How Donald Trump Is Trying to Rewrite the Rules of Capitalism
May 5, 2025
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John Cassidy, a seasoned economics writer for The New Yorker, discusses the tumultuous evolution of capitalism influenced by Donald Trump's protectionist policies. Cassidy highlights the departure from traditional free-trade ideologies and the chaos caused by chaotic tariffs. He sheds light on the generational shift in views toward capitalism, especially among young people prioritizing environmentalism and accountability. Cassidy's insights from his book, 'Capitalism and Its Critics,' provide a historical backdrop to today's economic dilemmas, advocating for informed discussions on capitalism's future.
Donald Trump's protectionist tariff policies have disrupted traditional free trade principles, fueling market instability and fears of a global recession.
Younger generations increasingly view capitalism through an environmental lens, linking economic issues with concerns over inequality and corporate monopolies.
Deep dives
The Evolution of Capitalism
Industrial capitalism originated around 1770 in England, transitioning from mercantile capitalism where government and economy were closely intertwined. This shift marked a move towards a factory system that prioritized free trade, heralded by figures such as Adam Smith, who criticized the mercantile system and defended open markets as essential for economic growth. Smith highlighted that protectionism led to corruption and monopolies, which were common in his era, evidenced by companies like the East India Company benefiting from government support. The historical context of capitalism's development reveals underlying conflicts, as modern discussions around trade policies hark back to the debates between government intervention and free-market principles.
Critiques of Modern Capitalism
Recent trends have seen significant criticism of capitalism, especially among younger generations who associate it with inequality and the dominance of monopolies. The discussions often reference Karl Marx, who identified the fundamental division between property owners and laborers as crucial in understanding economic disparities. Many now look at the environmental implications of capitalism, which reflect a shift in societal values that were not as pronounced in previous decades. Movements led by figures like Bernie Sanders challenge traditional capitalist narratives, advocating for measures such as higher taxes for the wealthy and regulation of monopolies as a response to increasing dissatisfaction with the current economic landscape.
The Impact of Protectionism and Tariffs
Donald Trump's tariff policies represent a significant departure from previous free trade agreements, driven by a belief in protecting American industries and jobs, despite criticism over their chaotic implementation. While some argue that temporary protectionism is justified for emerging industries, Trump's approach often appears to dismiss nuanced arguments about trade, viewing it through a win-lose framework. The unpredictability of his policies has led to market instability, provoking concerns among voters and business leaders alike about long-term economic consequences. Overall, this chaotic protectionist stance reflects deeper cultural sentiments about economic nationalism and has contributed to a polarized political climate surrounding trade.
For a long time, Republicans and many Democrats espoused some version of free-trade economics that would have been familiar to Adam Smith. But Donald Trump breaks radically with that tradition, embracing a form of protectionism that resulted in his extremely broad and chaotic tariff proposals, which tanked markets and deepened the fear of a global recession. John Cassidy writes The New Yorker’sThe Financial Page column, and he’s been covering economics for the magazine since 1995. His new book, “Capitalism and Its Critics: A History,” takes a long view of these debates, and breaks down some of the arguments that have shaped the U.S.’s current economic reality. “Capitalism itself has put its worst face forward in the last twenty or thirty years through the growth of huge monopolies which seem completely beyond any public control or accountability,” Cassidy tells David Remnick. “And young people—they look at capitalism and the economy through the prism of environmentalism now in a way that they didn’t in our generation.”
