Capitalism, the very economic system that has brought on great industrial capacity, technological innovation, and progress to a nation and its people over the past 250 years. I am not sure what Adam Smith would say about America today, yet I still think it is the greatest economic system to be created.
The flow of money in a capitalist system works like a well-oiled machine, but what happens when a crisis emerges? What happens when it is deemed necessary for the government to intervene economically in the present to secure a future that is self-reliant? What happens when private capitalism begins to turn into state capitalism? Does it set a precedent for future government policy for the years and decades to come?
Over the course of the past two years, the federal government and its agencies have invested large sums of money into corporations large and small. The ideology behind such investments is national defense and security for the nation as a whole. The federal government has begun using not only grants, loans, and subsidies, but also shares, warrants, profit-sharing agreements, and other equity-like interests as tools of economic policy. The Council on Foreign Relations has tracked billions of dollars in such government investments across dozens of deals since January 2025. (Council on Foreign Relations)
Although each deal is different based on shares owned or owed, warrants, loans, preferred interests, or other arrangements, the federal government has invested billions of dollars into American corporations and strategic projects. It is important to understand that these transactions do not all represent the government actually owning shares in the traditional sense. Some involve actual stock ownership, while others involve warrants, profit participation, preferred interests, or conditional agreements.
Intel, for example, is a clear case of direct government ownership. The Department of Commerce received 9.9 percent of Intel’s outstanding shares. At the time of the agreement, that stake was valued at approximately $8.9 billion. By July 15, 2026, the value of the government’s Intel shares had risen to approximately $44.6 billion. (GAO)
One may say that this is communism or socialism, but I call it state capitalism, a middle ground between complete private ownership of the means of production and that of socialism or communism.
State capitalism does not necessarily eliminate private ownership. Instead, the government becomes a participant in the capitalist system. Private companies continue to operate, investors continue to buy and sell shares, and markets continue to determine much of the flow of capital. Yet the government itself begins to place taxpayer-backed capital into particular industries and, in some cases, becomes an equity holder.
Although it appears there are blurred lines between publicly traded companies and the federal government, the logic behind such actions is to rid the United States of foreign dependence for materials like rare earth metals and semiconductors.
The question then becomes: why these companies?
The answer appears to be rooted largely in national security and supply-chain security.
Semiconductors are critical to nearly every modern industry, including defense, communications, transportation, computing, and advanced technology. The Government Accountability Office reported in August 2026 that Commerce had awarded approximately $31.7 billion across 49 semiconductor projects involving 24 companies. Commerce also began considering whether companies would provide equity in exchange for federal funding. (GAO Files)
Critical minerals create another vulnerability. Rare earth elements, lithium, gallium, and other materials are necessary for batteries, electronics, advanced manufacturing, and defense systems. The federal government therefore sees domestic production of these resources not simply as an economic matter, but as a matter of national security.
The reasoning is understandable.
If the United States becomes dependent upon another nation for the materials necessary to manufacture its computers, weapons, vehicles, energy systems, and communications equipment, what happens if that supply is interrupted?
What happens during a war?
What happens during a geopolitical crisis?
What happens when the foreign nation supplying those materials is also a strategic competitor?
This is where the free-market system encounters a problem that the market itself may not necessarily solve.
Imagine that a critical mineral can be purchased from a foreign supplier for $50 while producing the same material domestically costs $100. A private company has an obvious economic incentive to purchase the cheaper material. But the federal government may look at the same transaction and see something different.
It may see vulnerability.
The private company sees the price.
The government sees the national-security risk.
And this is where government intervention begins.
The government can provide subsidies. It can provide loans. It can become a customer. It can regulate an industry. It can guarantee purchases. It can create tax incentives. But when it begins acquiring shares, warrants, profit interests, or other financial positions in private corporations, it becomes something more than an observer of the capitalist system.
It becomes a participant.
Nonetheless, this has caused political strife across the aisle. As Trump calls Democrats socialists and Communists, his administration and its agencies have also expanded the use of federal capital and equity-like arrangements with American corporations.
Republicans can consistently argue:
“Government ownership of a few strategically important companies isn’t socialism; it’s national-security industrial policy.”
Democrats or other critics can respond:
“If government ownership of productive private enterprises is supposedly antithetical to capitalism, why is the government becoming an equity holder?”
As you can see, there are two sides to the same inherent facts.
The federal government can argue that these investments are not designed to replace capitalism, but to protect the American economy from strategic vulnerabilities. Critics can question whether the government should be selecting individual corporations to receive taxpayer-backed capital and whether those decisions create too much government influence over private enterprise.
Both questions lead us back to the same place.
Where do we go from here?
Is it a matter of national security to inject millions, and in some cases billions, of dollars into perfectly functioning companies in return for shares or interests in those companies?
Why did the government and its agencies choose those private companies?
Is it in the interest of security and defense to invest taxpayer money into corporations?
And perhaps the greatest question is not whether the government should ever intervene, but where the line should be drawn.
What happens when private capitalism turns into state capitalism?
Does it set a precedent for future government policy for the years and decades to come?
If the government makes an investment today because a semiconductor, rare earth mineral, energy technology, or defense system is considered essential to national security, what happens when another administration determines that another industry is equally important?
Who decides which companies are strategically important?
Who decides when government ownership is necessary?
Who protects the taxpayer when the investment succeeds?
And who protects the taxpayer when it fails?
Perhaps the question is not whether capitalism has failed, nor whether America has suddenly become socialist or communist. Perhaps the question is something more complicated.
What happens when the very economic system that built America’s industrial might encounters a world in which economic security and national security become inseparable?
If a semiconductor factory is essential to national defense, if rare-earth minerals are essential to advanced weapons and electronics, and if dependence upon a foreign power creates a potential vulnerability, can the government simply stand aside and allow the market to determine where those industries are located?
Or does national security require the government to become a participant in the market itself?
This is where the lines begin to blur.
The government can provide subsidies. It can provide loans. It can become a customer. It can regulate an industry. But when it begins acquiring shares, warrants, profit interests, or other financial positions in private corporations, it becomes something more than an observer of the capitalist system. It becomes a participant.
Perhaps this is state capitalism: not the abolition of private ownership, but the strategic use of government capital within a private market.
And perhaps that is the great economic question facing America in the decades ahead.
How much government participation is necessary to protect the nation without changing the very capitalist system that created the wealth, innovation, and industrial capacity the government is now trying to protect?
At what point does national security require intervention?
And perhaps most importantly, once the government crosses that line, who decides where the line is drawn?
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