BlogPerspectives
The Only Way a Market Society Wins an Industrial War
Published: December 30, 2025 · Kushan Weerakoon, Co-Founder / CEO
America cannot out-China China by trying to become China.
We do not have, and should not want, a command apparatus capable of enforcing industrial coordination and compliance from the top down. China does. It's no secret that its industrial strategy strategically mobilizes state capital and policy to shape entire supply chains.
That capacity to force coordination upfront is the central advantage of a control economy. Big, necessary moves are insulated from short-term market forces.
The American economy is built on a different premise. We coordinate through markets, through contracts, prices, and voluntary exchange. This decentralization has produced extraordinary innovation and adaptability. However, markets coordinate slowly when systems become complex. The variance created by small transactions and individual incentives in complex systems creates noise that makes it difficult to coordinate big moves.
Manufacturing, especially modern manufacturing, is among the most complex systems a society attempts to run.
We are in an industrial war with a competitor that is making big, tactical swings. How can we compete as an industrial base? How can we steer our complex ecosystem?
The only viable strategy is to beat a control economy with a different kind of coordination.
I will argue that software is how a market economy learns to coordinate like a plan without becoming one. Software should be the focus of defense acquisitions. It should be the first investment upon which we rebuild America's factories, not a finishing touch. Software is among our nation's greatest strengths. We should treat it as our ace in the hole.
Coordination is the battlefield
Most debates about American manufacturing focus on visible tools like tariffs, subsidies, reshoring mandates, etc. These matter, but they miss the deeper issue: our manufacturing coordination problem.
Command economies decide what will be built, where capital flows, and which firms survive long enough to learn. Coordination happens up front.
Market economies resolve coordination indirectly. They rely on prices, contracts, and firm-level planning. This works when systems are simple; it struggles when production spans hundreds of firms, thousands of product variants, and investment horizons measured in years.
Each firm in the system is a highly complex subsystem. Factories and supply chains are systems of dependent events. Cycle times, tooling, labor skill, quality, and component availability all interact in ways that compound rather than average out. Individual participants rise and fall, and the system is impossible to predict at scale.
China creates predictability via an iron grip forcing alignment and extreme focus. Through sheer force, it has taken global control over industries like EV. China's auto exports exploded from under 1 million in 2020 to nearly 6 million in 2024. As of late 2025, Chinese firms controlled 69% of the global EV battery market, with CATL and BYD alone accounting for over half of all global usage.
America's disadvantage isn't a lack of ambition or ingenuity. It is that we're beholden to the chaos of our own system.
Hayek was right — the individual is our strength
Friedrich Hayek famously argued that centralized planning fails because the knowledge required to run an economy is dispersed among countless local actors.
The problem now is not the absence of knowledge, it is its fragmentation. Factories now generate vast amounts of process data like cycle times, queues, bottlenecks, quality metrics.
China largely ignores the local details to make decisions from the top-down. In that ignored tacit knowledge lies the opportunity for our American market system. We can turn dispersed knowledge into legible, shareable, and executable decision structures, a sort of nervous system of signals that brings our whole industrial base to life.
Software as coordination power
This is where software moves from a productivity tool to a coordination technology.
Historically, coordination at scale required hierarchy. Large firms succeeded because management itself was a coordination technology, the visible hand guiding complex systems. The knowledge required to run systems efficiently sat at the top and was dispersed downward. In the era of infinite knowledge, software is the next coordination technology.
There are 3 prongs to software-based coordination:
- Process flow software that turns factories into executable models, capturing constraints, dependencies, and variability as they actually occur.
- AI decision systems that lower the cost of translating messy operational realities into structured and testable plans.
- Marketplaces that make capacity and capability substitutable, allowing decentralized firms to reconfigure without centralized decree.
This technology enables the smallest and largest firms alike to understand its constraints, operate to the highest reasonable degree of efficiency, and participate in our marketplace frictionlessly. Allowing small firms to operate with such efficiency enables a key economic flywheel: specialization.
“Each man must perform one function in the community, that for which his nature best suits him.”
Empowering small firms through software makes it possible for more to exist. Suddenly, small firms spring up to service niche demand for complex components, far off geographies, and burgeoning industries that are not yet on the government's radar.
The economic benefits of specialization need not be litigated. Since Adam Smith, we have known that individuals mastering distinct tasks in sequence operate better than individuals struggling through complex processes. What should be appreciated here is that through software, we provide the necessary conditions for said specialization to flourish.
“As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market.”
Specialization only scales when the capacity of each member of the system is legible and trustworthy (modeling), when management decisions are made properly (AI), and efficient exchanges are possible (marketplaces).
Why this beats a command economy
China coordinates by decree. Its industrial policy bundles capital and compliance and absorbs inefficiency early to drive strategic substitution. It gives its own critical industries an unfair advantage. We've had to balance the playing field with our own countermeasures, namely tariffs, to reduce the dependence of our supply chains. Still, the trade deficit remains stubborn: $295 billion in 2024.
Reconfiguration alone, reshoring or nearshoring, does not fix coordination. Software does.
By giving firms tools to see their own constraints clearly, we unlock faster decisions, earlier capital allocation, and easier integration across firms. Once local process knowledge is made legible, it can be aggregated, enabling markets to coordinate more like a plan without central authority.
The end state is for these software subsystems, especially those enabled by AI, to be connected together to create a corpus stronger than anything we can fathom right now.
“For the whole must of necessity be prior to the part; for example, if the whole body be destroyed, there will be no foot or hand.”
The industrial battlefield is in coordination capacity, which is the ability to align decisions across thousands of independent actors at industrial scale. We won't do this by building a better Politburo, but we will by building better wiring within our industries. Software will bring together our fragmented industrial base into one, brilliant system.
