The question of whether President Trump has turned the United States to a new “state capitalism”, one in which the government is not only economic referee but an active player, has been responded. Its second term brings policies that go far beyond traditional republican orthodoxies, such as tax cuts and deregulation and direct participation with production and capital. However, this doctrine is less a great coherent strategy than a set of ad hoc agreements, sometimes already pro-marketed and sometimes interventionists.
Some Trump policies (tax cuts, deregulation, talk about budget deficit reductions) retain a traditional republican tone. On the other hand, protectionism and tariffs of this administration would have been inconceivable a decade ago. Republicans would also traditionally label the government acquisition of a 10% participation in Intel as socialism if someone who is not President Trump proposed. And other policies have the sensation of the tactics of the mafia possible by the leverage exercise, such as letting Nvidia and AMD sell their chips to China in exchange for a 15% cut to the United States government.
Trump also remarkably departs from the last party of the Republican party in his lack of recognition that the market assigns resources much better than politicians and bureaucrats. He deals with the market as a stage for negotiation to reorganize world economies. The republicans of the old guard were globalist, while Trump built their appeal about nationalism and protectionism of “America first.”
The previous Republicans valued the predictable rules, but as the legal scholar of Cambridge pointed out, Antara Haldar in a project union symposium This month, evaluating the direction of the “Trumponomy”, the president “is willing to break any rule, norm or promise … on behalf of the strikes of the” agreements “of ad hoc corporate style.
However, Haldar correctly argues that Trump's approach differs from other forms of state -handed state control. It is not the Chinese model or the state of development. It is “erratic, transactional and myopic” and a rejection of the “state of the babysitter” in silence … in favor of a “state of patriarchal” state “.
The historian of Princeton University, Harold James, another participant in the symposium, sees Trump as a break from the past due to his rebirth of the directed state “industrial policy. “This began under the administration of President Biden, but there is no doubt that Trump's search for a manufacturing revival and a rehabilitation of global supply chains, along with their fees and capital bets in private companies and their general objective of reconstructing the strategic capacity of the United States, enter that category well.
Unfortunately, as James argues, Trump's industrial policy brand fosters the “hyperactivist corporate lobby, with large and well connected companies obtaining the best” offers. “In my opinion, all industrial policies end in this way, not just those of Trump.
In this case, it seems particularly interesting that even the defenders of industrial policy such as Mariana Mazzucato, author of “The business state“It seems disgusted with Trump's version. Done well, he states that during his contribution, industrial policy can support innovation and inclusive growth. She sees Trump's approach as” gestures without purpose, interventions without coordination and expense without strategy. “
That is because Trump's approach is not part of any coherent vision. It is only transactional. He looks at him in isolation and if he believes he is a good business, he does. That is what makes behavior especially harmful: it creates a deep uncertainty. The markets thrive in predictable rules, but when the president takes stakes or capital pressures to companies at will, investment and risk taking give way to doubt.
Soon, companies learn that success depends less on innovation or competition than the currí of political favor. Resources change from productive activity to lobbying, undermining both equity and growth. Because these actions are purely transactional, the worst aspects of state capitalism strengthen: allocation of politicized resources, favoritism for the connected good and erosion of the rule of law. This is not new, but Trump brumps a new scale and a unique pride by breaking traditional government conventions.
The inevitable result is the slowest growth, less dynamism and a political economy driven by the search for rentals instead of entrepreneurship.
Michael Strain of the American Enterprise Institute, however, reminds us that, despite Trump's many exercises in state capitalism, his most lasting legislative achievement, Big Beautiful Bill Law, moves the Tax Code in a more commercial direction. Strain concludes that the old classic liberal consensus will last because its past success will help guarantee its longevity. “
Chico, I hope it is right. The risk is not that Trump has created a sustainable model of state capitalism, but that its erratic improvisation is eroding institutional safeguards and confidence in markets without delivering lasting alternatives.
So is Trump a state capitalist? He certainly acts as one, but “Daddy Capitalist” is more descriptive. This is little comfort.
Veronique de Rugy He is a senior research member at the Mercatus Center of the George Mason University. This article was produced in collaboration with the creators Syndicate.
