By Atanu Biswas
In one of the most counterintuitive notions of today’s world, California Governor Gavin Newsom recently declared that “Trump is committing socialism” by having the federal government buy stock in private companies like Intel, US Steel, etc. Senator Bernie Sanders, a self-described democratic socialist, certainly praised Donald Trump’s investment decisions. However, there is a significant conservative backlash against such steps of Trump, his version of US capitalism. For instance, Georgia-based conservative radio host Erick Erickson referred to the equity stake idea as “terrible” and described it as “actual socialism happening by a Republican administration”. Numerous news stories and op-eds have also issued sombre warnings about the emergence of orange-hued Trumpian communism. Well, is Trump, who referred to Kamala Harris as “Comrade Kamala” during her campaign to combat grocery price gouging, truly Making Socialism Great Again?
Trump’s capitalist record
Certainly, Trump is attempting to gain a majority on the Federal Reserve’s board of governors and contesting the institution’s independence. Hours after official data showed a dramatic slowdown in employment growth during his tenure, he also dismissed the head of the Bureau of Labor Statistics. Honestly speaking, from the “$TRUMP” crypto to the repulsive concept for a “Gaza Riviera” development, there is little doubt that Trump is a capitalist. His intimidation of American universities was undoubtedly motivated by his desire for administrators to adopt a more conservative stance in return for federal funding.
What about Trump’s seemingly socialist acts, though, given that the Trump administration has acquired stock in Intel, MP Materials, Lithium Americas, US Steel, etc.? It’s important to keep in mind that Trump approved Nippon Steel’s contentious $14.9-billion takeover of US Steel while obtaining a “golden share” in the company. In another event, Trump declared in late September that the public would be able to purchase discounted drugs on the federal website “TrumpRx”. One may wonder if this is similar to Zohran Mamdani’s plan for city-owned grocery outlets.
Capitalism vs socialism
But as Trump continues to apparently blur the distinction between capitalism and socialism, socialism might be something completely else. In socialism, the state produces items to meet production quotas rather than private companies to satisfy consumers and make a profit. Socialism comprises, among other things, the redistribution of wealth and the selection of economic winners and losers by policymakers. In contrast, in corporatism or state capitalism, the government makes decisions, but private enterprises nominally hold the means of production.
Therefore, is Trump really exercising “socialism” in an effort to “make America great again”? Or is it similar to “state capitalism”, which is a “hybrid between socialism and capitalism”, as was recently described by the senior economics commentator of the Wall Street Journal, where the state guides the decisions of nominally private enterprises? Trump is “imitating the Chinese Communist Party by extending political control ever deeper into the economy”, according to the Wall Street Journal. And this path “risk[s] leading us down the road to serfdom that Friedrich Hayek warned against in 1944”, as was perceived by economist Daniel J Smith.
The White House National Economic Council’s director, Kevin Hassett, however, stated that the Intel deal was “certainly not socialism”, although some right-wingers disagree. Senator Rand Paul of Kentucky, for example, questioned, “If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?” So, the confusion continues.
Trump certainly did more than just impose a tariff when he demanded AMD and Nvidia pay a 15% export tax on chips sold to China. He, thus, established a system where the government controls which companies can sell to which clients and at what price. However, his administration claimed that its drug policy is in line with free-market principles—Washington will not set pricing, but it will demand that Medicaid prices be comparable to those in other advanced economies. Even the hitherto sacrosanct H-1B visa programme for foreign experts, which even conservative restrictionists feel is beneficial to the US, has not been spared by Trump.
In fact, even in his first term, Trump promoted a full-scale economic nationalist programme, which was often viewed as Marxism-Trumpism or socialism by experts. Early in 2000, when the pandemic threatened the world economy with a recession, the Trump administration planned the Covid-19 stimulus plan to provide $1,000 in cash per person. Additionally, a number of US bailout programmes known as “Trump administration farmer bailouts” were implemented during Trump’s first term in office as part of his “America First” economic strategy to assist US farmers who were suffering as a result of the US-China trade war as well as trade disputes with the European Union and some other countries.
Now, Trump 2.0 compared the US economy to a supermarket where he has the final say over prices, as many of his policies favour central authority over market incentives. “We are a department store, and we set the price,” Trump said to Time magazine. “I meet with the companies, and then I set a fair price… and they can pay it, or they don’t have to pay it,” said Trump.
It’s likely that Trump is more interested in politics than ideology. He must be thinking that instead of giving money to big companies for free, the state should be getting the most out of the deal. However, as a result of these stock purchases, America is gradually moving towards an economy where the government is a player on the field rather than a referee. So, the question that would keep haunting experts is whether Trump is merely an asymptomatic carrier of socialism. Or perhaps Trumpism-Socialism, a brand-new kind of “ism”, is created in the process.
Professor of Statistics, Indian Statistical Institute, Kolkata
