One of the great dangers of the 2016 election is that many Americans will mistake Donald Trump for an advocate of capitalism. Although he is a wealthy businessman, Trump is anti-capitalist in ideology.
The Democrats often are explicitly anti-capitalist; they represent the soft-socialism of so-called progressivism—the “democratic socialism” that Bernie Sanders loudly trumpets and that Hillary Clinton defensively parrots. This camp advocates redistributive taxation and heavy regulations on businesses to fight income inequality and other alleged economic injustices.
It is convenient for leftists to brand Trump’s racially tinged, nationalistic policies as “capitalist.” In reality, Trump’s proposals are diametrically opposed to capitalism. The “debate” between the democratic socialism of the left and Trump’s nationalism is really one between two forms of statism. Indeed, in many ways Sanders’s brand of statism and Trump’s brand of statism converge; consider, for example, the two candidates’ advocacy of restraints on international trade.
Before reflecting on some of the ways that Trump is an anti-capitalist, we should review briefly what capitalism is, so that we can tell what it is not.
In its narrow economic sense, capitalism refers to the development of capital—tools, factories, ships, software, and so on—that vastly expands people’s productivity and makes possible unlimited increases in standards of living. In this sense capitalists are those who invest the resources on which capital formation depends.
Here we are interested in the broader meaning of capitalism, as a political-economic system of liberty, including rule of law and property rights, that enables individuals to pursue their own values by their own judgment and, consequently, to pursue the heights of economic prosperity. In this sense, capitalism has never existed in pure form; where it has existed it has always been mixed to a lesser or greater degree with rights-violating practices; it is, as Ayn Rand puts it, an “unknown ideal.”
It is possible for someone to invest in capital, and to be a capitalist in that narrow sense, but to be ideologically mixed or antagonistic with respect to capitalism as the political-economic system of liberty. Rand dramatized the worst sort of such “capitalists” as many of her villains in Atlas Shrugged. In our world, people such as Michael Bloomberg, Warren Buffet, Bill Gates, and George Soros have been enormously successful in business and yet have supported rights-violating, statist policies to various degrees.
Ideologically, Trump is nearly as antagonistic to capitalism as is Sanders. At least in some ways (and arguably on net), he is even more stridently anti-capitalist than is Clinton. Trump occasionally mouths rhetoric somewhat friendly to capitalism only when he praises individuals and nations for achieving great wealth or picks up free-market-leaning talking points from conservatives (which he almost certainly does not genuinely understand or embrace). In almost all of his rhetoric, in all of the policies that animate him, and even in some of his business practices, Trump stands opposed to capitalism. Let us count some of the ways.
1. Trump threatened Amazon with political reprisals via tax and antitrust enforcement.
This point shows Trump’s anti-capitalism in three distinct ways: He threatened a business owner with political reprisals; he threatened to use the tax code specifically for this purpose, thereby sanctioning the existence of such tax laws; and he threatened to use antitrust law for this purpose, thereby sanctioning the existence of antitrust laws.
Here is what Trump said:
[The Washington Post] is owned as a toy by Jeff Bezos who controls Amazon. Amazon is getting away with murder tax-wise. He’s using the Washington Post for power so that the politicians in Washington don’t tax Amazon like they should be taxed. [Bezos is] worried about me . . . [because] he thinks I would go after him for antitrust because he’s got a huge antitrust problem. Amazon is controlling so much of what they’re doing. . . . What he’s got is a monopoly and he wants to make sure I don’t get in.
Obviously threatening to unleash government force against political opponents is anti-capitalistic; capitalism is based on individual rights and a government based on rule of just law.
Just as obvious, seizing producers’ wealth by government force is anti-capitalistic; producers have a moral right to their wealth, and it is a violation of their rights to confiscate it.
Perhaps less obvious to some but just as important, passing or enforcing antitrust laws is also anti-capitalistic, because such laws interfere with consensual relationships on a free market, instead imposing government dictates for how businesses must operate. (Antitrust is a complex topic; for more information see Rand’s remarks and the books The Abolition of Antitrust and The Causes and Consequences of Antitrust.)
2. Trump praises eminent domain, and his businesses have threatened to use it.
In capitalism, property rights are inviolate; no one may seize the property of another. But Trump does not believe in private property rights; he believes in government power to redistribute property via eminent domain.
As David Boaz relates, not only have Trump’s business concerns threatened to pursue eminent domain on at least two occasions, Trump has explicitly praised the use of government force to take property from some people and transfer it to others.
Government does play a proper role in resolving property disputes over abandoned properties and in addressing property uses that harm others’ enjoyment of their property. But that’s not what Trump advocates; he advocates taking people’s houses so that developers can build “beautiful fountains” and the like.
3. Trump has threatened a “trade war” with other nations.
Donald Trump has called for tariffs on goods from other nations, and he has explicitly threatened a “trade war.”
Trump’s policies would increase costs for U.S. producers and consumers and risk throwing the U.S. economy into recession.
Here, too, Trump is anti-capitalist. In capitalism, producers and consumers may buy and sell goods and services with whomever they please, anywhere in the world, excepting only some highly delimited cases (such as the selling of military goods to hostile nations).
Notably, Trump treats trade essentially as collectivistic, rather than as something to which individuals have a right. He talks about national trade as though it were something above and beyond the trade of all the individuals here. He talks about “American jobs,” as though the jobs an employer creates somehow belong to the nation and its government. He talks about the nation “losing” in trade, regardless of the individual choices that traders and investors voluntarily make.
Trump deserves a little credit for allowing his handlers to add language to his web site about cutting U.S. corporate tax rates, which indeed would partly unshackle U.S. producers, but on the whole Trump is strongly anti-capitalist with respect to international trade.
4. Trump wants to restrict immigration on explicitly protectionist grounds.
It’s one thing to say the U.S. government should more proactively screen immigrants for violent tendencies and more proactively deport or imprison violent immigrants. It’s quite another to say, as Trump does, that the U.S. government should forcibly restrict U.S. employers from hiring peaceable immigrants.
In capitalism, employers may hire any peaceable persons they choose; they have no obligation to hire someone just because they were born in one place rather than another. Similarly, under capitalism, property owners may invite any peaceable person onto their property that they choose.
Dangerously, Trump scapegoats immigrants, wrongly blaming them for high unemployment rates among certain segments of American workers and other for ills—even though rights-violating U.S. policies, not immigrants, demonstrably are to blame for those problems. For example, minimum wage laws, laws that interfere with employer-union contracts, licensing laws, and many other sorts of interventions drive many Americans into the unemployment lines.
At one point, Trump promised to forcibly deport some eleven million peaceable immigrants who are in the country illegally. (Trump seems not to really believe his own statements in this regard, as he seems not to really believe many things he says, but nevertheless he said it.) Not only would such a policy blatantly violate the rights of U.S. employers to hire immigrants and of peaceable people to live and work where they want, it would require the creation of a full-blown fascist police state to implement.
5. Trump relied on subsidies and discriminatory taxation to get ahead in business.
In capitalism, producers bear their own costs and operate on a level legal playing field. Trump operated his businesses by securing government subsidies and tax favoritism—thereby counting on government to throttle his competitors by taxing them more.
As the Los Angeles Times reported in 2011, Trump “built his empire in part through government largesse and connections.” The article continues: “In New York, Trump was the first developer to receive a public subsidy for commercial projects under programs initially reserved for improving slum neighborhoods.” Trump also benefitted from generous “tax abatement” programs, meaning that government taxed him at much lower rates than it taxed his competitors.
This is a tricky issue because, as I’ve explained elsewhere, business leaders morally may take advantage of certain government programs which they did not create and which they explicitly oppose, if for the sake of partial restitution for government seizing their wealth elsewhere.
But Trump did not take advantage of subsidies and tax favoritism for the explicit purpose of mitigating his long-term tax burden, nor did he explicitly call for an end to subsidies and for equitable tax cuts for all. Rather, he actively sought subsidies and tax favoritism and sanctioned their existence, as the Times‘s article makes clear.
6. Trump financed anti-gambling campaigns in New York to protect his gambling operations in Atlantic City.
In capitalism, business leaders must compete in a free market; they may not use government force to harm competitors. Trump intentionally advocated government action to throttle his potential business competitors.
As the New York Times reported in 2000, “Donald J. Trump and his associates . . . secretly financed newspaper advertisements opposing casino gambling in the Catskills.” Why? “Trump has long feared that competition in the Catskills would undermine the gambling industry in Atlantic City, where he owns three casinos.” (I first learned of this story from Politico. Note that I don’t approve of the lobbying regulations or fines discussed by the Times.)
This is a perfect case of what Bruce Yandle calls the “bootleggers and baptists” phenomenon, when supposed do-gooders (in this case members of an anti-gambling group) team up with interests who do the very thing the supposed do-gooders oppose, to forcibly restrict competition in the field.
Although hardly the worst of Trump’s offenses, this case clearly illustrates Trump’s antagonism toward capitalism.
* * *
Here I have outlined only some of the major ways that Trump is by practice and by ideology anti-capitalist. But mine is not too difficult a case to make. Trump has never pretended to advocate capitalism; it’s not as though he punctuates his public speeches with references to individual rights and free markets. Nor do Trump’s supporters pretend that he advocates capitalism.
No honest, informed person can reflect on the matter for more than a few minutes and conclude that Trump is anything other than anti-capitalist in basic orientation.
But I do think there is value in drawing attention to this fact and in reviewing some of the relevant details. After all, leaders of the Republican Party especially since Reagan often have voiced support at least for aspects of capitalism, even when Republican politicians often have acted by statist rather than capitalist principles.
With Trump now at the top of the Republican ticket, no one may now pretend that the GOP is any longer or in any way the party of capitalism—at least for now. Some Republicans continue to advocate capitalism, and many more unseriously mouth support for aspects of capitalism, but they are now outcasts riding in the box cars of the Trump Train.
Those of us who understand and advocate capitalism would do well not to let others forget that Trump is anti-capitalist—this goes for the left, Trump’s supporters, and other members of the Republican Party. Under Trump, the Republican Party even more than before stands for statism, not capitalism, and hence is competing with the Democrats merely over which brand of statism to impose.
Image: Gage Skidmore
I Came to the Same Conclusion
Great article, Ari. Your evaluation of Trump as anti-capitalist is very similar to my own, though expressed much more clearly. I do think that a significant portion of the population are unlikely to take the few moments necessary to see that he is not a capitalist. After all, many will think, he is rich so he must be a capitalist.
It is this mistaken attribution of him as a capitalist which puts Trump at the top of my “people I will not vote for” list. To be fair, Hillary and Bernie are on the same list.
Again, I very much enjoyed your article.
—Patrick L. Black
May 31, 2016