OK—who’s the dangerous radical pushing the state to take over private enterprise here? Who’s aping the Chinese Communist policy of having the government own or control major business entities?
Zohran Mamdani? He’s called for more consumer-friendly regulation of some New York City markets (rental housing in particular), and proposed setting up a handful of city-run grocery stores, but he hasn’t advocated seizing big corporations or banks, though New York is lousy with them.
On the other hand, there’s Donald Trump. His approval of Nippon Steel’s purchase of U.S. Steel was conditioned on giving the government a golden share through which the government—that is, Trump—could control the company’s policies and conduct. His decision to let chipmakers Nvidia and AMD sell their H20 chips to China, despite the risks that poses to U.S. national security, was conditioned on their having to pay our government 15 percent of the revenues they made from those sales, as my colleague David Dayen has noted. He has told Intel to fire its CEO, then walked that back when the CEO visited the White House and apparently promised, said Trump, to “bring suggestions to me.” On Friday, The Wall Street Journal reported that Trump was now considering having the government take a financial stake in the company. And he’s also been strong-arming major law firms to work pro bono for causes he promotes.
To be sure, there have been times in our history when the government has involved itself directly in businesses’ affairs and taken temporary stakes in them, but until now, that’s always been during particular and time-limited emergencies. When the domestic auto industry faced the prospect of collapse in the wake of the 2008 financial crash, the government took a temporary stake in both General Motors and Chrysler in return for bailing them out. While also bailing out the largest banks, however, it did not take a stake in them. And while the Biden administration boosted the strategically important green-energy industry with tax credits, it took no stake in those companies.
The Biden initiatives were classic industrial policy—but they didn’t encompass government control or even involvement in individual companies’ conduct. If they had, they would have crossed the line into state capitalism, which is the system that prevails in our rival for global domination—the People’s Republic of China. China has a market economy that the state directs through its de jure or de facto control of the majority of major enterprises. Its version of state capitalism is Leninist capitalism, in which it’s the leaders of the Communist Party who control the state’s ownership of large businesses.
Our version of state capitalism is Trumpian capitalism, which, like Chinese state capitalism, involves the government’s increasing control and direction of businesses. As The Wall Street Journal’s chief business columnist, Greg Ip, has observed, under Trump “capitalism in America is starting to look like China.” Americans’ support for “free-market” capitalism, Ip continues, has weakened as a result of decades of offshoring (and partly in consequence, if I may go beyond Ip, of working-class downward mobility). The market’s inability to meet or even address the nation’s strategic needs and its citizens’ aspirations was the proximate cause of Biden’s industrial policy.
But, as Ip makes clear, Biden’s industrial policy wasn’t state capitalism in the mode of China. It’s Trump who’s crossed that line, with his takeover and bullying of corporations, banks, and law firms.
It’s impossible to imagine Trump, or Republicans generally, supporting any form of state capitalism, however, if it occurred under anyone else’s presidency. It’s happened under Trump because, like Louis XIV, Trump adheres to the doctrine “L’état c’est moi”—I am the state. Under his rule, the state has become primarily the vehicle through which he can maximize his personal control of whatever he wishes to control. No broader doctrine—not nationalism, not mercantilism, not liberalism’s preference for regulated capitalism or a mixed economy, and certainly not social democracy or any form of socialism—is at the root of Trump’s embrace of state capitalism.
If there’s an “ism” here, it’s a narcissism rooted in an insecure man’s overwhelming urge for self-aggrandizement, for structuring transactions so that he visibly profits at somebody else’s expense. That profit doesn’t have to be financial; what really matters is that he takes control of something—a business, the trade balance of other nations, a state, a city, a university, one of the other branches of the federal government, or smaller stuff like the Kennedy Center—that had been under the control of somebody else.
Of course, that profit can be financial as well. In authorizing Nvidia to sell chips to China, Trump stands to make serious money. His latest filing with the U.S. Office of Government Ethics shows that he owned between $615,000 and $1.3 million in Nvidia shares late last year. Unlike the other presidents of the past half-century, Trump has not put his assets in a blind trust or Treasury bonds, and has rejected calls to divest himself of stocks.
As the editorialists at the Financial Times wrote in response to Trump’s pay-the-government condition for the chip sales to China, “The legally dubious arrangement underscores that, under Trump, corporate America has entered an era in which business decisions will be dictated less by the invisible hand of the market and more by the heavy hand of the White House.”
Though Republicans frequently assert that the model of Chinese communism poses the primary threat to the American system, they appear willfully blind to Trump’s embrace of a state capitalism with significant similarities to China’s. Instead, they rail at the social democratic proposals of Mamdani, Bernie Sanders, and Alexandria Ocasio-Cortez, which chiefly address the profound market failures of sectors like our uniquely for-profit health care industry. If they were truly worried about authoritarian state control, they’d focus on Donald “I Am the State” Trump, who in the name of—well, Donald Trump—is busily eroding every other source of power and locus of autonomy, be they governments, courts, states, nations, universities, and even American businesses.
“Any idiot can nationalize,” the great American socialist and DSA founder Michael Harrington frequently said. Fascists had nationalized industries, as had military juntas, he pointed out, which was quite distinct from socializing an industry by putting it under small-d democratic control. Though he died in 1989, Harrington warned about the rollback of America’s very partial welfare state and its unions. But not even Harrington could foresee a rollback to the personalized autocracies of prerevolutionary France, where the state existed for the benefit of a monarch obsessed with greed and dazzled by glitz.
I don’t mean to be unfair to the Bourbon kings of France. Some were as petty, but none were as vengeful, as Donald Trump.