{"id":16822,"date":"2025-01-23T18:00:39","date_gmt":"2025-01-23T18:00:39","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=16822"},"modified":"2025-04-17T11:11:29","modified_gmt":"2025-04-17T11:11:29","slug":"trump-2-0-and-a-new-age-of-authoritarian-capitalism","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2025\/01\/trump-2-0-and-a-new-age-of-authoritarian-capitalism\/","title":{"rendered":"Trump 2.0 and a new age of authoritarian capitalism"},"content":{"rendered":"\n
After four years of narrowly avoiding prison, Donald Trump is back in the White House. For many observers outside the US, the re-election of a convicted felon who tried to illegally overturn an election is baffling.<\/strong><\/div>\n
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But Trump\u2019s second victory was no fluke \u2013 and nor was it merely the result of Russian interference or \u2018deplorable\u2019 voters. Although Trump left formal politics in 2021, the forces that brought him to power did not. This time, he is entering office far better organised, far stronger, and with a more diverse political base.<\/div>\n
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Trump is also not alone: across the West, right-wing populism is on the march, while progressive parties continue to find themselves on the back foot. In an increasingly unstable world, the rising tide of the authoritarian right poses huge challenges for the global economy. Left unchecked, it has the potential to imperil peace, prosperity and the planet.<\/div>\n
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To fully assess the threat this right-wing populism poses, and how to counter it, we must carefully assess the conditions under which Trump is assuming power \u2013 as well as the plans he has for wielding it. Like all political developments, Trump\u2019s dramatic return has not happened in a vacuum. Instead, it must be viewed in the context of a series of profound political and economic shifts that are reshaping the face of Western capitalism.<\/div>\n
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Red Dragon rising<\/h2>\n
The first shift \u2013 and by far most significant \u2013 is the rise of a rival economic superpower that could potentially threaten the technological supremacy that has long underpinned US hegemony.<\/div>\n
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Following China\u2019s entry into the global trading system in 2001, many economists in the West assumed that China\u2019s state-capitalist model would deliver some catch-up growth, then quickly run out of steam. The theory was that while state-led systems can be effective at rapidly mobilising existing resources, they struggle to drive productivity growth and innovation. This, it was thought, would eventually force China to open up its economy and embrace liberal democracy.<\/div>\n
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However, China\u2019s achievements to date have made such pronouncements look remarkably naive. Not only has liberal democracy not arrived in the People\u2019s Republic, but the Chinese Communist Party (CCP) has developed a distinct economic model that has lifted nearly a billion people out of poverty and transformed the country into one of the world\u2019s largest and most dynamic economies. Somewhat ironically, it is Western governments that have had to adapt to China\u2019s model \u2013 not the other way around. In recent years, China\u2019s successes have forced Western governments to pivot away from free market orthodoxy and resuscitate muscular industrial policy, which had long been banished from Western policy toolkits.<\/div>\n
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The importance of China\u2019s spectacular rise to Trump\u2019s victory in 2016 cannot be overstated. At a time when most Americans felt the economy simply wasn\u2019t working, Trump offered a clear albeit false diagnosis of the problems \u2013 China and immigration \u2013 and an aggressive strategy for dealing with them, when the Democrats were doing neither. His aim was to stand up to China, bring back jobs and put \u2018America first\u2019.<\/div>\n
His weapon of choice, tariffs, marked a major break with the neoliberal consensus of recent decades. Protectionism was back, spearheaded by the world\u2019s largest economic and military power.<\/div>\n
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But in reality, Trump\u2019s \u2018trade war\u2019 was never about trade or jobs. As I wrote back in 2020, it was primarily a response to US fears of losing technological supremacy in the face of successful Chinese industrial policy. From the very beginning, the \u2018trade war\u2019 was less about trade, and more about constraining Chinese development and preventing China\u2019s rise as a rival technological power.<\/div>\n
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Return of the state<\/h2>\n
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Since Trump\u2019s exit from the White House in 2021, this \u2018return of the state\u2019 in Western economies has accelerated, fuelled by two other forces. The first has been a global ramping up of action to tackle the climate crisis. As a growing number of countries have embraced net zero targets, many have enacted new industrial policies to try and bolster capabilities to compete in emerging green supply chains. The second factor was the Covid-19 pandemic, which saw governments intervene in economies on an unprecedented scale. In order to contain the economic fallout, Western countries ripped up the neoliberal playbook in favour of widespread state planning and cash transfers. While the promises to \u2018build back better\u2019 inevitably rang hollow, many governments and businesses did act to bolster domestic supply chains in an attempt to address the chronic lack of resilience the pandemic exposed.<\/div>\n
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Acutely aware of these challenges, in 2021 the incoming Joe Biden administration sought to break with the economic consensus of his Democrat predecessors. Not only did Biden keep most of Trump\u2019s tariffs on China, he increased them. His administration then embarked on the US\u2019s most significant experiment with industrial policy for decades.<\/div>\n
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The key pillar of so-called \u2018Bidenomics\u2019 was the Inflation Reduction Act (IRA). Despite its name, the IRA was not primarily about reducing inflation. Instead, it launched the biggest investment programme in modern American history to revitalise the economy, enhance energy security, and tackle the climate crisis. The package included large tax breaks and subsidies to bolster US manufacturing capacity, and wean the US away from Chinese imports. In practice, the IRA was a significantly watered-down version of Biden\u2019s initial \u2018Build Back Better\u2019 agenda, which, in addition to ambitious climate spending, also proposed trillions of additional dollars on social spending in areas such as housing, childcare and healthcare, as well as more progressive tax hikes. This agenda was blocked by Republicans and conservative Democratic senators, who also secured big giveaways to the fossil fuel industry.<\/div>\n
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Nonetheless, the IRA represented a significant step change in the ideological outlook of the world\u2019s largest economy. It also posed new challenges for China, particularly as some policies were explicitly designed to discourage companies from using Chinese components. In a remarkable role-reversal, in May 2024 China lodged a complaint against the US at the World Trade Organisation (WTO), arguing that IRA subsidies \u201cdistort fair competition\u201d.<\/div>\n<\/div>\n
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Bidenomics didn’t work<\/h2>\n
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On the basis of conventional economic metrics, Bidenomics appeared to be working. Following the pandemic, US economic growth outperformed peer nations, business investment soared, and unemployment remained low. The problem was that Americans simply weren\u2019t feeling it. A big reason for this was inflation, which surged across the world as economies reopened after the pandemic, and Russia invaded Ukraine. Although in the US, inflation had fallen to less than 3% by the time of last year\u2019s election, the damage had been done. Under Biden\u2019s leadership, real earnings had fallen and satisfaction with the economy tumbled. Months before the presidential election, more than half of Americans wrongly believed the US was experiencing a recession, according to a poll for The Guardian. The consequences of this disconnect between buoyant economic statistics and peoples\u2019 lived experiences were fatal. As economist Isabella Weber put it in the New York Times: \u201cUnemployment weakens governments. Inflation kills them.\u201d<\/div>\n
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As for Biden\u2019s programme of green reindustrialisation, it didn\u2019t quite live up to its promise. Although the IRA successfully catalysed billions of investments in clean energy, the immediate impact on jobs and living standards was modest. Since 2020, the number of manufacturing and construction jobs in the US economy has increased by around 800,000. While this might sound impressive, it amounts to less than 0.5% of the total workforce.<\/div>\n
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This does not mean the IRA should be seen as a failure \u2013 far from it. Investment takes time to deliver returns, and ironically it will be Trump who reaps the political rewards when they start to materialise. But these statistics also reveal a significant flaw in Biden\u2019s approach to industrial policy. In the 21st century, most Americans do not work in manufacturing and construction, and likely never will. They don\u2019t care much for semiconductors, nor do they pay much attention to GDP growth and business investment. What they care about is whether their life is getting better or worse. The initial Build Back Better agenda recognised this, while the watered-down IRA did not.<\/div>\n
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This republished extract is in an openDemocracy daily newsletter. Read the full analysis <\/em>here<\/em><\/a>.\u00a0<\/strong><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Donald Trump\u2019s return to the White House is linked to the rise of right-wing populism and challenges faced by progressive politics. Trump capitalised on feelings of economic insecurity exacerbated by China’s emergence as a superpower. The Biden administration’s industrial policies, while ambitious, did not sufficiently address public concerns, allowing Trump to benefit politically.<\/p>\n","protected":false},"author":195,"featured_media":12332,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[319],"tags":[709],"class_list":["post-16822","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-us-election-2024"],"_links":{"self":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts\/16822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/users\/195"}],"replies":[{"embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/comments?post=16822"}],"version-history":[{"count":0,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/posts\/16822\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/media\/12332"}],"wp:attachment":[{"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/media?parent=16822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/categories?post=16822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sceptical.scot\/staging\/wp-json\/wp\/v2\/tags?post=16822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}