MAGA wants to end capitalism as we know it

By Adrian Wooldridge

Corporate America is learning the truth of Winston Churchill’s warning about the appetite of crocodiles. Trump’s tariffs on friendly countries, which were reaffirmed yesterday, will be only the beginning of his assault on the pillars of post-war prosperity. Some of the most influential people in Trump world are determined to go even further and deconstruct the great workhorse of American capitalism: the publicly owned and professionally managed corporation.

The managerial corporation emerged in the late 19th and early 20th century when entrepreneurs hired professional managers to boost business efficiency and sold shares to the general public to raise corporate capital. The great historian of the corporation Alfred Chandler argued that the managerial company complemented the invisible hand of the market with the visible hand of management, thereby moving it to the center of the US economy, particularly during the long postwar boom, and providing a global template for countries that wanted to imitate America’s economic success.

Today some of the most influential people in Washington want to downgrade Chandler’s visible hand — first by giving it a good biting so that it loses its self-confidence, and then by binding it so tightly with new rules that it plays a much less important part in the economy. MAGA’s plans present a much more fundamental challenge to the workings of US capitalism than anything that Elizabeth Warren or Bernie Sanders have ever dreamed up.

The most vocal critic of the managerial company is Kevin Roberts, the president of the Heritage Foundation, the most influential think tank in Trump’s Washington and the leading figure behind Project 2025, the controversial blueprint for a second Trump term that Trump disavowed during his campaign but now seems intent on implementing. Roberts spells out his objections to the managerial company in his newish book Dawn’s Early Light: Taking Back Washington to Save America. He doesn’t make any attempt to hide his anti-corporate rage — he repeatedly calls for BlackRock, Apple, Google and the World Economic Forum to be put to the flames.

Roberts’ objection is to the central feature of managerial capitalism: the divorce of ownership from control. Before the managerial revolution, companies were run by people who had a personal interest in their success, he argues: by founders who had invented the products that had made them great, family heirs who were rooted in local communities and local managers who had risen up through the ranks. Today, they are run by a corporate elite whose loyalties lie to the managerial class rather than to any one company. These MBA-trained, jargon-sprouting cosmopolitans are more interested in hitting the numbers than in producing great products and more concerned with the opinion of their fellow high-flying managers at Davos than in the feelings of their local employees.

At one point, Roberts writes that handing a company over to a professional manager is like handing a child over to a babysitter. But in his view, it is a particularly malign babysitter. Because they care more about the numbers than about the American people, “globalist managers” heedlessly ship jobs abroad in search of cheap labor. Because they care more about the opinion of people like themselves than that of their blue-collar underlings, they will kowtow to every fad generated in the Acela corridor, of which wokery is just the latest and most malign.

Roberts argues that managerial corporations are so intertwined with government through cross-subsidies and class interests (corporate managers and regulators all went to Harvard together) that it’s often impossible to tell where the government ends, and the private sector begins. “ He even quotes Schumpeter’s assertion, in Capitalism, Socialism and Democracy (1942), that if socialism ever arrives in the United States it will be in the form of the giant corporation.

Roberts sets out a radical set of ideas to eject the managerial corporation from its central role in the heart of the US economy. First: Reverse the managerial revolution. Roberts wants companies to recruit more senior managers from the shop floor rather than from universities. Companies should abandon the algorithms that automatically reject candidates for jobs because they don’t have university qualifications. The state should stop subsidizing universities through tax breaks. Second: Make ownership great again. The US should lighten regulatory burdens on small companies and break up giant companies such as Google and BlackRock. One of the few presidents other than Trump that Roberts treats as a hero is Teddy Roosevelt. Third: Create an “active commerce” for the 21st century by building up tariff barriers to cheap imports and targeting industrial policy to help US companies that make things.

What is one to make of all this? Roberts’ style is so overheated (his favorite metaphor is burning things down) that it is tempting to dismiss him as a rogue operative. Yet plenty of leading figures in Washington share his views. Dawn’s Early Light has a preface by Vice President JD Vance, who expresses the opinion that “the closest eighteenth-century analogue to the modern Apple or Google is the British East India Company, a monstrous hybrid of public and private power that would have made its subjects completely unable to access an American sense of liberty.” Josh Hawley, a US senator for Missouri, has condemned his fellow Republicans for “falling in love with profit for its own sake.” “A republican nation requires a republican economy,” he says. Marco Rubio, the secretary of state, has drawn up plans for a worker-friendly Republicanism that gives more power to trade unions. In an early demonstration of this faction’s clout, the Federal Trade Commission’s new chair, Andrew Ferguson, has announced that he will retain the Biden administration’s strict guidelines for merger review.

Roberts also has some powerful economic forces on his side. Students of US populism like to present it as a revolt of the left-behind against the ruling elite. But it is also a revolt of family capitalism against corporate capitalism. Donald Trump is a representative of a significant section of the business class: people who inherited their companies from their fathers, felt no need to apologize for their wealth, loathed MBA fads like DEI and ESG and want to wrest back control of the capitalist system from people they regard as no more than hired hands, the managerial elite. And this portion of the business class is arguably now in the ascendant as dynastic wealth surges, Silicon Valley mints founder-billionaires and companies abandon public for private markets.

What about Roberts’ ideas for reconstructing capitalism? He highlights some real problems: the focus on hitting the numbers rather than the quality of products; the massive overexpansion of the managerial class; managers’ infatuation with fads that amount to nothing. His idea for a ban on algorithms that reject people for jobs simply because they lack a sheepskin should be adopted immediately.

But he is not the first person to make these issues his flag: Left-wingers have complained for decades that American business privileges numbers over products, while the stock-option movement was an attempt to address the problem of the divorce of ownership and control. Roberts’ history of the US corporation is soaked in nostalgia. Andrew Carnegie and John D. Rockefeller were founders who both owned and ran their companies. But they earned the names “robber barons” and “malefactors of great wealth” by crushing rivals and bullying trade unions. The quaintly named Homestead, Pennsylvania, is not remembered for peaceful place-based management. Some of today’s most ruthless companies, such as Koch Industries LLC or, indeed, the Trump organization, are family- rather than manager-controlled.

Likewise, Roberts claim that Trump will act as a booster of small business is hardly plausible. Has a more oligarch-friendly figure ever inhabited the White House? Teddy Roosevelt did not have Rockefeller in the Oval Office swinging a chainsaw or hoisting John D. III on his shoulders. The first Trump administration proved much better at delivering on its promises to dynastic fortunes (the Waltons and DeVoses) than it did to improving the fate of struggling small business owners.

Corporate America should not underestimate this administration’s radicalism: Having had both the Republican and Democratic Party on its side in the 1990s, America’s corporate elite now has powerful enemies on both sides of the aisle. But, by the same token, America’s small businesses and blue-collar workers should not expect lasting solutions to their problems from MAGA’s half-baked and nostalgia-soaked anti-corporatists.