Trumpism and capitalism

According to Luigi Zingales, Trump is attacking capitalism, and capitalists should unite and resist. Zingales’s piece is a notable attempt to save the face of capitalism: in his view, Trumpism is not a consequence of capitalism but, rather, capitalism is its victim.

However, it is not very convincing to claim that Trumpism has emerged in the country that most strongly symbolizes capitalism, and that this economic system bears no responsibility for the rise of such a serious political pathology.

Zingales argues that “the biggest threat to capitalism has always been the arbitrary abuse of government power.” He also claims that Trump’s behavior is not capitalist but socialist and authoritarian. Yet capitalists—American and otherwise—have themselves abused government power in arbitrary ways, for example in Chile, or have attempted to manipulate it in the United States through campaign finance, lobbying, and corruption.

Zingales further states that “without respect for the rule of law, we cannot have capitalism.” Really? What about Chile under Pinochet, Spain under Franco, and similar cases? He concedes that without the rule of law we may instead have “crony capitalism.” Fair enough—but in that case, capitalism is “crony” in many, many places.

A few years ago, in his book "Capitalism Alone," Branko Milanovic argued that capitalism had been left without competing economic systems after the fall of communism and China’s adoption of a market economy. At the same time, democracy has been eroding in recent decades, with the fastest decline now taking place in the United States. According to data reported by Martin Wolf in the Financial Times, only 7% of the world’s population lives in genuine democracies (down from 17% just a few years ago). It appears that capitalism has advanced while democracy has receded. Admittedly, that 7% also lives under capitalism—but likely a more constrained and better-regulated version than the one found in autocracies or backsliding countries.

There is little doubt that the kind of mafia-style state Trump is promoting is at odds with a certain version of capitalism. But this is an idealized version. Trump represents a frontal attack on both free markets and well-regulated markets. Yet capitalism—an economic system in which economic power is concentrated in the hands of capital owners—can coexist with markets that are neither free nor properly regulated. Neoliberalism, understood as an extreme version of capitalism, coexisted with brutal dictatorships in the twentieth century and has now morphed into a kind of “dark enlightenment,” as described in Quinn Slobodian’s "Hayek’s Bastards."

Some of the world’s wealthiest capitalists are endorsing Trump’s global coup. It might be comforting to believe that anti-capitalists can build a successful democratic alternative. But for now, we may need the support of forward-looking and altruistic capitalists—if they exist, as in the Anthropic model praised by Zingales—who understand that human progress requires more and better democracy, not less. So far, however, it has not been capitalists or other elites who have united against Trumpism, but rather ordinary people in the streets, along with some scientists, intellectuals, and journalists writing on alternative media platforms like Substack.

The future of us

Lant Pritchett (London School of Economics) has an article in the Journal of Economic Perspectives on the need for global mobility between shrinking and growing labor forces.

In the coming decades, given fertility rates across different regions, territories with low or very low fertility will need to receive migrants from territories where fertility rates are higher. The region of the world with the highest fertility rates at the moment is Africa.

The figures are striking. Spain will have a “labor force gap” of 23.6 million people by 2050. This gap is calculated by keeping the ratio between the labor force and the population aged 65 or older at its 2020 level. If we were to fill this gap with permanent migrants, they would need to be allowed to come with their families. This would require an additional 49.6 million migrants (beyond current levels) by 2050—about 1.1 additional residents for every working migrant—most of them coming from Africa.

Fertility policies will not fill the gap because the people who would need to be 25 years old in 2050 have already been born—or rather, they have not been born, since we are simply not having enough children. There is heterogeneity in fertility rates, but the general trend is downward. At some point in the future, there may not even be territories producing enough migrants, but we are not there yet. Now, the economic gains of migration are high for migrants and for societies receiving migrants. While we figure out how to organize our societies under conditions of very low fertility everywhere (in the absence of strong even coercive pro-natalist policies), migration appears to be the only solution.

Pritchett argues that filling the gap with permanent migrants is politically impossible because, in his words, existing citizens would lose control of their “future of us.” He therefore proposes filling the gap not with permanent migrants, but with “rotational and temporary” labor mobility.

This makes sense, although the details matter, and it would not be easy to manage. I doubt that, given the income gap between Africa and Southern Europe—and their geographic proximity—movement could be controlled at a “desired” level.

In any case, we need in Spain (similarly in other relatively rich countries) at least approximately 25 million foreign migrants between now and 2050, and unless we are economically self-destructive, we will probably receive many more. Perhaps, then, the challenge is not so much how to stop permanent migration, but how to redefine “us” in the “future of us.” This redefinition will need to take place even if temporary mobility is successful.

It is true that the rise of the xenophobic far right does not inspire optimism. Yet the reality of large, diverse cities such as London and New York tells a different story. Both cities are attractive, diverse, and prosperous, and both have democratically elected mayors who come from immigrant families. Why can we not all be more like New York and London?