When US Vice President JD Vance sat down with Michael Knowles recently, he noted that President Donald Trump had said he wanted to seize equity in AI companies, and that nobody had really protested, describing this as evidence that the American right had already reordered its economic thinking.
Vance called the new direction “American developmentalist”. He said American economic policy on the right was now closer to Alexander Hamilton than to Milton Friedman, describing this as a good thing. He said the Hamiltonian tradition, not laissez faire, would dominate American conservative economic thinking going forward.
Vance’s comments and frame of thinking can be taken as indicative of what the political right, in the US and increasingly elsewhere, now believes its purpose to be. Vance was explicit: the goal was to build infrastructure and tools that let national and native industries flourish “at the expense of a hyper-globalized economy”. The economy, he said, was a tool to serve the dignity of the human person. If policies helped someone raise a family, earn a living wage, or attend church on Sunday, the state should support them.
None of this is unreasonable as a description of what people value. Family, faith, community and a living wage matter.
The trouble lies in what follows from the premise. Vance is not describing a smaller state that gets out of people’s way so they can pursue those things themselves. He is describing a state that actively directs capital, protects favoured industries and shapes the economy toward outcomes it considers correct.
He even offered a theory for why Friedman’s ideas worked and gained traction in the 1980s. In Vance’s telling, Friedman succeeded because “institutional Christianity” supplied moral guardrails that made a freer market tolerable. Remove those guardrails, the argument goes, and laissez faire capitalism simply produces “globalized liberalism” as the new elite status quo. The implicit conclusion is that the state must now supply the guardrails that Christianity once did.
This is not a rejection of big government. It is a rejection of one ideological camp’s version and justification of big government in that of another.
Wielding state power
The progressive left has spent a century building the case for wielding state power to correct market outcomes in the name of equality, class and internationalism. As Vance describes it, the New Right wants to wield the same state power to correct market outcomes in the name of nation, family and tradition.
Seizing equity in private companies, picking which industries deserve protection and treating hyper-globalisation as an enemy to be restrained by government are not new ideas. They are old ideas with a new set of intended beneficiaries and a new justification.
Friedrich Hayek made this point in The Road to Serfdom, published in 1944; both economic nationalism and international socialism rest on the same premise. A small group of planners in government can and should direct economic life toward a predetermined social outcome. They differ only in whose outcome is served, and in the language used to justify it. One speaks of class and international solidarity; the other speaks of nation, family and God. Both require an expansive, empowered state willing to override individual economic choices and property rights to get there.
Hayek’s underlying warning was about knowledge, and not just pure ideology.
As he put it, “The more the state ‘plans’, the more difficult planning becomes for the individual”. No planning board, whatever values it serves, can gather enough dispersed information to run an economy better than the people living in it.
Beyond America’s borders
This matters for investors and businesses well beyond America’s borders, including in South Africa.
Ideological currents in Washington shape trade policy, industrial subsidies and the treatment of foreign capital, all of which affect emerging markets directly. Should Vance assume the top post following Trump, the US government will probably be even more focused on muscular industrial policy, favoured sectors and businesses, and with trade deals exposed to greater risk of being driven more by graft than by economic benefits for the American people.
It also matters domestically. South Africa’s own political economy debates, over industrial policy, localisation and the state’s role in strategic sectors, mirror the same underlying question that Vance is answering for the American right. Governments across the ideological spectrum are converging on the belief that markets cannot be trusted to deliver outcomes that voters or activists consider correct, and that only state direction can.
Increasingly, in Washington as much as in Pretoria, government intervention is believed to be the answer to various economic and societal ‘ills’. International socialism promises equality and global solidarity delivered by state planners. National socialism, in Vance’s developmentalist sense of nation and family before market, promises dignity and rootedness delivered by the same planners.
Neither promises a market economy in which individuals, not governments, decide what gets built, who gets funded and what flourishing looks like.
[Image: By Gage Skidmore from Surprise, AZ, United States of America – J. D. Vance, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=149694748]
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