When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.

(Thomas Piketty)

Karl Marx believed that capitalism was doomed to collapse. The technological-industrial and political-social revolutions of the late eighteenth and early nineteenth centuries – the steam engine and the guillotine – shaped his worldview. For Marx, the capitalist system was embedded in epoch-making upheavals. The ever-growing concentration of wealth in the hands of an ever-smaller number of “expropriators” could not continue indefinitely, and so he foresaw the end of all exploitation in Das Kapital (1867): “capitalist production begets, with the inexorability of a law of Nature, its own negation”; henceforth, “the expropriators are expropriated.” 1

Marx’s prophecy has not come true. The “expropriators” were not “expropriated,” and the proletariat has not established a communist world society. On the contrary, the number of billionaires continues to grow, in China as well as in the United States, and after more than 150 years there can be no talk of a natural law of capitalism or a final act of history. I therefore share neither Marx’s hope for the end of capitalism nor Schumpeter’s later fear of capitalism’s demise (at the hands of National Socialist populism). Nevertheless, the diagnosis of the “toxic brew” of Trumpian populism – that it is “rapidly destroying the foundations of the post-war international order and producing a far more unstable world” – is certainly persuasive.2

Trump has managed to combine two seemingly opposing currents within the capitalist field and to harness them for his own authoritarian ends. He has taken up the grievances of a large segment of the American population and articulates them relentlessly, particularly at his mass rallies. At the same time, through targeted tax cuts and deregulation, he has won over many of the wealthiest Americans and brought some of them into his cabinet – the richest in U.S. history. (The total net worth of Trump’s cabinet is estimated at around $7.5 billion; including Trump himself, the first billionaire president, the figure rises to roughly $13 billion. By comparison, Biden’s cabinet had an estimated net worth of about $118 million.)

To understand just how significant the combination of popular resentment and the ambitions of multimillionaires and billionaires was, it helps to recall that, before Trump, the two major parties generally addressed the interests of these economic opposites separately. The Republican Party of Ronald Reagan and the two Bush presidents largely looked after entrepreneurs and the affluent, while the Democratic Party of Bill Clinton and Barack Obama was more closely associated with the concerns of ordinary Americans.

Roughly speaking, this was the traditional political division of labor between the two major parties in the United States. Trump has disrupted this arrangement and, at least for the time being, brought conventional conservatism to an end. He has made the Republican Party his own and incorporated not only plutocrats and affluent voters but also workers and welfare-dependent voters into his coalition.

How enduring this realignment will prove to be remains uncertain. Much depends on the future evolution of Trumpism and on the Democrats’ ability to develop an attractive economic vision for lower- and middle-income Americans. Nevertheless, Trump’s exploitation of the novel connection between rising inequality and growing discontent is one of my eight reasons for considering his historic electoral successes to be explainable.3

Alternatives in the capitalist field

Just as in the wind field, where different air currents arise and are given names, various economic systems emerge within the capitalist field that can likewise be named. What they all have in common is the use of the means of production to generate profit. However, the degree of market freedom varies, as do the regulations governing wages, goods, investments, and services. In other words, capitalism in one form or another is a worldwide economic reality, but there is no globally uniform form of capitalism.

“Regional capitalisms” would be an appropriate term for this plurality of capitalist systems. It encompasses the manifold national and transnational forms of capitalism. If we stop speaking of capitalism in the singular, we can begin to think about alternatives within the capitalist field. And if we no longer regard existing forms of capitalism as a given, we can view the capitalist economic order as a design task and ask what kind of capitalism would serve us better – that is, make us happier.

The figure below illustrates four examples of regional capitalisms: Chinese, Nordic, German, and American capitalism. The extreme left represents a completely state-directed form of capitalism, which does not actually exist, while the extreme right represents a market-based form of capitalism without any external control, which likewise does not exist. These two extremes are purely theoretical, and the four regional forms of capitalism depicted within the capitalist field are Weberian ideal types. Their position is not determined by empirical metrics but solely by their relative proximity to one or the other theoretical endpoint. The same applies to the center-left and center-right variants of welfare-state capitalism.

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The scope for market forces within China’s state capitalism has both philosophical and practical limits. China’s aspirational goal of building a socialist society defines the ideological boundaries, while the Chinese Communist Party’s (CPC) interest in maintaining its supremacy and ensuring its survival constrains the free operation of markets. Officially, China describes its system as a “socialist market economy” in which market forces play a “decisive role.” In practice, however, market activity remains subject to extensive political oversight—the president and the Communist Party exercise ultimate authority over the economy.

The economic toolkit of the Communist Party of China includes both active and passive forms of government intervention. During the era of Deng Xiaoping, passive interventions allowed market forces greater room to operate. Under Xi Jinping, by contrast, news blackouts and active government measures helped stabilize China’s stock market during the turbulence of 2015. Chinese markets possess only limited autonomy.

Decisions concerning the exchange rate of the renminbi (“people’s currency”) and the broader direction of the economy are ultimately made by the political leadership of the CPC. President Xi has the final say. American capitalism places a comparatively much greater emphasis on market mechanisms, entrepreneurial freedom, and managerial autonomy. It seeks to limit government regulation and grants companies broad discretion in hiring and firing employees. Competition among firms, investors, and workers alike is regarded as a primary driver of innovation and economic growth.

Radical change, disruption, and innovation are hallmarks of American companies such as Amazon, Google, Facebook, and Uber. The American model tends to be skeptical of non-market forms of economic coordination. Social and environmental activism is criticized as an unnecessary constraint on economic efficiency. Public support for this model remains strong. Great wealth accumulated by entrepreneurs and investors is regarded as a legitimate reward for success, whereas welfare programs and labor-market regulations are denounced as economic “rigidities.” Social benefits for economically unproductive actors therefore appear not only uneconomical but, in some circles, even un-American.

Between the contrasting economic models of China and the United States lie two forms of welfare-state capitalism: Nordic and German capitalism. The Nordic ensemble comprises the economies of Denmark, Finland, Iceland, Norway, and Sweden. Nordic capitalism combines free-market economies with state-supervised collective bargaining between capital and labor, as well as extensive welfare-state benefits. The Economist once described the Nordic countries as “the next supermodel,” noting that Nordic capitalism had managed to avoid both “southern Europe’s economic sclerosis and America’s extreme inequality.”

The German model of capitalism grants employees a voice in corporate decision-making through the appointment of union representatives to company boards and works councils (Betriebsräte). This system of co-determination (Mitbestimmung) extends from the boardroom to the shop floor. It seeks to reconcile the pursuit of profit with the interests of employees. In addition, German capitalism maintains a strong vocational tradition that combines classroom education with practical training through apprenticeships.

Faced with the competing demands of economic efficiency and social justice, Germany has cultivated a both-and model of capitalism that seeks to combine market liberalism with social responsibility. The Nordic and German models demonstrate the range of alternatives that exist between strong state influence and extensive market freedom.

The capitalist field allows not only for systems committed to the American market-driven approach or the Chinese state-led model, but also for those that incorporate humanitarian values. One example is the recognition of the needs of fellow citizens who are unable to meet those needs on their own. Social support for citizens in need is not merely possible; it also contributes significantly to a society’s overall well-being. The United Nations’ World Happiness Reports underscore this point.

Happy and not-so-happy countries

The UN World Happiness reports, which annually assess the social well-being of more than 140 countries, consistently confirm the exceptional standing of the Nordic countries. For many years, all five Nordic states have ranked among the world’s ten “happiest” societies. Throughout the Trump era to date – from 2016 through 2025 – Finland and Denmark have occupied the leading positions, with Finland remaining number one since 2018. Iceland has also consistently ranked among the top three, while Sweden and Norway have remained among the global leaders in reported life satisfaction. The 2025 World Happiness Report again placed Finland first, followed by Iceland, Denmark, Costa Rica, and Sweden, with Norway in sixth place, among the leading countries.

Germany has performed noticeably less well than the Nordic countries in the happiness rankings. After placing 16th in 2016 and rising to 13th in 2020, it fell back to 14th in 2021, 16th in 2022, 24th in 2023, and 22nd in 2024, before improving to 17th in 2025. The United States has shown a similar long-term decline. Ranked 14th in 2016, it dropped to 18th in 2017 – the first year of Trump’s presidency – and continued downward during the following years, reaching 24th in 2024 and 23rd in 2025.

Compared with the capitalist systems of Germany and the United States, China ranks considerably lower in the World Happiness report. It placed 79th in 2016, fell to 86th in 2017 and 93rd in 2018, and then improved somewhat in subsequent years, reaching 64th in 2022, 60th in 2023, and 68th in 2024. In the 2025 report, China ranked 65th. Although the country has shown some improvement over time, it remains far below the levels of reported life satisfaction found in the Nordic countries and most Western democracies.

The World Happiness reports draw on global Gallup surveys that measure the subjective well-being of citizens around the world and relate national happiness levels to six principal explanatory variables:

“per capita income,” “healthy life expectancy,” “social support in times of need,” “perceived corruption in government and business,” “generosity toward others,” and “freedom to make individual life choices.”

To answer the question of why the Nordic welfare-state capitalisms rank so consistently high in happiness, I would point to their combination of economic prosperity and relatively small populations. The five Nordic countries together have a total population of only slightly more than 27 million people. This sharply distinguishes them from Germany (84 million), the United States (339 million), and China (1.4 billion), which suggests that high levels of social well-being may be easier to sustain in prosperous societies with comparatively small populations than in countries with very large and socially complex societies.

Germany and the United States appear to be experiencing declining happiness levels for different reasons. In Germany, economic difficulties and concerns about material well-being seem to play a central role. In the United States, by contrast, the decline appears to stem less from economic conditions than from weakening social cohesion. Jeffrey Sachs, lead author of the World Happiness Report, has argued that the report’s first two variables, which measure material living conditions, continue to place the United States in a relatively favorable position, whereas the remaining four social variables paint a considerably darker picture. Pointing to “less social support, less sense of personal freedom, lower donations, and more perceived corruption of government and business,” Sachs concluded that “America’s crisis is, in short, a social crisis, not an economic crisis.”4

The escalation of this crisis has been vigorously pursued in the United States since 2017. Trump and Trumpism promote America’s “greatness” in ways that undermine rather than strengthen the social foundations of democracy. Tax cuts for the super-rich exacerbate inequality, social safety nets are being dismantled, and university research and public education face growing political and financial pressure. The rule of law is eroding, environmental protections are weakened, and big-money donors are granted privileged influence and entrusted with governmental functions.5 Hatred of immigrants and refugees is stoked, official disinformation is amplified, and the country’s unmatched military power continues to expand at the expense of its soft power. At the same time, coercive state power has increasingly been directed against Trump’s domestic opponents.

The material foundations of life in the United States continue to improve, while its social conditions deteriorate – a development accelerated by the “America First” agenda. The inequality spiral that began in the late 1970s has become firmly entrenched through extraordinary executive compensation and growing inheritance flows. Wealthy individuals and their offspring tend to marry within their own socioeconomic class and fill elite positions with members of the same privileged circles. Private fortunes continue to expand, while many low-income earners experience declining social well-being. Meanwhile, Trump’s Republicans have shown little inclination to deploy political authority and public resources to preserve the nation’s social and environmental capital. How sustainable – and ultimately how happy – can such a society be?

Capitalism without a heart – or without tears?

Neither is possible. Just as there is no such thing as pure state capitalism or pure market capitalism, there is no form of capitalism entirely without heart or completely without tears. The heart of capitalism beats either more to the left or more to the right, that is, more for the many or more for the few. And capitalism can never exist entirely without tears, because there will always be individual hardships and collective downturns that cannot be fully eliminated. However, there are also no immutable “laws of nature” preventing societies from shaping forms of capitalism characterized by lower inequality and higher levels of social satisfaction. Inequality and discontent are not inevitable outcomes of a capitalist political economy but manageable consequences that can be socially moderated and politically restrained.

The French economist Thomas Piketty has examined the historical dynamics of capital and capitalism with a breadth and scope not seen since Marx. He has identified the “considerable transfer of U.S. national income … from the poorest 90 percent to the richest 10 percent since 1980” and warned, “it is hard to imagine an economy and society that can continue functioning indefinitely with such extreme divergence between social groups.”6

Yet much of what once appeared unimaginable has, thanks to Trump, become normalized in everyday American political life. Trump and Trumpism have perfected a heartless capitalism for the benefit of what is now less than one percent of the population. Under the guise of MAGA, they have instrumentalized a deeply unequal society for the limitless enrichment of a neo-monarchical leader, his family, and his loyal vassals. The strategic genius of the project lay in neutralizing the electoral resilience of American democracy by fusing extreme inequality with mass discontent. The traditional political, bureaucratic, academic, and journalistic elites of the United States were profoundly unprepared for this transformation – or for much of what followed.

One of Trump’s principal trailblazers, Steve Bannon, found the concentration of unlimited wealth in the hands of a few so “disturbing” that he envisioned an “enlightened Christian” form of capitalism. But in whose interests did he deploy his talents? Those of families from his own working-class background, or his super-rich patrons? Trump gave the unvarnished answer when he remarked that Bannon was simply “a guy who works for me.”

Had Bannon not been effectively for sale, and had he genuinely sought a form of capitalism grounded in Christian values – perhaps in the spirit of Matthew 19:24: “It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God” – he could have allied himself with Pope Francis, whose encyclical Laudato si’ had already addressed many of Bannon’s concerns about heartless capitalism. Instead, Bannon was “suspicious” of Francis and aligned himself with Cardinal Raymond Burke, one of the Pope’s most outspoken critics and a leading reactionary voice within contemporary Catholic conservatism.

The Pope’s encyclical was not a neutral document but a passionate plea for social and environmental justice.7 It sought to amplify “both the cry of the earth and the cry of the poor.” Arguing that “the human environment and the natural environment deteriorate together,” it called on all regional capitalisms to combat “human and social degradation” by investing in the social and natural capital of their societies. The encyclical urged greater attention to “the needs of the poor, the weak and the vulnerable” and affirmed that “we are one single human family.” As the Pope stressed: “There are no frontiers or barriers, political or social, behind which we can hide, still less is there room for the globalization of indifference.”

Unfortunately, that is easier said than done. In the field of Trumpian capitalism, enormous inequality is not a wake-up call but the norm. The belief that great wealth spurs economic growth is immortal in that field. Studies showing that billionaire wealth inhibits economic growth are largely ignored, while the insight that politically connected billionaire wealth significantly hampers economic development falls on deaf ears. Trump and his billionaires are happy. To the winners, growing inequality looks rosy.

However, inequality is by no means inevitable. It is a social construct and can be reduced. A functioning administrative state with democratically legitimized authority can achieve this. Yet for Bannon and Trump, the administrative state was an object of hatred. Their revolutionary project was to destroy the “deep state” of the old elites, and they have largely succeeded in doing so. They have dismantled the very instrument that could make greater economic equality –and even a form of Christian capitalism – possible in the United States.

America could place a capitalism without too many tears on the global agenda. Instead, Bannon, Trump, and Trumpism are fueling rising inequality and turbulent discontent. The world’s billionaires – who already own more than half the planet’s wealth – owe them their thanks.

America could be a republic of equals. The nation could demonstrate collective solidarity and a capitalism with plenty of heart and fewer tears. But that is not in the interest of the top 1 percent. The profiteers of inequality are trying to teach the remaining 99 percent of society that solidarity is a weakness. Why join a mutual health insurance system, they ask, if you are young, strong, and healthy? Why strengthen the weak and weaken yourself by supporting the unsuccessful with your money?

Yes, why would one, actually? For a loudspeaker like Robert Mercer, not empowering the weak is entirely reasonable. An insider at Renaissance Technologies described Mercer’s worldview as follows: “Bob believes that human beings have no inherent value other than how much money they make. A cat has value, he’s said, because it provides pleasure to humans. But if someone is on welfare, they have a negative value. If he earns a thousand times more than a schoolteacher, then he’s a thousand times more valuable.”8 That is the algorithm of capitalism without a heart.

America’s goal of providing all its citizens with life, liberty, and the pursuit of happiness is enshrined in the American Declaration of Independence of 1776, whose 250th anniversary the nation celebrates this year. Trump marks the occasion in Roman style – with bread and circuses, or panem et circenses – by hosting a caged mixed martial arts event on the lawn of the White House. The three founding goals of the American constitutional republic are further away than ever. Yet they are by no means impossible.

Notes

1 Karl Marx, Capital: A Critique of Political Economy. Volume I, p. 542.
2 See Our Schumpeter columnist pens a dark farewell The Economist, 20 Dec. 2016. For the original, see Joseph A. Schumpeter, Capitalism, Socialism, and Democracy. New York, London: Harper & Brothers, 1942.
3 For a schematic overview of the eight driving forces that can explain Trump’s rise to power in my opinion, see Wolf Schäfer, Populism as a wishmachine: the Trump brand. On some characteristics of populism and the question of what brought it to power in the USA, Meer, 25 February 2026.
4 Jeffrey D. Sachs, Restoring American Happiness World Happiness Report 2017, chapter 7, p. 178-184.
5 See Wolf Schäfer, Loudspeakers for Trump: On the adventure of American presidential elections and the billionaires’ chance to determine the winner, Meer, 25 April 2026.
6 Thomas Piketty, Capital in the Twenty-First Century. Cambridge, Mass.: Harvard University Press, 2014, p. 297.
7 See Encyclical letter Laudato Si' of the Holy Father Francis on Care For Our Common Home (official English-language text of the encyclical). Rome, 24 May 2015, paragraph 49; subsequent quotes paragraph 52.
8 Jane Mayer, The Reclusive Hedge-Fund Tycoon Behind the Trump Presidency. The New Yorker, 17 March 2017.