No, not Trump. As Fabius points out, the Donald is more accurately described as a populist reactionary than a revolutionary or even a fascist (“Fascists,” as Hitler himself noted, are revolutionaries.)
Weirdly, perhaps, today’s strident calls to storm the barricades comes from that bastion of conservative economics, The Economist. In “Too much of a good thing: Profits are too high. America needs a giant dose of competition” (paywall) the magazine lays out how America’s dysfunctional economy evolved and what it costs the vast majority of US citizens who don’t own large chunks of major corporations or occupy their C-level offices.
The article also makes a case for why the current situation is unlikely to change anytime soon. In the past, there have been periods of oligopoly (e.g., TR’s trust busting in the early 20th century) and abnormally high profits, but new entrants into the marketplace or severe recessions or technological change have broken them open. Today, however, there are at least two reasons why this process may be delayed. One is that a small group of super investors, mainly funds, owns significant percentages of all the major firms in a variety of industries. Thus it is in their interests to keep things as they are and even to force more mergers (the article lists several in the works).
As I noted in Certain to Win (p. 45 of the US edition), once firms get to oligopolistic size, they warp the market space analogous to how massive bodies warp space-time. You don’t need vast conspiracy theories or metaphysical speculations to explain what’s going on. As three dimensional space required the addition of the time dimension, so economics requires the addition of the political dimension. Giant organizations change the rules of the marketplace in their favor not so much through quality, innovation, or even price — these are well understood — but additionally through lobbying, campaign contributions (thank you SCOTUS), the revolving door, rewarding friendly congressional districts with plants and facilities and so on. Fans of defense procurement will recognize many old friends.
The ability of big firms to influence and navigate an ever-expanding rule book may explain why the rate of small-company creation in America is close to its lowest mark since the 1970s (although an index of startups run by the Kauffman Foundation has shown flickers of life recently). Small firms normally lack both the working capital needed to deal with red tape and long court cases, and the lobbying power that would bend rules to their purposes. A lack of lobbying clout and legal savvy may also help explain foreign firms’ loss of momentum. In the 1990s adventurers from abroad piled into America, with the share of output from foreign-owned subsidiaries rising steadily. But foreign firms seem to have lost their mojo. Since 2003 their contribution has been flat at about 6% of private business output.
There is hope. While “moats” as Warren Buffet calls such barriers to entry are certainly great for those who own the stock, and for the “elite employees” (as The Economist calls senior execs), they will prove fatal to the companies themselves. The reason is that while moats lock competitors out, they also lock current decision makers in, something Boyd, in his first unclassified briefing, New Conception for Air – Air Combat, called the “Maginot Line mentality.” (You can download all of Boyd’s briefings for free from our Articles page.)
As competitive pressure declines — the moat doing its job — management’s attention swings internally. Corporate politics becomes court politics. Whose office is closest to the CEO’s becomes a matter of vital interest. Projects are valued primarily for their patronage rather than their profitability or promise of future growth. Risks are evaluated primarily in terms of which corporate baron might be offended — or worse, embarrassed — by their likely effects. Eventually something unexpected will disrupt these cozy arrangements — think of the PC, digital phones, the Internet — and internally focused companies won’t understand in time.
As comforting as all this might be to the average consumer, it can take a long time. In the meantime, as the effects of corporate oligopilization cascade through the economy and concentrate wealth even more than it is today, the only way out may be political. And although Trump might indeed be a populist reactionary, he might also be the initial tremor of something much bigger.