after a revolution wins political independence from an empire that seeks to reestablish economic domination and the factionalizing pressures produced. It's great, and the kind of story that takes full advantage of the comics medium—wait till you see Jed's page layouts. The first collected volume of FREE PLANET is available now. If I say so myself, its themes pair nicely with IRON MAN VOL. 2: THE INSURGENT IRON MAN, which is currently available for preorder.