For decades, a core part of the Republican Party’s identity was the whole-hearted embrace of free-market capitalism. Adam Smith’s “invisible hand” of the market was understood to be infinitely preferable to government meddling.
Lately, though, President Donald Trump has been having second thoughts. Forget the invisible hand — what about, uh, Trump’s hand?
The second Trump administration has cut a revenue-sharing agreement with Nvidia, it’s taken partial control of US Steel, it’s considering taking a stake in Intel, and it’s created a loyalty ranking system for US companies. And did we mention that Trump has taken to brow-beating companies into not raising their prices in response to tariffs?
All this adds up to unprecedented intervention into the market, and pushes America toward a “state capitalism” model practiced by countries like Russia, India, and China. The Wall Street Journal’s chief economics commentator, Greg Ip, calls it “state capitalism with American characteristics,” a nod to the Chinese Communist Party’s “socialism with Chinese characteristics.”
Free-market fans aren’t happy. Neither are most Democrats. There is one small but vocal faction in US politics that has historically been more open to this kind of intervention, so Today, Explained gave a prominent member of that group a call to get his thoughts.
“Obviously, as a socialist, I start from the principle that private industry should be subject to more democratic control and oversight,” Bhaskar Sunkara, president of The Nation magazine and founding editor of Jacobin, told Today, Explained co-host Noel King.
Sunkara talked to King about how the history of state capitalism doesn’t neatly map onto current political divides, why he respects Trump for putting tariffs back on the table, and why he’s skeptical Trump’s latest interventions will do anything for the working class.
Below is an excerpt of their conversation, edited for length and clarity. There’s much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify.
Is capitalism dead? Is it in trouble?
You know, I wish it was dead for a variety of reasons. I think it’s perfectly legitimate for the state to intervene in private enterprise. In the US, we often frame the free market as a conservative ideal and state intervention as a socialist ideal. But history shows it is a lot more complicated than that.
In the 20th century, right-wing authoritarian governments in places like South Korea and Taiwan used really heavy state direction. They used tariffs, subsidies, and credit allocation to build out globally competitive industries and lift their countries out of poverty. They did a lot of horrible things against political rights and labor rights and so on, but they did that, to their credit. In the US we sometimes just knee-jerk react: More state intervention means more socialism. For me, the real question is: Is what we’re doing coherent? Does it make sense?
My worry with Trump’s approach is that it looks more like ad hoc favoritism and punishing some industries and subsidizing other industries on a whim, and less like a long-term plan.
Where do you stand on the tariffs?
I have a lot of the same concerns. I think that there’s a place for tariffs in the toolkit of creating a viable economy. I think there’s a place for protecting certain industries as part of a wider plan. I really appreciate that Trump in his first term put on the table the toolkit of tariffs and talked about industrial policy.
I didn’t agree with how he executed those tariffs in his first term, but I think it paved the way for Joe Biden to be much more successful in industrial policy.
At a time when countries like Germany were losing hundreds of thousands of manufacturing jobs, the US was gaining hundreds of thousands of manufacturing jobs. But in this particular case, I just can’t see the long-term plan behind Trump’s use of tariffs, and I really worry that it will make the US, in the long run, a poorer country, and that won’t be good for any sort of egalitarian politics.
The thing Joe Biden was never willing to do was to call companies and say, don’t you dare raise prices on Americans. This is one of those things that, again, with Trump, if you are working-class and you hear that the president has called a corporation or telegraphed to a corporation, the tariffs may be pushing up the cost of goods, but you are not going to raise them on American citizens. It’s appealing. It’s a little strongman, but it’s appealing, right?
I’m not impressed because I don’t think it’s sustainable.
And also I think Trump was able to get away with this stuff, or has been able to, partially because he is a right-wing president who came in with a lot of goodwill from business. At least initially, he delivered huge tax cuts for the wealthy, and capital at least until recently, I think, trusted him. I don’t think the markets would’ve been nearly as tolerant if it was President Bernie Sanders trying the same thing.
And it’s very clear to people that he’s trying to rig the game to reward friends and punish enemies. And because of that, CEOs like Apple’s Tim Cook feel like they have to play along and stay on his good side. And that’s behind the very awkward and kind of embarrassingly gauche gift-giving. If you visit the sovereigns, you better come with a big, gaudy gift.
The irony is that a lot of the American right has spent decades railing against left-wing, in their mind, strongmen leaders governing in this fashion. And yet Trump is really mimicking the worst of that style.
I imagine you have rubbed your hands in glee looking at the polling that shows us that Americans are frustrated with capitalism. Young people in particular are giving up on it. Whether you like him or not, President Trump is doing uncapitalism. Zohran Mamdani would like to do uncapitalism. Do you think we’re at a point where the left and the right are converging on America with socialist characteristics?
I love being contrarian. I would love to tell you that Trump’s action is bringing us closer to being a socialist country, but I honestly believe that Trump is taking us further away from my vision of a good society, and further away from any vision of a socialist society.
I think in part because he’s deploying legitimate tools of economic policy, like tariffs and industrial policy, in such a chaotic, self-serving way. I think he’s going to create a backlash that makes it harder for the left to use those tools in the future.
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