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Illustration: Lazaro Gamio/Axios

The modern version of American capitalism seems destined to change — perhaps profoundly — for the first time in our lifetimes.

What's new: Capitalism is being squeezed from both sides by a debate over socialism vs. strongman nationalism: President Trump bullying the Fed, publicly pressuring CEOs and juicing short-term markets at all cost.

Why it matters: It’s no longer debatable: The system makes the big, bigger and the rich, richer. The rest of America stagnates or suffers.

Ray Dalio, the billionaire capitalist, argues that the rich vs. everyone else divide is an existential threat.

  • "I believe that all good things taken to an extreme can be self-destructive and that everything must evolve or die," he writes on LinkedIn. "This is now true for capitalism."

A lot of CEOs and rich people are coming to the same conclusion — many reluctantly and privately. But the change in tone is noteworthy.

  • JPMorgan Chase chairman and CEO Jamie Dimon wrote this week in his annual shareholders letter: "Capitalism enables competition, innovation and choice. This is not to say that capitalism does not have flaws, that it isn’t leaving people behind and that it shouldn’t be improved."

The flashing signals are everywhere:

  • The data — the unambiguous reality — is sobering and startling: Since 1980, the incomes of the top 1% tripled, the top 10% doubled, and the bottom 60% of prime-age workers were flat.
  • History — and the past half-decade here and abroad — shows this is a key ingredient of populism.
  • All of this also makes socialism attractive — to the young, especially, but also to Democrats broadly.

The Democratic debate is less about Trump and more about redistribution, government intervention and huge safety nets.

  • While it gets insufficient coverage, the 2020 policy debate among Democrats is fascinating and foretelling.

There’s also a healthy debate about how we judge whether something is a monopoly. Right now, antitrust law focus on whether concentrated power results in higher prices for consumers. 

  • As Axios Future Editor Steve LeVine has written, the debate is shifting to whether too big and too powerful is simply too big, too powerful and too dangerous.

What's next: This may manifest on the campaign trail as a referendum not only on reversing the tax cuts and implementing a Green New Deal, but then moving in the exact opposite direction — Trump as the last gasp of trickle-down economics, Axios' Dan Primack notes.

  • Axios chief tech correspondent Ina Fried points out that this comes as artificial intelligence and automation are about to disrupt and displace even more of the labor sector — and vastly increase the pace of change. 

Be smart: It's hard to imagine a more worthy debate at a more important time for America. It's tempting to fixate on Trump. But the real action is the policy and philosophical debate unfolding before us.

Go deeper: Read Axios' deep dive on the new political and economic order

Go deeper

New Jan. 6 body camera footage shows Trump supporters attacking officer

New body camera footage obtained by CNN shows the moment a DC police officer was brutally attacked by Trump supporters during the Capitol Hill insurrection.

Driving the news: The release of video comes a day after Republican members of Congress sought to downplay the Jan. 6 events, with some lawmakers calling the rioters "peaceful patriots" and comparing them to tourists.

Mike Allen, author of AM
59 mins ago - Politics & Policy

Liz Cheney's plan to take on Trump

Cheney speaking to reporters after being removed as GOP conference chair yesterday. Photo: Kevin Dietsch/Getty Images

Rep. Liz Cheney (R-Wyo.) plans to make her purge the beginning of a new movement, with campaign travel, fundraising and speeches to challenge Donald Trump for ideological dominance of the GOP.

Driving the news: Sources in Cheney's camp tell me her message will be the importance of the truth, the need to move past Trump, and a push to articulate conservative policy and substance to combat Democrats.

Exclusive: Stephen and Ayesha Curry join One Million Black Women initiative

Stephen Curry and Ayesha Curry. Photo by Steve Jennings/Getty Images

Stephen and Ayesha Curry are joining the advisory council for Goldman Sachs' One Million Black Women initiative, Axios is first to report.

Why it matters: The initiative has committed to invest more than $10 billion in Black women over the next 10 years. It comes as banks and large companies are increasingly putting money behind rhetoric about advancing racial equity.