State, Capital and State Capitalism
As Trump mobilises the state for his purposes, Karl Elliott explains that, counter to official narratives, there is always interplay between state and capital in the way capitalism works.
Trump 2.0: The (increasingly interventionist) Story So Far
On 22 August 2025, the Trump administration announced it was taking a 10% equity stake in Intel, making the government the largest shareholder in the US’s flagship semiconductor firm. This came just fifteen days after the president posted on his Truth Social platform: “The CEO of Intel is highly CONFLICTED and must resign, immediately”. Cue the company’s stock price falling by 3.8%.
In between, Trump cut one of his famous deals with two of Intel’s rivals, Nvidia and AMD. In return for his mercy of staying an embargo on their AI exports to China, Trump extracted a tribute of 15% of all revenues arising from these sales to be paid to the U.S. Treasury. Pope Innocent III must surely be smiling up at him right now: tithes are back in vogue.
In June, the government secured a “golden share” in US Steel (veto power over major corporate decisions, de facto a controlling interest) in exchange for blessing Nippon Steel’s $14.9 billion acquisition of the company. July saw the Department of Defence splash $400 million to become the largest investor in MP Materials – a California based rare earth miner that harvests minerals essential for military-grade weapons.
Add to this: Trump’s firing of the Bureau of Labor Statistics commissioner at the start of August (within hours of a jobs report release he claimed was “rigged” to make him “look bad”), his attempted firing of Federal Reserve Governor Lisa Cook at the end of August and his repeatedly expressed desire to fire the Fed Chair for not cutting interest rates fast enough. Not to mention the general chaos wrought by the president’s unmoored wielding of executive authority – tariffs, emergency powers, the trade war saga – all geared at steering corporate decisions, reshaping industries and influencing sector behaviour (covered in detail in Brian O’Boyle’s instructive article earlier this year). Put it all together, and what have you got?
No State Please. We’re Capitalists.
State Capitalism, apparently – at least according to the Cato Institute, the D.C. based doyenne of American libertarianism. The think-tank bemoans “unprecedented government ownership of private enterprise”, quipping “state capitalism will not make America great again – it will make it unrecognizable.” The National Review laments the “lurch toward state-directed capitalism”, characterising Trump’s shakedown of the chipmakers as “the definition of extortion”. The response from the free-market commentariat has been similarly indignant: “The U.S. Marches Toward State Capitalism With American Characteristics” reads a Wall Street Journal headline, in an ironic wink to Deng Xiaoping. The article goes on to make the case that Trump is “imitating the Chinese Communist Party by extending political control ever deeper into the economy”, describing his administration’s policies as a “hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises”.
Clearly, the American Right are up in arms that Trump has entered his interventionist era, but are they right? Is his administration guilty as charged of following the CCP’s state capitalist playbook? While that question may seem straightforward, answering it substantively implies we already know the answer to several other, related, questions. Questions such as: What is state capitalism? How’s it different from good old-fashioned private capitalism? When have we seen other instances of it? Can capitalism exist without the state? Why is it seemingly all the rage again now? Why should we as socialists care about any of these distinctions? Comparing Trump’s alleged state capitalism with vanilla varieties of capitalism, such as we have here in Ireland, may help us arrive at answers.
What’s It All About, State Capitalism?
The Wall Street Journal’s “hybrid” framework of state capitalism conceives of economic systems on a spectrum with ‘pure’ free-market capitalism on one end, ‘pure’ socialism on the other, with state capitalism somewhere in between. This view takes capitalism (vs socialism) at its core to be private (collective) ownership of the means of production, exploitation (coordination) of labour, production for profit (for social need), competitive accumulation (distribution according to social or economic priorities) and a virtually non-existent (central planning) role for the state in economic life.
The need for the state in capitalism, in this version, is thus negligible: enforce contracts, secure property rights, maintain order and basic infrastructure, and otherwise stay the hell out of the way. It’s basically there to be the referee. But in reality, the interplay between state and capital is much deeper. With state capitalism, the state pulls on the jersey and comes onto the pitch as a deep lying playmaker. Sure, all that good, fun stuff that dyed-in-the-wool capitalists love remains: the exploitation of workers, the extraction of surplus value, the accumulation of capital, etc. But the state also intervenes in economic affairs as investor, as owner, as director. In addition, there are shiny bonus features: a powerful domestic state bureaucracy operating in line with the ruling class, and heightened imperialist rivalry with other foreign state capitals. Ostensibly, it may appear plausible that the distinguishing feature of state capitalism is a more active, muscular state – counterposed against a hands-off, minimal state under its earlier and different capitalist versions. Think of the middle of last century so called Soviet Russia, US War Production Board during WWII, postwar East Asian development states. But there are good reasons to be sceptical of the claim that the state, under classical capitalism, is distinct from the capitalist system itself.
For starters, this portrayal of the state as passive, supervising “night-watchman” under capitalism is a mirage. The state is not just some neutral, free-floating structure above society. It never has been. For proof that the “hands-off” capitalist state notion is a myth we don’t need to skip ahead to Stalin or Japan and South Korea in their industrial heyday. We need look no further than the cradle of modern capitalism itself – Amsterdam 1602 and the founding of the Dutch East India Company (VOC). The story of its formation isn’t just about the birth of commercial corporations and their instruments of capital and conquest (shares, dividends, permanent incorporation, multinational operations). It’s the cautionary tale of how capitalism was, from the start, a state project. Whether it’s the granting of the firm’s charter by the States-General of the Netherlands (to seventeen of the most prominent merchants and regents forming the board), the fact the firm was vested with sweeping sovereign powers (rights to wage war, mint coins, negotiate treaties), or the Dutch state’s use of the VOC as the armed wing of its mercantilist, colonial strategy for securing spice routes and underwriting imperialist expansions – the conclusion is inescapable. The entanglement of state power and corporate profit is essential to capitalist development. As the tech bros say: It’s a feature, not a bug.
Bonnie and Clyde. Captain and Tenille. State and Capital.
We shouldn’t satisfy ourselves with simply pointing to historical examples of this Bruderkuss between state and capital. The bigger question is: why this structural independence, with each feeding off the other, which neither appear capable of easily escaping? Over the decades, there have been several influential attempts to answer this question and to lay out the logic underpinning the co-dependency. Some common themes emerge.
First and foremost, under capitalism, they rely on each other to survive. To keep the show on the road, the state depends on capital for resources: specifically, tax revenues; more generally, capital accumulation. Act against capitals’ interests and they might just defect, taking their productive assets with them. Thus the approximately half trillion dollars in annual corporate tax receipts acts as a limiting constraint on Trump’s strong-arm tactics against US firms.
If the state is prudent, it avoids concentration risk and diversifies across a broad base of industries and geographies. If instead the state is run by Fianna Fáil and Fine Gael, it relies on three US firms for 38% of all corporation tax take, leaving us in hock to these private tyrannies for the foreseeable. Apple, ECJ, €13 billion – need I say more? Likewise, individual capitals’ success depends heavily on their ability to influence state policy. Firms in a particular country are all too aware that their success rests, in large part, on their ability to influence the state to manoeuvre any number of variables in their favour (labour costs, borrowing rates, foreign-exchange rates, public sector contracts, protectionist trade barriers). Despite the seeming Damoclean sword (of companies hinting they might up sticks) hanging over the state’s head, in reality firms usually have strong economic and legal reasons for being there in the first place. Tearing up finely tuned supply chains and restructuring operations elsewhere tends to be a guaranteed way to torch profits. Far better to ingratiate oneself with the great and the good of the state, and gently nudge them toward the ‘right’ decisions.
It’s A Big Club. And You Ain’t In It.
Leading us to a second main reason for suspecting state and capital can’t be kept discrete: people and relationships. Any capitalist worth their salt has a contact book brimming with movers and shakers of the state. Any up-and-coming apparatchik hungry for high office needs to be seen as au courant with the captains of industry. This dynamic has intensified under Trump, where the ‘revolving door’ has spun so fast, it’s practically a carousel: Scott Bessent and Howard Lutnick in from Wall Street hedge fund and brokerage firms as current Secretaries of Treasury and Commerce, respectively. And in the other direction: Rick Perry rejoining the board of Energy Transfer LP (a leading mid-stream oil and gas company) in January 2020, having previously resigned from the same board in 2017 to become Trump’s Secretary of (you guessed it) Energy.
Such flagrant jobbery might even make our ruling class here blush. Here in Ireland, we’d like to think of ourselves as a little more demure in our patronage – rationalising decades of policy outcomes favouring corporations over the public interest as the result of a broadly ‘pro-enterprise’ ideological orientation of senior civil servants and the personal connections and tight interlocking networks they form with private sector leaders in the course of crafting policy. Or to translate all that bureaucratic waffle: lobbying (legalized, codified corruption) and old boys clubs (nod-and-a-wink, sanctioned cronyism) guaranteeing business-as-usual carries on.
It might not be a perfectly geometric circle on Google Maps connecting Clongowes, Smurfit, IFSC, Ibec and Leinster House – but it’s undeniably a golden one. Although, now with the two most recently retired Taoisigh exiting stage left to join the boards of a private equity company and an American PR firm, respectively – not to mention the Minister for Finance resigning last month to take up a $600k-a-year tax-free job at the World Bank, months after serendipitously increasing the government’s annual contribution to the organisation by 33.5% – the revolving door is starting to creak ever louder on this side of the Atlantic. But it’s not just connections solidified by education, socialising, in-marrying and nepotism that unite businesspeople and state bureaucrats: it’s their shared status as members of the ruling class. Even if state bureaucrats don’t personally hold shares in their IBKR portfolios, they’re still forced to operate as agents of a capital accumulating class. The continued existence of their stratum depends directly on continued capitalist exploitation. Without it they can’t fund their own privileges and functions. Like it or not, under capitalism, they can’t be autonomous. The senior civil servant’s interests are inherently aligned with those of the corporate exec that they golf with – and both are against the interests of the working class.
Crisis (State) Capitalism
Nowhere is the proof of this alignment of interests among the ruling class more evident than in that essential feature of modern capitalism: the dig-out (or for American-English speakers: bail-out). Is there anything more nailed on, in times of crisis, than the state riding in on its white horse to save the day? The 2008 Great Financial Crisis brutally exposed this. IBRC, NAMA, TARP, TBTF … you name the crisis, the state reflexively intercedes to deliver life-saving resuscitation to capital (along with a jargony four-letter acronym to obscure the true nature of the heist).
Libertarian ideologues might talk a good game about the perils of state interference in free markets. But their Cassandra warnings fall silent whenever the threat of systemic financial collapse drives them back into the forgiving arms of their mother states. In breaking news: capitals will in fact turn to the state (to whom they’re paying protection money) to defend their competitive and economic interests. And in the current epoch of Too Big To Fail corporations (where the fall of any one of the technofeudalist mega-corporations would trigger a domino effect bringing them all down), states have no option but to intervene. The alternative – millions of their citizens losing their livelihoods, imminent collapse of the prevailing order and the loss of revenue and power that threatens to accompany widespread economic collapse – is simply too dire to contemplate. These interventions are rare, temporary exceptions, we’re told. But these are the exceptions that prove the rule that a minimalist role of the state in capital is undesirable for both. Likewise, capital needs to be backstopped by something else that only the state can provide: what Chris Harman referred to as “local monopolies of armed forces” that can prevent their geoeconomic rivals from “using direct, Mafia style violence” against them. Only the full might of the state’s arsenal can keep the foreign wolf from the corporate henhouse.
It’s these insights about the fragility of the capitalist system – unbridled corporate leviathans, superpower rivalries, geopolitical tensions – that are key to understanding the resurgence of state capitalism. China has long been its poster child over the past three-quarters of a century. And you don’t need to have been listening to many Trump speeches to realize it’s his bête noire. China has transformed utterly, from Mao’s largely subsistence-based agrarian economy modelled on the Soviet Union, to a nation that can boast the following accolades: world’s largest exporter, largest energy consumer, second largest economy (one-fifth of global GDP). All achieved through systematic, long-term orchestration of state capitalist power over capital accumulation and exploitation (terms not in the Chinese official version) under the tightening grip of the CCP – and increasingly blurring the boundaries between public and private.
When your whole shtick is that you’re going to Make America Great Again, these challenges to your political, economic and military interests are a direct affront. No mafia boss just sits back and allows a rival family to take over. And if you can’t beat them, join them. But analysis of Trump’s seemingly erratic attempts to reset the global economic order back in America’s favour should go beyond a shallow inference of an impetus to emulate China’s success. The deeper question is: what features intrinsic to capitalism are forcing this global tendency towards competitive state capitalism?
Neoliberal decay
First, the accelerating decay of neoliberalism. The spectre of economic stagnation haunts the markets. Exponential growth on a finite planet, with finite resources and markets to expand into, is destined to end in increasingly antagonistic, nationalist competition. From an average of roughly 10% per annum for three decades from 1980 on, China’s yearly growth rate is down to below 5% today. The US meanwhile has limped along at 2-3% growth this century. The law of diminishing returns to scale. Both nations have staggering national debt burdens, continually exacerbated with stimulus packages and quantitative easing (money-printing) to eke out these dwindling GDP rates. There are structural limits to mature capitalist economies as markets get saturated and overall rates of profit decline.
All of this necessarily results in intensified competition over trade, investment and technological superiority between geopolitical rivals. What emerges is a kind of Game Theory in an increasingly multipolar world, with states monitoring each others’ policy moves and making strategic changes to their own in response. Which is why you can’t open the newspaper these days without encountering tariffs, embargoes, export bans, border controls and other such artifacts of state interventionism. History has repeatedly shown us that the rise of aggressive economic nationalism often precedes the erosion of any meaningful boundary between corporate interests and national security.
A case in point: Taiwan. Despite being an island of just 36,200 square kilometres, it has become a crucial pawn in this inter-imperialist struggle. Not only is it caught in the cross-fire of the militaristic sabre-rattling of both Washington and Beijing, but as home to the world’s largest producer of semiconductors (TSMC), it has also taken on an outsized strategic importance as the superpowers vie for access to the precious silicon increasingly regarded as an existential necessity in the rapidly escalating AI arms race. Geoeconomic rivalry is once again the new norm.
State capitalism?
So, to return to the initial question: is the Trump administration guilty of State Capitalism? Fixating narrowly on this probably misses the wood for the trees. It’s in attempting to answer the series of related questions posed earlier in the article that we can deepen our understanding of the state’s role in capital. State capitalism might best be viewed as a mutating feature of the capitalist mode of production, rather than a distinct mode of its own. All the classical elements – the private property, the exploitation, the accumulation – are still there. But this variation involves a brawnier, more overt state with explicit imperialist aims, no longer content with remaining hidden in the engine room. This mutation may express itself differently across time and place. Trump’s “Daddy State” economics may appear more volatile, transactional and opportunistic than the carefully orchestrated, tightly planned, systemic (Chinese) or coercive, bureaucratic (Soviet) variants that have gone before. But what links them all is a ruling class sitting at the top of society and a powerful overlap of interests and personnel between those who preside over capital and state office alike. While history may well look back on Trump in his second term as an accelerant of state capitalist dynamics in the midst of neoliberal decline and inter-imperial multipolarity, it’s important to recognize that the history of capitalism is the history of the state constituting capital. To paraphrase Sinatra – under capitalism – state and capital go together like a horse and carriage. Our job as socialists is to bring about the conditions where you can have one without the other – or a state that pulls for workers not capitalists.
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