As President Trump gets ready to meet today with senior officials from the auto industry, some think there’s a teachable moment in the president’s approach to increase American jobs.
Mark Blyth, a professor of political economy at Brown University’s Watson Institute, argues that “[Trump] is a Marxist.”
Blyth said Trump’s effort to keep jobs from going abroad mirrors steps Marxists took to address the problems they had with capitalism in the 1970s. He stopped by to make his case and discuss the issues he sees within the U.S. economy.
The following transcript has been lightly edited.
David Brancaccio: One of the economists I talk to quite frequently said President Trump believes in the invisible hand, but that he believes it’s his.
Blyth: That’s cute; I like it. I prefer to think of him as channeling some of the Marxists from the 1970s. So let me explain what I mean by this. It’s individually rational for any firm to, for example, move jobs abroad. Because if you do, you make more money. That creates a competitive dynamic where every other firm does it, and collectively what’s individually rational becomes collectively disastrous. The last time capitalism got into trouble in the 1970s, a bunch of Marxist theorists started to think about capitalism in this way. And if you think about the border tax arrangements that possibly are coming through, it is essentially trying to, in some sense, solve that collective action for capital.
Brancaccio: Now you may see a delicious irony here, but maybe what this country does need is a little bit of top-down industrial policy because there are some problems. People on the left and on the right agree the U.S. economy is not serving as many people as it should.
Blyth: Ah, that’s absolutely the case. I mean, one only needs to look at how much debt we’ve piled up — not public debt, but private debt. And we can pretend that everything’s fine and we’re back to full employment, etc. and wages are growing. But let’s put this into perspective. Wages have been growing for three quarters. They’ve been pretty stagnant for about 25 years, so let’s not get too excited. And what we’re seeing here is a reaction against the system that many people genuinely think isn’t working.
Brancaccio: It’s interesting. President Obama had an industrial policy. He put federal dollars into, for instance, the alternative energy sector. He tried to promote robotics and advanced manufacturing and so forth. But one couldn’t imagine a Democrat, would you say, going as far as Mr. Trump has in terms of trying to pull the strings of the economy.
Blyth: Well, you can always invoke the “only Nixon can go to China” rule on this one. So let’s go back to the notion that what Trump’s trying to do is get at this collective action problem for capital by reassuring businesses, giving them incentives to stay at home. We’ve seen this before. It was in the 1930s, and it was called the National Industrial Recovery Act. Because what this leads to, if you follow it through, is very big corporations — a kind of oligopolistic structure. And that type of big, strong cartelized structure seems to be the type of economy that Trump and the people around him want to build. And that’s definitely an industrial policy. Whether it’s a feasible one is a different question. It didn’t work in the 30s and no reason why it should work now.