As many CEOs understandably grew horrified last month at the prospect that New York City, the capital of capitalism, is on the brink of going socialist with the mayoral momentum of the inexperienced candidate Zohran Mamdani, they were ignoring the greater assault on free market capitalism that has already overtaken the nation in the Republican Party. While we agree that Mamdani’s solutions to affordable housing and grocery prices threaten to undermine free markets by bowing to the appeal of populist anger, President Donald Trump has already begun doing so, but to suit his own grandiose political agenda instead.
Unlike any leader of any free-market economy around the world, President Trump has seized control of private enterprise’s strategic decision-making and investment policies while invading corporate board rooms so that he may dictate leadership staffing, punish corporate critics, and demand public compliance with his political agenda. This is far more dangerous to capitalism than a city-run grocery store.
Many free-market economists and business leaders who have long worshipped the free-market ideals of Adam Smith, Friedrich Hayek, Ayn Rand, and Milton Friedman should be aware that their idols would be rolling in their graves right now, as rather than pursue standard laissez-faire conservative economic policies, MAGA has gone Marxist and even, increasingly, Maoist.
As Greg Ip warned this week in The Wall Street Journal, “The US marches toward state capitalism with American characteristics … President Trump is imitating [the] Chinese Communist Party by extending political control ever deeper into the economy.” Ip pointed out that in the past, crisis-driven government bailouts of the banking and automotive sectors, such as TARP, were acute, targeted assistance, with brief and bipartisan rescue aims. Similarly, government incentives to drive investments in chips manufacturing, oil exploration, space exploration, internet development, agricultural vitality, cancer detection, disease treatment, and clean energy were not ownership deals with preferred companies or corporate cronies.
Indeed, Ip’s warnings mirror our own, as we were the first to accurately, presciently warn—over a year ago—that many of Trump’s economic positions more closely resemble communism than capitalism, as part of what we called “the coming MAGA assault on capitalism.” It certainly looks like MAGA is going Marxist if not even Maoist, especially across Trump’s vicious personal targeting of individual business leaders; government crackdown on business freedom of expression; weaponization of government powers; apparent extortion of businesses; and insertion of government into an unprecedented, outsized role in private sector strategic investment, capital flows and business decision-making.
Marxism and Maoism were both, of course, expressions of the communist theory that spilled forth from Karl Marx’s pen in the 19th century, brought to life in the brutal one-party states of the Soviet Union and the People’s Republic of China under its leader Mao Zedong, before it evolved into “capitalism with Chinese characteristics” starting in the 1970s, around the time of President Richard Nixon’s fateful visit to Beijing.
Both Marxism and Maoism claimed to champion “ordinary people” against corrupt or exploitative elites, while both targeted intellectuals, bureaucrats, and traditionalists, and purged institutions to enforce ideological purity, especially during Stalin’s “Great Terror” and Mao’s “Cultural Revolution.” Both centralized leadership to the point of creating a cult of personality, demanding intense loyalty and the glorification of the sole figure who could fix the country’s problems. Both prized loyalty over expertise, sidelining critics and dissenters in favor of a tightly controlled political narrative. Sound familiar?
The essence of market capitalism is that owners—shareholders and the management they appoint share in the profits. These deals give share of profits to government in return for favors. Friedman said that federal government should never own anything—that it should not run a surplus because it would have funds to invest in the private sector. What strategic decision-making rights would the government have in such deals, then?
Assaults targeting individual business leaders
Trump has a long history of targeting individual CEOs in highly vicious, personal terms for perceived offenses. This week, Trump called for the firing of Goldman Sachs’ renowned economist Jan Hatzius who accurately called the 2008 financial crisis over the economist’s concern regarding the tariff overhand on the US economy. He also attacked a top-performing financier, David Solomon, the non-partisan CEO of Goldman Sachs, telling him to quit and just be a disk jockey. (Solomon has a famous side hustle as an electronic dance music DJ, known as DJ D-Sol.)
Just last week, many semiconductor industry observers expressed tremendous discomfort with Trump’s attacks on Lip-Bu Tan, the CEO of Intel, and Trump’s calls for his immediate recognition. Even those who are genuinely concerned by Tan’s documented history of CCP ties and his continuing investments in China, would have preferred that Trump express his views in a more subtle fashion which recognizes the widespread entanglements of the Chinese Communist Party in the largest Chinese businesses. Roughly one-third of the Chinese economy is controlled by CCP-owned enterprises with actual CCP monitors in their boardrooms. Instead of calling this out, the Trump administration appears to want to match such corporate oversight itself.
Virtually any CEO doing business in China works with companies and schools that have ties to People’s Liberation Army of China, given China’s own authoritarian command economy. There has been great concern that such prominent Chinese businesses as Huawei, Aviation Industry Corporation of China (AVIC), China Telecom, China Mobile, and Hikvision have close ties to the PLA. Many state-owned enterprises with which most western enterprises do business even have militias with ties to the PLA. While this is concerning across political parties, how can President Trump justifying singling out Intel alone?
Trump has similarly publicly called out and humiliated leading CEOs ranging from Jamie Dimon of JPMorgan to Brian Moynihan of Bank of America to Doug McMillon of Walmart to Tim Cook of Apple to Matt Levatich of Harley-Davidson, among many others, when they speak the truth about issues ranging from trade policies to HR practices to diplomacy to environmental sustainability.
The unwarranted attack on Brian Moynihan and Bank of America—that they previously denied him as a customer—was particularly alarming as President Trump’s four bankruptcies were reasonable concerns when major banks were approached about lending to him. Bewilderingly, Deutsche Bank’s private wealth unit loaned Trump $48 million—following his default on a $640 million loan from Deutsche Bank’s commercial unit. Now regulators are being told by the Trump Administration to withdraw reputation risk as criteria for reviewing prudent banking practices.
Suppressing business freedom of expression in favor of political obedience
The political right used to complain about the “political correctness of the left.” Similarly, Trump’s history of cracking down on businesses for exercising their freedom of expression resembles the purges of Maoist China far more than American democratic norms.
For example, when Merck CEO Ken Frazier resigned from Trump’s Manufacturing Councils in protest over Trump’s infamous response to the Charlottesville rally, claiming there were “fine people” on both sides, Trump lashed out at Frazier, mocking him by saying he’d now have “more time to lower ripoff drug prices”. Similarly, Trump has repeatedly attacked Jeff Bezos, claiming that Amazon was “stealing” from the US Postal Service in the aftermath of critical coverage by the Bezos-owned Washington Post.
Trump FTC Chairman Andrew Ferguson has publicly challenged woke ideology as a part of his antitrust remit, arguing that “In 2020, if you had a view on masks that was inconsistent with how big tech felt about masks, you weren’t allowed to talk about it. If you had a view on vaccines, couldn’t talk about it. But it wasn’t just big tech censorship. That was a huge problem. Consumers couldn’t go into a store without having political messages pushed in their face. And I’m sitting in 2020 working in the Senate going, gosh, if companies feel like they can alienate half their consumer base without suffering any real competitive consequences, we probably have a competition problem.”
Similarly, Trump FCC Chair Brendan Carr has argued that he would use DEI as a basis to block mergers, declaring that “if there are businesses out there that are still promoting invidious forms of DEI discrimination, I really don’t see a path forward where the FCC could reach the conclusion that approving the transaction is going to be in the public interest.”
Accordingly, to complete it acquisition of Paramount/CBS, David Ellison’s Skydance had to ensure review of its news reporting “to address bias and restore fact-based reporting” with a bias monitor as well as racial hiring practices which met the FCC’s standards under Carr.
Seizing control of strategic investment and private enterprise decision-making
Akin to Mao Zedong directing business decisions as a part of his wildly disastrous Great Leap Forward central economic planning initiative, Trump has plunged the US government headfirst into an unprecedented active role in directing private business decision-making and capital flows. Last month, he ordered Coca-Cola CEO James Quincey to replace cane sugar with other sweeteners that the firm uses, despite the lack of scientific evidence supporting such a move and despite the fact that the CEO of Coca-Cola is accountable to his board and shareholders, not Donald Trump.
This even extends to the US government directly receiving equity stakes, golden shares, and royalties from business revenues, sometimes as a part of complicated negotiations with the US government and giving off the appearance, whether warranted or not, of drug deals. For example, leading chipmakers Nvidia and AMD were just forced to surrender 15% of the revenue flows from their sales to China to the U.S. government, apparently as a concession to be able to continue selling in that market.
Similarly, as a precondition to approving the dangerous takeover of US Steel by the Japanese, Trump extracted a “golden share” for the U.S. government with effective veto power over certain corporate decisions. Likewise, in his first term, Trump attacked Harley-Davidson for supposedly moving factories overseas when in reality 100% of its beloved motorcycles sold in the U.S. are actually made in the U.S. Out of sheer political spite, Trump proclaimed that American bikers should buy from Harley’s foreign competitors, ranting that Harley had “surrendered” and “betrayed” America while threatening “they will be taxed like never before.”
Likewise, Trump wrongly accused Ford of robbing Detroit of jobs when it relocated an engine plant from Europe to Mexico, fortifying its North American supply chain. When one of us personally corrected Trump on that, he replied, “I don’t care, it’s working.” At the same time, the home appliances firm Carrier had a parallel experience with Trump-bashing them, despite being located in Mike Pence’s home state of Indiana.
Political weaponization of government powers
Trump targeted AT&T with a drawn-out antitrust suit as well as numerous personal taunts when it tried to merge with Time Warner, hoping to pressure CNN to become more friendly in its coverage. In stark contrast, Trump pal Rupert Murdoch received the white-gloves treatment through antitrust when he sold 21st Century Fox at around the same time, despite arguably more genuine antitrust concerns.
In fact, Trump antitrust chief Makan Delrahim expressed support for the AT&T-Time Warner combination as an academic but flipped 180 degrees to appease Trump once in office, holding up the deal for two years. Likewise, before his first term ran out, Trump personally drove a proposed deal that would have secured TikTok for his longtime supporter and friend Larry Ellison at Oracle, unusually inserting himself into every detail of the negotiation process.
The appearance of extortion and bribery
As prominent media commentators such as Oliver Darcy and Matt Belloni point out, some of Trump’s demands resemble extortion. There was the payment of $16 million to the Trump Presidential Library from CBS News’ 60 Minutes over the standard editing of an interview with Kamala Harris last summer. This occurred over the objections of its executive producer (who resigned in protest), and while FCC approval was pending of Paramount’s acquisition by Skydance.
This was followed by the cancellation of the modern “King of Comedy,” Stephen Colbert, whose revered late show suddenly had its deal abruptly canceled on the eve of Trump’s FCC merger approval, seemingly over its satirical criticism of the Trump administration. The explanation that the show was too expensive and lost money raised many eyebrows, particularly given the lack of attempts to trim the 200-person production staff.
Similar lawsuits initiated by Trump in office against private businesses give off a similar appearance of extortion and bribery, whether justified or not. These include Trump’s $100 million lawsuit against The Wall Street Journal for reporting about a letter Trump wrote to Jeffrey Epstein for his 50th birthday; and Disney/ABC’s $15 million payment to the Trump Presidential Library to settle defamation claims against George Stephanopoulos.
Across each of these five dimensions, one can’t help but think MAGA is going Marxist or full Maoist. Adam Smith’s salute to the “invisible hand” of free markets in favor of the fist of government appears to be losing out in the Trump administration. as these unprecedented policies with no parallel in American history share much more in common with Karl Marx and Mao Zedong than Adam Smith and Ayn Rand. Many now wonder why the Business Roundtable remains missing in action, insulating itself with turgid knowledge, subtracting white papers and passive forums, piously genuflecting to President Trump’s assaults on free-market capitalism that make New York’s Mamdani look like John D. Rockefeller.
The Marxist-style oppression of free enterprise was echoed in assaults on the nation’s top law firms and universities through authoritarian blitzkriegs to suppress constitutionally protected American ideals of freedom of expression, a cornerstone of capitalism. Harvard University, like 60 other universities, has been threatened with a cutoff of foreign-born students and vital federal research funds under the false pretext of antisemitism, despite the Anti-Defamation League giving Harvard passing grades on its tests for antisemitism. Paul Weiss is one of many major law firms that the Trump administration threatened with having its security clearance and federal building access denied, merely by offering to represent independent citizen voices attacked by Trump for noncompliance with his thought police and MAGA political correctness. We have spoken in admiration of the hundreds of universities and law firms that have now unified to stop these totalitarian White House edicts. The legal and academic community remembered what the Business Roundtable and genuine traditional economic conservatives have forgotten, which was Benjamin Franklin’s admonition that “we must all hang together or surely we will hang separately.”
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