The fierce political rhetoric pitting a “capitalist” America against a “socialist” threat obscures a fundamental truth: the United States operates, and has always operated, as a mixed economy. The absolute choice between pure laissez-faire capitalism and pure state socialism is a false one. The real and far more interesting question facing modern democracies is not if the state should intervene in the economy, but how and, most importantly, for what purpose. It is a debate about which spheres of human survival and flourishing should be insulated from the logic of profit-driven markets and protected as democratic rights. The supreme irony is that the administration most vocally opposed to “socialism” engaged in a form of state intervention that highlights the true nature of this debate.

While denouncing any policy that expanded social welfare as a step toward communism, the Trump Administration engaged in a robust industrial policy of state-directed capitalism, taking direct equity and ownership stakes in strategically vital private corporations. To secure domestic supply chains and compete with China, the U.S. government, acting through the Department of Defense and other agencies, acquired significant ownership positions in:

• Intel Corporation (INTC): A stake to bolster domestic semiconductor manufacturing.¹
• MP Materials (MP): A 15% stake as part of a $1.3 billion investment to build a domestic rare earth magnet supply chain.²
• USA Rare Earth: A 10% stake as part of a comprehensive CHIPS Act funding package to expand U.S. processing capacity.³
• Lithium Americas Corp. (LAC): A 10% stake to stabilize the domestic supply of critical minerals for high-capacity batteries.⁴
• Trilogy Metals Inc. (TMQ): A 10% stake to protect critical mineral development inside the U.S.⁵
• Korea Zinc: A stake in a joint venture to build a massive smelter facility in Tennessee.⁶
• United States Steel Corporation: A specialized “golden share” giving the government veto power over its acquisition to ensure national defense and economic control over domestic steel production.⁷

This is not democratic socialism. It is a form of state capitalism where the government acts as a strategic investor to achieve national security and industrial objectives. This model, however, provides a crucial point of contrast with the mechanisms used in modern mixed economies that embrace democratic socialist principles. The intervention in those countries is designed not for state-centric strategic advantage, but for broad-based social welfare and the democratic control of essential services.

• Norway (The Social Wealth Fund Model): Norway’s state owns over 70% of the nation’s wealth. Its Government Pension Fund Global owns roughly 1.5% of all publicly traded companies worldwide. Domestically, the state holds dominant shares in the largest bank (DNB), telecom giant (Telenor), and energy sector (Equinor). These companies compete in the market, but their massive profits are socialized to fund universal public goods, channeling the returns of global capitalism into a robust social safety net.⁸
• Sweden & Denmark (De-Commodification & Labor Power): These Nordic models are built on the principle of de-commodification—that essential human needs like healthcare, higher education, and childcare must be legally insulated from the private market sphere. Furthermore, high union density and sectoral collective bargaining grant labor organizations effective democratic veto power over corporate wage structures and working conditions, institutionalizing a balance of power between capital and labor.⁹
• Costa Rica (Universal Public Infrastructure): After abolishing its military in 1948, Costa Rica constitutionally reallocated its national budget to state-guaranteed universal human welfare. It operates a state-run universal healthcare system (the Caja) and provides free public education. The state maintains structural monopolies or heavy regulatory control over major infrastructure, ensuring that basic services like water and electricity are treated as universal public rights rather than corporate commodities.¹⁰
• Germany & France (Co-Determination & Sectoral State Ownership): In Germany, federal Mitbestimmung (co-determination) laws mandate that large corporations give workers up to 50% of the seats on the company’s supervisory board, forcing private capital to share executive decision-making power directly with labor. In France, the state has a long history of nationalizing or holding controlling stakes in vital infrastructure, such as the energy giant Électricité de France (EDF), ensuring that key societal production answers to a democratic electorate rather than private shareholders.¹¹

These real-world examples help clarify the distinction between modern democratic socialism and traditional social democracy. A social democracy heavily funds social safety nets through taxation but often leaves the delivery of those services to a blend of private and public options. Some forms of the democratic socialist approach, by contrast, seek to fully own and operate the “commanding heights” of social infrastructure—medicine, housing, energy, education—to completely remove them from the profit motive. But other forms provide a mix of government and private sector roles for social infrastructure. For example, Market Socialism (the decentralized approach) theorists like John Roemer argue for models where the state does not directly own or manage specific industries like energy or medicine. Instead, corporations operate competitively in a market, but their equity (corporate stock shares) is distributed publicly or through a “coupon” economy to prevent wealth concentration. Workplace Democracy & Guild Socialism favor worker-owned cooperatives over state ownership. In these frameworks, the “commanding heights” would be managed, owned, and operated directly by the workers within those industries, rather than by a centralized government bureaucracy. For the Social Wealth Fund Model, thinkers like Matt Bruenig advocate for a system where a democratically managed state fund buys up large blocks of corporate stock across all sectors. Under this framework, the state captures corporate profits to distribute as a social dividend, rather than taking direct, operational control of the day-to-day services. These forms of Democratic Socialism do not eliminate private ownership entirely; rather, it allows a regulated private market to thrive in non-essential sectors like retail and technology while ensuring that the foundations of human survival are democratically controlled public goods.

The American political debate would be far more productive if it moved beyond facile scare words and engaged with this fundamental question: which parts of our society should be governed by the volatile logic of the market, and which parts are so essential to our collective well-being that they must be governed by our democratic will?

Footnotes:

¹ U.S. Department of Commerce. (2024, March 20). Biden-Harris Administration Announces Preliminary Terms with Intel to Onshore U.S. Chipmaking Leadership. CHIPS.gov.
² U.S. Department of Defense. (2022, February 22). Biden-Harris Administration, Department of Defense Announce $35 Million to MP Materials to Build U.S. Heavy Rare Earth Processing Facility.
³ U.S. Department of Defense. (2023). DPA Title III Agreement with USA Rare Earth. See project awards under the Defense Production Act Investments Program.
⁴ U.S. Department of Energy. (2023, February). Loan Programs Office Announces Conditional Commitment to Lithium Americas to Help Finance the Development of Thacker Pass.
⁵ U.S. Government Accountability Office. (2022). DEFENSE PRODUCTION ACT: Opportunities to Improve Reporting on and Planning for Use of Authorities. GAO-22-104649.
⁶ Clarksville Now. (2023, November 14). LG Chem, Korea Zinc to build $7.4 billion joint venture plant in Clarksville.
⁷ United States Department of the Treasury. (2024, March 13). Statement from Secretary of the Treasury Janet L. Yellen on U.S. Steel.
⁸ Norges Bank Investment Management. (2024). The Fund. Retrieved from https://www.nbim.no/en/the-fund/.
⁹ Pontusson, J. (2013). Once Again a Model: Nordic Social Democracy in a Globalized World. In The Nordic Models in a Globalized World. Oxford University Press.
¹⁰ Evans, S. (2017). Costa Rica’s Development Model: A Successful and Replicable Strategy?. E-International Relations.
¹¹ Streeck, W. (2009). Re-Forming Capitalism: Institutional Change in the German Political Economy. Oxford University Press.