Trump and The New Capitalism: Old Wine in New Bottle

By Ibrahim Ozturk 

Introduction

Despite its apparent economic, political, and social challenges, the US remains a global powerhouse that can profoundly impact the world with even the slightest changes, whether progressive or regressive. Therefore, it is essential to understand and analyze the unpredictability and uncertainties upcoming with Trump’s (dis)order.

To grasp what Trump is trying to achieve, one should step back and take a bird’s-eye view to avoid the chaos and noise generated by him and his team. What do the iconic skyscrapers of Manhattan, such as the Empire State Building and the Chrysler Building, towering above the clouds, tell us?

When one listens to the sounds beneath the clouds, the shining progress emanating from Silicon Valley in northern California—the focal point of American entrepreneurship—whispers of groundbreaking discoveries and a bright future for the US and humanity in general. In Schumpeterian terminology, America’s "creative destruction" is ongoing. The share of the US GDP has reached 27% of global GDP. Although this is just below the 30% recorded in 2000, it is significant compared to the 23% in 2023, marking the United States’ rebound from its trough, driven by the forces of creative destruction. This pace of change in the structure of the US economy also transforms the financial architecture of the powerhouses on Wall Street, including the New York Stock Exchange.

However, the ongoing global competition indicates that this alone is not enough for America to maintain its competitiveness and status as a global empire. China’s rapid advancements in strategic high-tech industries—such as artificial intelligence (AI), quantum computing, semiconductors, 5G, and renewable energy technologies—along with heavy investments in R&D and talent acquisition to close the gap with the US, have reached a critical stage with far-reaching implications.

Moreover, the competition extends beyond the US and China, as Europe, Japan, and South Korea also play vital roles in niche technologies such as EV batteries, advanced robotics, and biotech. The outcome of this race will shape global supply chains, security policies, and economic leadership, ultimately defining the nature of the ongoing global power transition in the coming decades.

Trump Is Emulating Xi Jinping

As Graham Allison has analyzed in historical cases, the key concern now is how the US will respond to this precarious situation. Signals from Trump’s first term and early indications from his newly started second term suggest that the US political economy may be shifting toward a model resembling China under Xi Jinping. In other words, despite its significant economic superiority, America appears to be emulating its rival to defend its interests and contain China’s rise.

This shift toward unilateralism disregards international norms and values, undermines the post-World War II order it once championed, and abandons the institutions and stakeholders that upheld this system. As a result, the US is embarking on a perilous path that extends far beyond China. Increasingly, it is drifting away from the principles of law, rules, and values, instead embracing arbitrariness and raw power—posing a global threat that contradicts its raison d’être.

Meanwhile, the Statue of Liberty, a powerful symbol of American ideals such as freedom, democracy, and opportunity, is slowly disappearing beneath the clouds. As it fades into the distance, so does the American Dream—the long-standing promise of opportunity, prosperity, and success—becoming an increasingly unattainable illusion.These symbols, once synonymous with American greatness, now represent the triumphs of a bygone era.

Accordingly, the country’s status as a world leader in finance, technology, and industry is being redefined, and the old certainties are giving way to a new, uncertain reality.

Having sought to maintain its position by rejecting its past hegemonic sacrifices or leadership and putting a unilateral emphasis on the rhetoric of “America First,” “Making America Great Again” (MAGA) to protect its "greatness" will also reshape the nature of capitalism and globalization. Several questions need to be addressed and examined in this context. This commentary focuses on the new capitalism the United States has adopted to respond to ongoing global power pressures, changing competitive conditions, and potential consequences.

Three Models of Capitalism

Economic systems (such as capitalism, socialism, and mixed economies) are compared based on several key pillars. These include the right for ownership, the role of government, central planning vs competition, the workings of prices and the production mechanism, income distribution, equity, efficiency, and productivity, economic stability and growth, innovation and entrepreneurship, social welfare and public goods, flexibility and adaptability, approach to free trade vs. protectionism or autarky. There are also various hybrid models combining different system elements at different doses. Each economic system has strengths and weaknesses, depending on societal goals such as growth, equity, efficiency, and stability. 

In addition to these differences between economic systems, as J. H. Dunning, D. Rodrik, and J. E. Stiglitz published terrific works on, the world economy has also been characterized by different stages of globalization or deglobalization. These range from mercantilism, a potent form of protectionism, to the extreme form of neoliberal globalization, which went beyond control with severe negative repercussions, and now to new protectionism and civilizational nationalism, along with rising multipolarity and power shift.

Several questions need to be addressed and examined in this context. This commentary focuses on the "new capitalism" that the United States appears to have adopted to respond to ongoing global power shifts, changing competitive conditions, and potential consequences. Whatever form capitalism takes, the debate will always revolve around the market economy, capitalists, big corporations, property rights, and how the state controls and regulates all of this.

Two eminent thinkers, economic historian Fernand Braudel, who focused on long-term structures, and Karl Polanyi, a political economist, who analyzed economic transformations, and anthropologist, provided fundamental critiques of capitalism concerning the state, power, and institutions. Braudel and Polanyi view capitalism as an evolving historical system rather than a static or natural economic order. Through his longue durée approach, Braudel analyzes how capitalism has developed over centuries within specific historical contexts, while Polanyi’s “Great Transformation” illustrates the shift from embedded economies to market-driven societies.  

Both scholars differentiate between market economies based on local trade and reciprocity and capitalism, which operates on a larger scale and inherently tends toward monopolization. Braudel views capitalism as an upper layer of economic activity that never functions under pure free-market conditions, exploiting markets rather than being synonymous with them. Capitalism always seeks privileged access to resources, political power, and monopolies. Thus, Braudel and Polanyi converge in their critiques, exposing capitalism’s reliance on state power and monopolistic control and its disruptive effects on society. Braudel emphasizes capitalism’s exploitative nature, whereas Polanyi underscores the commodification of key economic factors, particularly labor. 

In short, both view capitalism as a threat to market economies and open societies when left unchecked. Capitalism often operates at the expense of broader societal well-being, benefiting elites while fostering instability and social resistance. Most notably, when the economy becomes "dis-embedded" from society and socially disruptive, the adverse effects of non-market processes, such as externalities and monopolization, become apparent. These circumstances call for state intervention to sustain markets. 

However, these two scholars not only explored the state’s crucial role in developing and shaping markets, as D. North demonstrated as an instituted process, but they also showed how state intervention is a double-edged sword and a hazardous process. Given the different allocations of power dynamics, the state’s role cannot be taken for granted.

As shown historically by M. Olson, in the context of development theory by Theda Skocpol, and more recently by C. Jonson during Japan’s rapid post-war development, effective state intervention depends on several restrictive conditions, such as state autonomy and capacity, free from the influence of interest-seeking coalitions. Most notably, Olson explores how special interest groups and coalitions gradually capture state power, leading to economic stagnation. This is also relevant in relatively stable societies, where entrenched interest groups gain influence, creating rigidities that slow economic growth and hinder necessary reforms.

To explore these developments further, I will delineate three evolving variants of capitalism based on ownership structures and governance mechanisms.

State-Controlled Oligarchic Capitalism (Turkey – Erdogan Model)

👉🏿 The private sector’s independence diminishes as the government integrates strategic industries into political control.

👉🏿 State-backed business elites thrive through public contracts, incentives, and preferential credit.

👉🏿 Bureaucrats and politicians hold executive roles in private firms, aligning private enterprise with state agendas.

👉🏿 This model merges authoritarian populism with capitalist oligarchy.

State Capitalism with Strategic Planning (China – Xi Model)

👉🏿 State ownership dominates, yet specific industries operate with market-driven efficiency.

👉🏿 Despite their semi-independent façade, companies like Huawei and Alibaba align with national economic strategies.

👉🏿 The government employs market forces for efficiency while maintaining overarching economic control.

👉🏿 This hybrid model blends centralized planning with capitalist dynamics.

Techno-Feudal and Oligopolistic Capitalism (US–Trump Model)

👉🏿 Traditional neoliberalism is evolving into a state-elite partnership.

👉🏿 Billionaire elites increasingly influence governance, making the state an agent of corporate interests.

Tech giants like Tesla, SpaceX, Facebook-Meta, and major media conglomerates serve as political tools for mass influence. For instance, in a clear transactional or win-win approach, President Trump appointed Elon Musk to lead the Department of Government Efficiency (DOGE). However, the court blocked his attempt to intervene in the US Treasury and access private data, a case that fueled Trump’s anti-law aggression. Stephen Schwarzman, the chairman and CEO of Blackstone, Ana Botín, the executive chair of Banco Santander, Patrick Pouyanné, chairman and CEO of Total Energies, and Brian Moynihan, chair of the board and CEO of Bank of America, participated in a public dialogue with President Trump at the World Economic Forum‘s 2025 Annual Meeting, indicating a collaborative relationship. Additionally, US business leaders have significantly increased their financial support for President Trump’s second inaugural fund, with contributions expected to surpass previous records. Major corporations such as BP, Chevron, Shell, Google, Microsoft, and Apple have adopted the term "Gulf of America" in their communications following President Trump’s executive order renaming the Gulf of Mexico. This move signifies corporate alignment with the administration’s directives. 

Whatever hybrid forms of capitalist models evolve, they underline the rise of Strategic Capitalism, diminishing market competition, increasing state-business convergence, and greater government control over economic participants. In other words, "state capture by entrenched interest-seeking coalitions" is becoming increasingly widespread and pervasive. Most notably, when capital infiltrates the state—through so-called "legitimate lobbying," as seen in the US—and effectively merges with the government, a fundamental question arises: On whose behalf does the state intervene in the market? How can the criterion of rationality be upheld?

Besides such domestic political-economy implications of the evolving forms of capitalism, their various configurations are also catalysts for conflict when they attempt to externalize emerging problems and challenges. The main dimensions of problem externalization might take several forms:

Globalization’s Externalities and National-Level Risks: While globalization promotes economic interdependence, it has also resulted in significant negative externalities, such as income inequality, industrial decline, job displacement, and financial volatility. Traditional economic governance models suggest addressing these risks at the national level through various mechanisms:

👉🏿 Wealth redistribution via progressive taxation (such as wealth taxes) to fund social welfare and infrastructure.

👉🏿 Regulatory adjustments through stronger labor protections, improved financial oversight, and enhanced corporate accountability mechanisms.

👉🏿 Fair wage policies to ensure that productivity gains translate into equitable income distribution for the working class.

However, instead of internalizing these costs within their economies, some nations are now externalizing them—shifting economic grievances onto foreign entities, often framed within a civilizational nationalist discourse. This trend has been particularly evident under the Trump administration.

The Shift from National Economic Regulation to External Blame: Historically, economic nationalism has been used as a policy tool to protect domestic industries. However, the new wave of civilizational nationalism reframes economic struggles as existential conflicts between distinct cultural or civilizational blocs. This shift is evident in several key areas:

👉🏿 Trade protectionism and economic sanctions through tariffs and trade restrictions on perceived economic competitors (e.g., the U.S.-China trade war).

👉🏿 Industrial policy disguised as strategic autonomy, supporting vital domestic industries for national security purposes (e.g., the EU’s strategic autonomy, the U.S. CHIPS Act).

👉🏿 Resource and financial weaponization, using energy supplies, commodities, or economic systems as geopolitical leverage (e.g., U.S. dollar-based sanctions, Russia’s energy policy).

👉🏿 Anti-globalization narratives rooted in identity politics, portraying globalization as an elite conspiracy that threatens national sovereignty, thus justifying exclusionary economic policies.

The motivation behind these strategies is to "externalize" the burden of globalization’s side effects—shifting responsibility away from corporations and national policymakers onto foreign nations or civilizational "rivals"—ultimately deepening global fragmentation.

Civilizational Nationalism Increases the Likelihood of Conflict: Economic nationalism has historically led to trade wars and economic decoupling. However, civilizational nationalism extends beyond economics, intertwining identity, culture, and geopolitics into economic policy, making conflicts more intense and less negotiable.

In this context:

👉🏿 The West perceives China as both an economic competitor and a cultural and ideological challenger.

👉🏿 Russia is pivoting away from global capitalism, crafting its own "civilizational" economic model centered on Eurasianism.

👉🏿 The European Union, recognizing the limitations of globalization, is adopting industrial policies emphasizing strategic autonomy.

👉🏿 South Asia and the Middle East are developing distinct regional capitalist models.

👉🏿 Meanwhile, the US, under Trumpism, appears to oppose the "rest" of the world.

In conclusion, by replacing domestic policy reform agendas, such as corporate taxation and labor protections, with blame-driven economic nationalism, governments avoid addressing the root causes of economic discontent and fuel long-term geopolitical instability. If this ongoing trend persists, the world may experience an era of intensified trade wars, economic decoupling, and heightened geopolitical tensions, reminiscent of the 1930s, increasing the risk of large-scale conflicts.

Trump’s Presidency and the Shift Toward Authoritarian Capitalism

Obviously, Trump’s populist authoritarian and pragmatist rhetoric lacks a coherent theoretical foundation. It can be seen as a contradictory fusion of economic nationalism, protectionism, and populism, driven more by emotional appeal than analytical rigor. Unlike traditional neoliberalism, which has grown in the US and promotes minimal state intervention, Trump’s era witnessed the convergence of state power with elite economic interests. As Antara Haltar observes, Trump’s policies – tariffs, tax cuts, de/regulation, and re/industrialization- to “Make America Great” again (MAGAnomics) reject core tenets of neoclassical economics, notably free trade, and efficiency. As M. Mazzucatoputs it, this aligns with techno-feudalism, in which large technology firms exert immense economic and social control. 

What is idiosyncratic and hypocritical is that Trump rose to power by appealing to those experiencing poverty, feeling left behind, and abandoned. However, he has ultimately shaped his policies to further enrich giant capital owners. He not only serves the interests of capital but has gone a step further by directly placing capitalists in key government positions. Even though his protectionist trade wars were framed to protect American jobs and boost employment and income, there is broad consensus among economists that these policies may primarily benefit select corporations at the expense of consumers and citizens. As J. Stiglitz correctly noted, there is already a high degree of market concentration in the US. 

While it remains unclear how he will deliver on his political promises amid the growing challenges of techno-feudalism, these features suggest that Trump’s evolving capitalism, which carries significant global implications, will emerge as a hybrid model combining the following aspects.

👉🏿 Nationalist Protectionism: A more aggressive form of protectionism where the government prioritizes domestic industries and restricts foreign competition. For instance, Trump’s decision to block the acquisition of United States Steel by the Japanese company Nippon Steel created tensions with Japan. Prime Minister Ishiba responded by saying that "the president blocking a takeover is a significant ‘political interference’ and difficult to understand." This could lead to a more insular, self-sufficient economy, with tariffs and trade barriers becoming more prevalent.

👉🏿 State capitalism: A blend of state control and private enterprise, where the government is more active in guiding the economy. This could involve increased government ownership of key industries like energy, finance, or infrastructure.

👉🏿 Authoritarian Capitalism: A system where the government exercises significant control over the economy, often through a combination of state-owned enterprises, regulations, and repression of dissent. This could lead to a more rigid, hierarchical economy with limited opportunities for entrepreneurship and innovation.

👉🏿 Neoliberalism 2.0: A revised version of the neoliberal ideology that dominated the 1980s and 1990s. This could involve a renewed emphasis on deregulation, privatization, and free trade but with a more aggressive approach to suppressing labor unions and social welfare programs.

👉🏿 Corporate-Friendly Populism: A system where the government prioritizes the interests of large corporations and wealthy elites while using populist rhetoric to appeal to working-class voters. This could lead to a more unequal economy, with greater concentrations of wealth and power.

👉🏿 Hybrid Capitalism: A system that combines elements of different economic models, such as state-led development, private enterprise, and social welfare programs. This could involve a more nuanced approach to monetary policy, focusing on balancing competing interests and promoting sustainable growth.

The actual outcome would depend on a complex interplay of factors, including policy decisions, economic conditions, and societal responses. The impact-response paradigm will also reflect the nature of (i) the state-corporate symbiosis, in which even if Trump does not formally integrate capitalist figures like Elon Musk or Mark Zuckerberg into the government, he might pursue policies favoring elite interests, such as corporate tax cuts. (ii) Media and technology manipulation. Trump weaponizes social media platforms like Twitter (now X) while simultaneously attacking tech giants that challenge his influence. (iii) Regulatory favoritism. Despite public criticism of Silicon Valley, Trump’s administration provided regulatory and tax advantages to major corporations. (iv) Preferential treatment for loyal capitalists. Trump’s government allocated state contracts, tax breaks, and industry protections to politically aligned business figures.

To the extent that corporate feudalism is costly to the economy and society’s well-being, the US will likely turn to asymmetric power, military force, and destructive nationalist and civilizational rhetoric to balance, conceal, legitimize, and make it acceptable to the public.

Strategic Implications of Trumpism Globally

As Nancy Quian emphasizes, while initially seen as just a "trade war" with China, it quickly became clear that Trump’s ambitions were far more extensive. He started imposing tariffs on Mexico, Canada, and the EU, which were promptly met with retaliatory actions. Although it’s still uncertain whether Trump’s actions will dissuade his "strategic competitors," they have already raised alarm among many European nations—long-standing strategic allies of the US since World War II and throughout the Cold War—along with NATO members and most OECD countries.  

Had he pursued his policies under the banner of democracy, human rights, the rule of law, multiparty free elections, separation of powers, checks and balances, and transparent governance, most of the OECD nations—controlling nearly 50% of the global GDP—might have been more open to closer cooperation with the US. However, Trump’s broad and aggressive stance and his confrontational rhetoric extending beyond trade wars are likely to leave the US deprived mainly of the allies it seeks.  

One reason for this maximalist stance may be Trump’s realization that gaining an economic advantage over China solely through trade wars is impossible. As a result, he has sought to incorporate military, political, technological, and other strategic means to secure a stronger position for the US. However, in doing so, he may have overestimated America’s strength—much like an empire already losing its hegemonic power. Instead of consolidating US influence, this overreach could accelerate America’s decline on the global stage.  

Additionally, should global resistance and retaliatory measures against Trump’s America gain momentum, two key consequences could emerge? First, competitors like China may grow even more potent. Trump’s disregard for international norms and values, his habit of barking orders at partners, and his use of political pressure like a small-town thug could alienate his allies and drive them closer to rising powers like China. Second, increasing costs for US consumers and damage to America’s strategic interests could weaken domestic support for Trump, potentially leading to a loss of the congressional majority in the 2026 midterm elections.

Conclusion

In our age of multipolarity, global capitalism is no longer a cohesive system under US hegemony. There are now competing forms of capitalism with different norms and values. There are three notable issues to underline here in terms of understanding the nature of rising capitalism under Trump 2.0. 

First, despite its contradictions, Trumpism exposes fundamental flaws in post-WWII economic orthodoxy—particularly its failures to address inequality, identity, and the unintended consequences of globalization. Therefore, the strength of Trump’s approach lies in its emotional resonance with voters who feel marginalized by globalization. Trumpism thrives not on traditional economic logic but on perceptions of cultural and economic displacement. 

Second, the fact that politicians come to power using right-wing populist rhetoric and then cede substantial control to capital rather than monitoring, directing, and engaging it in government for the benefit of the people underscores the volatile, elusive, and inherently dangerous nature of populist discourse. Trump’s apparent shift toward oligarchic capitalism (techno-feudalism) through his explicit favoritism toward specific billionaires signals a transition from "neutral" state capitalism to a system where the government actively serves dominant private entities. This shift undermines market competition, reduces economic democracy, and fosters monopolistic tendencies.

Third, rather than adhering to the principle of reforming the existing US system and global multilateral organizations, as Yuen Yuen Ang argues, Trump intends to export or externalize significant problems of the US economy, such as the ever-rising income inequality, chronic and systemic corruption caused by the rise of robber barons, and financial risks, to the “rest” of the world via “beggar thy neighbor policies.”

In this emerging conflict, the digital economy, technology wars, and financial sanctions have become key instruments. However, under Trump’s approach, the current global fragmentation and the new Cold War environment have evolved beyond a simple polarization between the West and the China-Russia axis. The struggle is no longer just between the center (West) and the periphery (Global South) but also within the Global South and the West.

That fragmentation might also lead to: (i) The breakdown of global supply chains as the West tries to reduce its dependence on China, shifting toward a "friendshoring" trade model. As a reaction, expanding BRICS nations are advancing de-dollarization and constructing alternatives to the Western financial system. (ii) A possible economic bloc formation against Western dominance reminiscent of the 1930s increases the risk of economic stagnation and geopolitical conflict. The US and the EU are implementing "Green Protectionism" via carbon tariffs. If these trends persist, the global economy may enter an era of trade wars, financial decoupling, and economic fragmentation. 

Finally, economists must grapple with the systemic issues that enabled its rise rather than dismissing it as an aberration. Until mainstream economics confronts these shortcomings, the populist movement it fuels is unlikely to fade.