[Global Focus] The Birthplace of Capitalism, the U.S., Tilts Toward 'State Capitalism'

From Semiconductors to Defense and Shipbuilding...
Strategic Industries See Increasing Intervention
Trump-Style State Intervention, Different from the Past...
Concerns Over Waste and Corruption

Debate over state capitalism is spreading in the United States, the home of capitalism. As the Donald Trump administration signals the possibility of acquiring stakes in private companies not only in semiconductors but also in the defense and shipbuilding industries, there is growing assessment that the U.S., which has long emphasized free market principles, is shifting toward a government interventionist economic system that prioritizes national security and strategic industries.

From Semiconductors to Defense and Shipbuilding...Government Intervention in a Series of Strategic Industries

Reuters Yonhap News

On August 22 (local time), President Trump announced on the social networking service Truth Social that the U.S. government had "fully acquired and taken control" of a 10% stake in Intel, calling it "a very good deal" for both the United States and Intel. He also stated that Intel had agreed to transfer its 10% stake to the U.S. government, adding, "We do a lot of these deals. I will do more of them." As a result, the U.S. government purchased 433.3 million shares of Intel common stock at $20.47 per share, securing a 9.9% stake and surpassing BlackRock, which previously held an 8.92% stake, to become Intel's largest shareholder.

In this regard, Kevin Hassett, Chairman of the White House National Economic Council (NEC), said he was "confident" there would be further deals to acquire stakes in other companies following Intel. He explained, "This is a very special case in which massive funding is being injected through the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act."

The U.S. government has already conducted several such transactions. Previously, the Department of Defense invested $400 million (approximately 550 billion won) in rare earth mining company MP Materials and signed a contract to acquire 15% of its preferred shares, becoming its largest shareholder. In addition, during the Trump administration, as a condition for approving Nippon Steel's acquisition of US Steel, the U.S. government secured a "golden share" that allows it to exercise veto power over major management decisions. Howard Lutnick, U.S. Secretary of Commerce, emphasized that the golden share, which includes key provisions such as the relocation of US Steel's headquarters and plant closures, would be maintained permanently. As a result, there has been speculation in the industry that the golden share could become a factor restricting the management of US Steel in the future.

The Trump administration has also hinted at the possibility of acquiring stakes in defense contractors. In an interview with CNBC on August 26, Secretary Lutnick stated, "Lockheed Martin generates 97% of its revenue from the U.S. government. They are essentially part of the government," indicating that the government is considering acquiring stakes in U.S. defense companies in a manner similar to the Intel deal. The justification is that most transactions involving defense companies are related to government contracts, allowing the government to secure stakes.

The day after Secretary Lutnick's remarks, U.S. Treasury Secretary Scott Besant pointed to the shipbuilding industry. In an interview with Fox Business, he said, "Industries we are restructuring, such as shipbuilding, could be included as targets for stake acquisition," adding, "These are extremely important industries in which the United States must be self-sufficient. However, they have been neglected for the past 20, 30, or 40 years."

Commenting on these developments, Gillian Tett, a columnist for the Financial Times (FT), wrote, "A tremendous era-defining change is underway at the White House. Especially in areas related to security, state-led capitalism is gaining strength." She added, "Just 20 years ago, Western leaders thought China would gradually adopt American capitalist principles. Now, however, the United States is starting to look more like China," calling it "a strange twist of history."

Trump-Style State Intervention, Different from the Past...Concerns over Waste and Corruption

One of the key criteria for distinguishing a country's economic system is "who owns and operates the means of production." A system in which individuals own factories, land, and machinery to pursue profit is called capitalism, while a system in which society as a whole or the state collectively owns and manages these assets is classified as socialism.

There are various forms of socialism, including state socialism, in which the government exercises strong power to plan and directly operate the entire economy. The planned economy of the former Soviet Union is a representative example, where the government set production volumes and prices, and companies had to operate accordingly. Conversely, even in capitalism, the state does not completely withdraw. When certain industries are directly linked to national security or strategic interests, the government may intervene directly, acquire stakes, or influence management. This is called state capitalism. In other words, state capitalism has the outward appearance of capitalism but is characterized by deep government involvement in the overall economy, especially in strategic industries.

Today, China and Russia are representative examples. In China, state-owned enterprises dominate key industries such as oil, telecommunications, railroads, and finance. These companies operate in the market but follow government policy directions. Russia's energy sector is also a typical case of state capitalism, with large state-owned companies like Gazprom and Rosneft controlling natural gas and oil, allowing the government to wield significant influence in the international energy market.

Recently, there have been observations that the U.S. government's move to acquire stakes in private companies resembles the state capitalism of China and Russia. Steven Rattner, who served as an advisor to the U.S. Treasury Department during the Barack Obama administration, said, "The recent moves by the Trump administration evoke Chinese-style state capitalism. President Trump's approach is far removed from traditional Republican principles and is even more interventionist than the Democratic Party's stance, which has advocated for government involvement." He added, "This contradicts the reasonable consensus on the relationship between government and business." Rattner also noted, "President Trump is using government power in an impulsive manner, which is severely undermining the 'predictability' and 'order' that businesses expect from the government," and warned, "The actions taken by the Trump administration may be perceived by companies as undue pressure."

Chinese President Xi Jinping (left) and U.S. President Donald Trump. Photo by AFP News Agency

It is not entirely unprecedented for the U.S. government to intentionally own stakes in private companies. In the 1820s, state governments invested in banks, canals, and railroads and received dividends. During the 2008 financial crisis, the U.S. government injected bailout funds into major corporations to prevent market collapse and acquired stakes. In particular, when General Motors (GM) and Chrysler faced bankruptcy in the auto industry, drastic restructuring measures such as brand reduction and plant closures were implemented, and GM succeeded in recovery through asset sales and negotiations with labor unions.

However, experts say the current situation should be distinguished from the one-off emergency measures taken during past economic crises. Jason Zweig, a columnist for The Wall Street Journal (WSJ), said, "When the government acquired stakes in companies during the financial crisis, it was a 'special measure' taken in an emergency, and it was not a major policy shift of the kind President Trump is now talking about, such as 'doing more of these deals going forward.'" He warned, "If the government intervenes directly in companies in this way, it could lead to misallocation of capital, increased waste and corruption, and more conflicts of interest." Zweig continued, "Investors should hope President Trump exercises such powers only temporarily. If the government replaces investors, only a select few who profit in the middle will benefit, and it could be detrimental to all other investors."