Is Donald Trump a cudgel capitalist – greed in his heart, cudgel in his hand – eager for your craven submission to his will?
Yesterday seizing oil tankers to cripple the Venezuelan economy so that he can have his way in “running” that parcel of the Western Hemisphere. Today imposing tariffs on Denmark and other allies in Europe to beggar their citizens and squeeze them hard until they gasp, “Please, please take Greenland, but let us prosper!”
Trump’s model of capitalism is to take what you can, when you can and damn the consequences. This is what I called in my book “brute” capitalism. Its moral ideal was artistically prescribed by Nietzsche as emerging from the whirlwind of any self-centeredness thrust on by a will to power, responsible to none and dangerous to all. As Nietzsche proclaimed:
“But nevertheless I walk with my thoughts above their heads; and even should I walk on mine own errors, still would I be above them and their heads. For men are not equal: so speaketh justice. And what I will, they may not will!”
President Trump put this sentiment rather well in a note he sent yesterday to the prime minister of Norway, writing:
“Considering your country decided not to give me the Nobel Peace Prize for having stopped eight wars PLUS, I no longer feel an obligation to think purely of peace, although it will always be predominant, but can now think about what is good and proper for the United States of America.”
“I have done more for NATO than any other person since its founding and now, NATO should do something for the United States. The world is not secure unless we have complete and total control of Greenland.”
Trump’s message was in response to a text message the Norwegian prime minister had sent on behalf of himself and President of Finland Alexander Stubb less than half an hour before urging Trump to “de-escalate” on “Greenland, Gaza, Ukraine and your tariff announcement.”
Trump is not taking his country and the world into a better future. Rather, he is turning us back towards the past, to the power-seeking rivalries of governments and corporations during the late 19th century, the age of social Darwinism domestically and internationally, of cartels, monopolies and the imposition of colonial fiefdoms, taking others into one-sided receiverships.
This was the era of President William McKinley with tariffs; Andrew Carnegie and John D. Rockefeller with cartels; Yale Professor William Graham Sumner on survival of the fittest; a colonial war against Spain; exclusion of Chinese immigrants.
This is the same America which novelist Henry James described as having no items of high civilization:
“No sovereign, no court, no personal loyalty, no aristocracy, no church, no clergy, no army, no diplomatic service, no country gentlemen, no palaces, no castles, nor manors, nor old country-houses, nor parsonages, not thatched cottages, nor ivied ruins; no cathedrals, nor abbeys or little Norman churches,; no great universities nor public schools – no Oxford, no Eton, nor Harrow; no literature, no novels, no museums, no pictures, no political society, no sporting class, no Epson nor Ascot!”
Then, European powers were on a course that would end up in World War I in which 15 to 22 million died and after which four empires collapsed. Japan was arming itself to take predominance in East Asia, which would bring about World War II in Asia. Not so lovely times in human history, but, frankly, not off the norm for, as once noted by Thomas Hobbes, the state of nature for humans was usually a war of all against all, where lives were “solitary, poor, nasty, brutish and short”.
In the first year of his second term, Trump has followed a neo-mercantilism or national industry policy, where the national government owns shares in companies and invests money where it thinks best to foster some companies, but not others. Companies with government as an owner are: Intel Corporation (10%), MP Materials (15%), Lithium Americas Corporation (10%), Trilogy Metals Inc. (10%) and U.S. Steel Corporation, where the federal government holds a “golden share,” giving the U.S. veto rights over certain corporate actions as part of the Nippon Steel acquisition deal.
A week ago, President Trump told American credit card companies that they had until January 20 to comply with his demand that they put a cap of 10% on interest to be charged on credit card balances. It is estimated that reducing interest on credit card balances would save American users of credit cards some $100 billion. Credit card companies would lose revenue, but still be profitable.
Trump’s imposition of tariffs depresses markets and conflicts with the Caux Round Table Principles for Business:
Principle 5: Support responsible globalization.
A responsible business, as a participant in the global marketplace, supports open and fair multilateral trade. A responsible business supports reform of domestic rules and regulations where they unreasonably hinder global commerce.
Cudgel capitalism can easily violate American law and public policy, which favor open access to markets and multiparty, free market competition, but not one-sided extortion of unfair returns.
Under the Sherman Antitrust Act, companies broken up for having too much “cudgel” power over markets were John D. Rockefellers’ Standard Oil, American Tobacco and the Northern Securities company, which owned two railroads and so limited competition in prices between them. In 1982, the national telephone company, AT&T, was broken up under the Clayton Act.
Secondly, court doctrines that do not enforce contracts obtained through “cudgel” power tactics are:
-Procedural unconscionability, when the party with the cudgel gives the weaker party no meaningful choice, uses hidden or fine-print terms or complex or misleading language and resorts to high pressure or surprise in the negotiations.
-Substantive unconscionability, which happens when the party with the cudgel writes a contract that has overly harsh or one-sided terms, extreme limitation of remedies in case of breach by the more powerful party, excessive fees or penalties to be paid by the weaker party or one-sided arbitration clauses.
-Contracts of adhesion, where a form contract is presented with no chance to bargain over the printed terms may not be enforced by a court if a reasonable consumer would not expect such onerous terms to be included in the deal. Courts will not enforce contract of adhesion terms that waive statutory rights (e.g., minimum wage, consumer protections), limit liability for intentional misconduct or gross negligence or conflict with consumer-protection statutes.
Thirdly, courts will not enforce contracts agreed to under duress or undue influence. Duress happens when consent is obtained by wrongful threats. Undue influence is when the party with the cudgel exploits a position of trust or dominance. A general rule is: “Every contract, combination… or conspiracy, in restraint of trade or commerce among the several states… is illegal.”
Notable cases where courts voided oppressive contracts are:
-Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co. Alaska Supreme Court (1978)
Where Alyeska withheld payment it knew Totem desperately needed to avoid bankruptcy, forcing Totem to accept a much smaller settlement.
-Austin Instrument, Inc. v. Loral Corp, New York Court of Appeals (1971)
Where Austin threatened to stop delivering essential parts unless Loral agreed to price increases and awarded additional contracts. A threat to breach a contract, when no reasonable alternative exists, can constitute duress.
-Odorizzi v. Bloomfield School District, California Court of Appeal (1966)
Where a teacher was pressured into resigning immediately after an arrest, while exhausted and emotionally distressed. Excessive persuasion exploiting vulnerability invalidates apparent consent.
-Allcard v. Skinner, English Court of Appeal (1887)
Where a woman transferred substantial property to a religious order under spiritual influence.
Even with all his cudgels at the ready, Trump still faces competition. For example, Canadians can do deals with the Chinese and cut Americans out.
