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Left-leaning thinkers have been inveighing against the problems of globalized capitalism for decades. From Stiglitz’ Globalization and Its Discontents to Klein’s This Changes Everything, arguments have been marshalled against the relentless profit-seeking globalization of manufacturing and supply chain on humanitarian, environmental, and economic justice grounds. It has been to no avail: the engine of globalized capitalism keeps churning along for better or for worse.

But there’s increasingly an argument to be made that a just-in-time lowest-cost supply system may not just be bad for the climate or for domestic employment. It may also in many cases be bad for business. The semiconductor crisis tells an exemplary tale. As information technology becomes essential to daily life in developed countries, semiconductors are essential for making the world go round. Phones, computers, gaming consoles and automobiles all require increasingly sophisticated semiconductors. And most of them are made by a single company: Taiwan Semiconductor. Indeed, Taiwan Semiconductor is so dominant in the field that few competitors can match them, and they’re falling farther behind.

Analysts say it will be difficult for other manufacturers to catch up in an industry that requires hefty capital investments. And TSMC can’t make enough chips to satisfy everyone—a fact that has become even clearer amid a global shortage, adding to the chaos of supply bottlenecks, higher prices for consumers and furloughed workers, especially in the auto industry.

The situation is similar in some ways to the world’s past reliance on Middle Eastern oil, with any instability on the island threatening to echo across industries. Companies in Taiwan, including smaller makers, generated about 65% of global revenues for outsourced chip manufacturing during the first quarter of this year, according to Taiwan-based semiconductor research firm TrendForce. TSMC generated 56% of the global revenues.

Being dependent on Taiwanese chips “poses a threat to the global economy,” research firm Capital Economics recently wrote.

The semiconductor shortage is harming vehicle production lines. It’s why the next generation gaming consoles that were supposed to be available last Christmas are still in vanishingly short supply. It is starting to impact smartphones and personal computers as well.

There are many correlated aspects to this problem. It’s partly a matter of national security: what does the global economy do when it relies so heavily on a single actor in a location of geopolitical instability? It’s partly a problem of monopoly: is the market truly free or stable if so many essential products depend on the fate of a single company? How can there be genuine competition if the cost of entry makes establishing new competition prohibitive? It’s partly a matter of the pandemic: Taiwan Semiconductor and other manufacturers have been struggling to meet production targets due to reduced capacity from COVID restrictions.

We have seen global supply chain failures hurt consumers frequently, especially when domestic production of essential goods are eliminated in favor of easily disrupted or costly global trade. Haiti, for instance, has been particularly victimized by the destruction of its domestic food production as the U.S. subsidized its own rice exports. The blocking of the Suez Canal by the Ever Green earlier this year was in part the result of larger and larger ships being forced through waterways that were not built to sustain them.

But the scale of the semiconductor issue raises the question of whether unregulated global capitalism is really the best way to run essential services in a world economy. Consider these staggering numbers from the same Wall Street Journal story:

Semiconductors have become so complex and capital-intensive that once a producer falls behind, it’s hard to catch up. Companies can spend billions of dollars and years trying, only to see the technological horizon recede further.

A single semiconductor factory can cost as much as $20 billion. One key manufacturing tool for advanced chip-making that imprints intricate circuit patterns on silicon costs upward of $100 million, requiring multiple planes to deliver.

TSMC’s own expansion plans call for spending $100 billion over the next three years. That’s nearly a quarter of the entire industry’s capital spending, according to semiconductor research firm VLSI Research.

Other countries would need to spend at least $30 billion a year for a minimum of five years “to have any reasonable chance of success” in catching up with TSMC and Samsung, wrote IC Insights, a research firm, in a recent report.

This would seem to be a matter of enormous national security implications, especially if an increasingly totalitarian China were to exert more forceful control of the Taiwanese economy. The capital investment to challenge the dominance of Taiwan Semiconductor is unreasonable to ask of players in the private sector for uncertain return. And it would be irresponsible to simply let things take their course and hope for the best.

The world has a mutually invested interest in distributing production of goods like semiconductors–and it’s not clear that the private sector should be wholly responsible for taking on the burden. (To say nothing of the leftist critique that the benefits of successfully adding semiconductor production should not redound merely to the shareholders.)

The governments of the world have both a competitive and cooperative interest in ensuring that resources like semiconductors are not at the mercy of geopolitical conflict, and that production can be ramped up as needed even if problems should arise in one company, country or corner of the globe.

Yes, governments could subsidize domestic companies. But in an era of globally held international corporations it’s less clear than ever what a “domestic company” means, and it’s an enormous injustice to spend taxpayer company giving gifts to private firms without public return on investment.

It sounds like radical leftism to suggest the socialization of production of a resource like semiconductors. But it may well be that modern problems require post-neoliberal modern solutions–and that those solutions may, in the end, be ironically good for business.

David Atkins

Follow David on Twitter @DavidOAtkins. David Atkins is a writer, activist and research professional living in Santa Barbara. He is a contributor to the Washington Monthly's Political Animal and president of The Pollux Group, a qualitative research firm.