The promise of American capitalism has long offered a vision of prosperity driven by the market and the people, where the government’s role was simply to stay out of the way. This American creed is embraced by conservative politicians shaped by Reagan-era beliefs in deregulation and small government, but it does not belong to conservatives alone. America is, and has always been, capitalist — burdened with all its sins and blessed with triumphs. There have been various degrees of intervention that came with Republican and Democratic governments, but it has always been a balancing act, never fully laissez-faire yet never outright socialist. Some degree of government intervention does not mean the end of the free market economy, but the Trump administration’s recent buy-in on Intel’s stock marks something dangerous and highly unprecedented. The U.S. government now acts as a private investor on behalf of the American taxpayers, engaging in a kind of stock-picking that is transactional and opportunistic rather than rooted in national interest. Capitalism is far from perfect, and it is fair to criticize its failures, but what many Americans can agree on is that socialism is the antithesis of what this country stands for and practices. This deal is inherently un-American — one step closer to state capitalism and one step away from the free market America has promised its people.
When Washington Steps In
Government intervention in the private sector is not new. Its most aggressive form has typically been used as an emergency power, most often by Democratic administrations. The most prominent example is Franklin D. Roosevelt’s New Deal during the Great Depression. What eventually rescued and revived the U.S. economy was not the New Deal but rather the full-scale economic and military mobilization that occurred during World War II. But that does not diminish the vision or necessity of the New Deal. FDR’s policy stabilized banks, created jobs, but most importantly, restored faith in the government and one another when it was needed the most. In doing so, FDR saved American capitalism from itself.
Again, during the 2008 financial crisis, the Obama administration faced the collapse of major banks on Wall Street, and the government intervened on a scale not seen since FDR. This was achieved through capital injections under the Troubled Asset Relief Program (TARP), a nearly $800 billion stimulus package, and public officials who stepped into the center of the crisis to save the system from imploding.
These two examples are some of the most aggressive yet necessary forms of government intervention during extraordinary times, but intervention does not always come in moments of crisis. Other cases are more calculated, strategic, and long-term. The Biden administration’s CHIPS and Science Act of 2022 authorized $280 billion in funding, with $52 billion aimed specifically to boost domestic semiconductor manufacturing and research. Unlike the emergency bailouts in the past, the CHIPS Act positioned the U.S. at the forefront of a critical technology. At a time when Taiwan produces over 60% of the world’s chips, the CHIPS Act is a deliberate strategy to remain competitive and safeguard national security. If the CHIPS Act is a broad-based investment in the industry without favoring one firm, the Trump administration’s decision to purchase a direct stake in Intel is something different altogether.
A Stake in Intel
Intel has been falling behind competitors like Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC). Having missed the AI boom, Intel’s revenue plunged from $80 billion in 2021 to $50 billion in 2024. Its market value has halved in five years, and its PC and server chip dominance slid from 84% and 94% in 2019 to 69% and 62% in 2024. But Intel remains relevant, especially when the future of Taiwan remains uncertain, as President Trump vows to revive domestic manufacturing. The lower Intel has fallen, the more potential it has in the future, and the more important it becomes to incentivize its growth.
The U.S. government seized this opportunity to purchase a 10% stake in Intel, worth $8.9 billion, in addition to the $7.86 billion funding from the Biden administration under the CHIPS and Science Act, and Nvidia’s $ 5 billion investment in Intel’s common stock. The U.S. government is now Intel’s biggest shareholder. This recent move by the Trump administration is seen as an effort to level Intel’s competitiveness in the market and reduce reliance on the foreign supply chain, but it is difficult not to view this investment as opportunistic and through a transactional lens.
Just before reaching this deal, President Trump demanded in a Truth Social Post that Intel CEO Lip-Bu Tan resign immediately, accusing him of being “highly conflicted,” with concerns that Tan had and still might have ties to firms that link to China. But just after meeting Tan in the White House, the president changed his mind and backed off on his call for Tan’s resignation. Intel portrayed this deal as a tremendous success and a vote of confidence in its leadership position as the leading-edge semiconductor manufacturer.
President Trump’s decision is unilateral, without debate in Congress and carried out by the executive branch alone, and it operates more like a private business deal rather than a transparent act of governance or policy. However, it does reveal a shift in how the government relates to the private sector.
President Trump’s Intel stake is a direct equity purchase, which means the government is using taxpayer money to buy a slice of a single corporation, but without their consent. Instead of incentivizing and giving directional support, which is what other administrations have traditionally done, the recent purchase binds the fate of Intel, the U.S. government, and the American taxpayer together. This kind of entanglement goes beyond the role of the government and against the free-market principle at the core of American capitalism.
“State Capitalism With American Characteristics”
What will come out of this deal? This remains unclear. Yet its implications are already being debated by businesses and policymakers alike. Wall Street Journal journalist Greg Ip called this phenomenon “state capitalism with American characteristics,” mirroring China’s brand of economy known as “socialism with Chinese characteristics. State capitalism is an economic system where the market and competition between companies still exist, but the government plays an intrusive role: owning stakes, directing investment, and essentially hand-picking the winners and losers. It is still far from socialism, where the state owns and controls production, but it is a clear break from traditional American capitalism.
The bigger picture here is concerning. The Trump administration’s economic strategy is beginning to resemble China’s, just without the discipline and strategy, and doing it for reasons that are purely transactional and for profit. But it is important to know that China did not succeed because of state capitalism, but despite it.
This moment with Intel is more than a business deal; it’s a test of what kind of capitalism America wants to practice. Capitalism in this country has created deep inequality and cycles of boom and bust, but it has also lifted millions out of poverty and drawn people around the world to its opportunities. The promise of American capitalism was never that it would be perfect, but that it would be free — free of government control, ownership, and coercion, and it is essential that it stays that way.
Image Source: The Atlantic
