‘Trump embraces state capitalism’ declared the US news site Foreign Policy in July: ‘the level of U.S. government economic intervention under Trump 2.0 is off the charts’. In August the Wall Street Journal took up the theme in an article by its chief economics commentator, Greg Ig: ‘The U.S. Marches Toward State Capitalism With American Characteristics’, he wrote, ‘President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy’.
Ig instanced ‘Trump’s demand that Intel’s chief executive resign; the 15% of certain chip sales to China that Nvidia and Advanced Micro Devices will share with Washington; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct’. He commented:
‘This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises. China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France. So call this variant “state capitalism with American characteristics.”’
This is one definition of state capitalism, but state ownership is not socialism; nor can there be any hybrid between socialism and capitalism. Capitalism exists whenever there is minority ownership of the means of production, wage-labour and production for sale and profit, irrespective of whether that ownership is via individual ownership, a limited company or a nationalised industry.
The term ‘state capitalism’ first came into use towards the end of the 19th century, to describe instances where the government performs the role of capitalist by employing wage-labour and selling the product or service to realise a profit, such as state-owned and run mines and railways. After the Bolsheviks seized power in 1917, Lenin extended the term to include the development of private capitalism under the direction and control of the state. Others later extended the meaning further to include a nationalised economy without private capitalists but still with wage-labour, production for the market and a privileged ruling class such as eventually developed in Russia.
It was a term used more by critics than by supporters of capitalism. Latterly, however, it has come to be used routinely in the media to describe the economic system in China where political control is firmly in the hands of a single party but where profit-seeking private enterprises are allowed to operate, where their shares are traded and where state-owned enterprises compete on the world market with the same aim and methods as private capitalist enterprises.
Politically motivated government intervention in the economy is not new — governments have always done this to one degree or another via taxes, subsidies, tariffs, and monetary policy — but calling this ‘state capitalism’ is new, at least in openly pro-capitalist circles. This could even be seen as a step forward in that, previously, they called it ‘socialism’, ‘communism’, ‘Marxism’, a travesty of these words. The more backward of them still do, as this from Fortune (12 August) magazine:
‘Many free-market economists and business leaders who have long worshipped the free-market ideals of Adam Smith, Friedrich Hayek, Ayn Rand, and Milton Friedman should be aware that their idols would be rolling in their graves right now, as rather than pursue standard laissez-faire conservative economic policies, MAGA has gone Marxist and even, increasingly, Maoist’).
Even though it is quite ludicrous to say that Trump has ‘gone Marxist’, there is a delicious irony in him being accused of undermining capitalism. Not that he is of course. He is using state power in what he considers to be the general interest of the US capitalist class.
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