Davos likes to imagine itself as the board meeting of the world. Amid the geopolitical convulsions triggered by the United States, this year’s Alpine gathering seems less a summit of equals and more like a courtesy call on the chairman.

Global chief executives were invited to “a reception in honour of President Donald J Trump” after his address on Wednesday. The promise of public-private partnerships on global challenges gave way to meek thematic calls for “dialogue”. It all reflects the uncomfortable reality that the World Economic Forum’s (WEF) soft global corporatism is buckling under America First pressure.

Many will lament global capital seemingly bowing to American aggression. Yet, dangerous as Trump’s policies are, perhaps the penny will also drop on Davos Man’s own delusions.

For years, the forum rejected Milton Friedman’s framework on the virtues of clearly defining the role of business and state. Companies should seek profit, Friedman said, but if citizens want redistribution or decarbonisation, honest government action should deliver it. Davos disagreed. It preached “stakeholder capitalism”, the idea that all businesses have broader obligations to workers, communities, the planet and “society at large”, and must actively collaborate with “stakeholders” to deliver on them.

Elites from the corporate, political, and non-profit worlds would supposedly work up plans to improve the world, infusing environmental and social goals via corporate practice and eulogising. Progressive aims like inclusive growth and a just carbon transition began as buzzwords, then seeped into corporate policy, eventually getting hard-wired through law as mandatory climate disclosures and diversity mandates.

Some dressed these priorities up as enlightened self-interest. Others claimed it just described how decent firms behave. Yet “partnership” between corporations and governments was inherently unstable. If companies must serve “society” beyond core business, then who sets society’s goals? Governments lay best claim to that power. And once politics assesses corporate virtue, moral exhortation quickly becomes legal compulsion, per the whims of today’s leaders.

Enter Trump. Amid sluggish western growth, the WEF’s previous priorities looked decadent and out of step with voters’ priorities. Nevertheless, during his first term, Davos Man tried riding it out, supporting Trump’s deregulation and tax cuts while keeping other aims on the back burner.

Trump’s second term disabused them of that possibility. The soft corporatism of business and government working together around climate change, diversity, and corporate social responsibility is out. The raw corporatism of state power pushing an ever-expanding American “national interest” on fossil fuels, industrial policy, artificial intelligence, affordability, and geostrategy is in.

It’s not just the goals that changed. The president’s specific means are corrupting capitalism. Trump’s government is arranging firm-by-firm deals, punishments, and privileges under assorted pretexts, so tilting the competitive landscape towards giant businesses. Firms self-censor to stay in favour. They also invest more time and energy in lobbying and second-guessing how the White House will react, rather than creating value.

Yet that is where we are. Jenny Johnson, chief executive of Franklin Templeton, summarised Trump’s method: “I’m going to come out with a hammer, and then I’ll negotiate with you.” When firms are tools to deliver government priorities, it scarcely matters whether the aim is net zero, AI leadership, or beating China. They get treated as subcontractors of the state.

Indeed, Trump’s actions offer a harsh lesson for the WEF. The corporate world will always be the junior partner to an assertive government of the world’s largest economy. And Trump has no qualms about using arbitrary coercion via tariffs, export fees, government stakes in companies, threats of price controls, or the bully pulpit to bend corporations and countries to his will.

Businesses can rush to Switzerland to protect their own interests through dialogue, lobbying, or making promises to buy breathing room. But they should surely now appreciate the virtues of Friedman’s insight. When profits are treated as legitimate only if they serve a political agenda, leaders do not just abuse the system. They become it.