In February, President Trump announced the intent to establish a sovereign wealth fund for the United States. More recently, the Commerce Secretary announced that the U.S. had taken a 10% ownership share in Intel. The acquisition of the microprocessor juggernaut’s equity is part of a larger plan to acquire more strategic companies as a “down payment on a sovereign wealth fund,” according to National Economic Council Director Kevin Hassett.

With the renewed interest created by President Trump’s policies, this post explores how social and sovereign wealth funds (SWFs), as publicly owned investment vehicles, could serve as a powerful mechanism for democratizing capital and establishing a more equitable economy. While we take a skeptical eye on the US government’s approach, drawing from a market socialist perspective, we explore how such funds could serve as a bridge to a more collective and democratic economy. 

This analysis clarifies the crucial distinction between traditional sovereign wealth funds and social wealth funds. Through case studies of the existing frameworks like the Alaska Permanent Fund, we’ll explore the practical viability of these models. Ultimately, we conclude that by adopting transparent governance structures and innovative, non-extractive funding mechanisms, social wealth funds can provide a durable foundation for economic security, social cohesion, and a genuine democratization of capital.  

The Case for Collective Capital

The concentration of wealth and ownership in the hands of a small, private elite represents a fundamental challenge to both economic stability and democratic society. Addressing this challenge rests not on the abolition of markets but on a fundamental restructuring of ownership. Under such a system, the means of production would be collectively owned, while the profits could be used to reward workers, finance public services or infrastructure, or distribute to the public as a social dividend. 

SWFs could serve as an investment vehicle for achieving these ends. By moving capital into publicly owned funds, the same market mechanisms that generate immense private profits could be directed toward the collective public good. SWFs provide a stable funding source that can grow over time without the need for increased taxation.

Universal Basic Income (UBI), generally a cash transfer or stipend provided from one entity to the population, has attracted the interest of political leaders and entrepreneurs. But UBI doesn’t fundamentally change the nature of capital ownership. Universal Basic Assets (UBA), on the other hand, extend beyond the idea of UBI by granting every citizen a non-transferable share of a collectively held fund. While individuals cannot sell or withdraw this share, they receive a regular dividend from the investment income the fund generates. 

While it seems simple enough, this approach fundamentally alters the relationship between the citizen and the economy. In a capitalist system, many individuals experience a profound sense of alienation—a feeling of powerlessness and detachment from the economic forces that govern their lives. Their labor is treated as a commodity, and they have no direct stake in the productive apparatus of society. 

UBA through an SWF directly addresses this by making every citizen a co-owner of a growing national asset. By ensuring that everyone owns a “slice of the collective pie,” the fund democratizes economic growth, ensuring that when the economy performs well, the benefits accrue to all, not just the wealthy. This shifts the focus from solely redistributing income to democratizing ownership itself, thereby alleviating alienation in the working class. 

Sovereign vs. Social: A Critical Distinction

While the terms “sovereign wealth fund” and “social wealth fund” are often used interchangeably (same acronym, right?), there is a crucial distinction. A sovereign wealth fund is a state-owned investment fund that manages a country’s surplus reserves to generate financial returns. These funds are typically capitalized by revenues from commodity exports, such as oil and gas, or from foreign exchange reserves. Their primary objectives are often fiscal: stabilizing government revenues against commodity price volatility, accumulating savings for future generations, or financing strategic national projects.

A social wealth fund, on the other hand, is a public investment vehicle managed for the explicit purpose of serving the public good. While they may operate with similar market mechanisms as a sovereign wealth fund, their purpose is fundamentally different: to democratize wealth and distribute its benefits to society as a whole. 

The difference between sovereign and social wealth funds becomes clear when examining their practical applications and governance. Traditional SWFs, such as those in the Gulf Cooperation Council states, often act as instruments of statecraft. They can be used to invest internationally to strengthen trade and national security, acquire equity in strategic industries like semiconductors or AI, or serve as “war chests” for uncertain times. Their primary allegiance is to the state and its long-term strategic and fiscal interests.

In contrast, a social wealth fund is defined by its mandate to empower the public directly. While sovereigns may indirectly benefit citizens by stabilizing government finances or funding infrastructure, socials are designed to provide a direct and quantifiable benefit, often through a dividend or by directly funding public services. The purpose is not merely to manage state reserves but to restructure economic ownership, ensuring that the wealth co-created by a community is democratized and redistributed for social benefit. This difference in purpose—from a top-down, state-centric model to a bottom-up, citizen-centric one—is what makes social wealth funds a critical tool for building a more democratic economy.

Social Wealth Funds Already Exist … in the US!

Before anyone complains that SWFs are too socialist(!) for the free market United States, we should be clear that they already exist here! Both Texas and Alaska, hardly beacons of socialism, operate SWFs and distribute the proceeds directly or indirectly to their citizens. Here we’ll explore three such funds, two in the US and one in Norway.

• The Alaska Permanent Fund (APF) is a prime example of a social wealth fund in practice. Established by a constitutional amendment approved by 66 percent of Alaska’s voters in 1976, its creation was a visionary act to ensure that the state’s finite oil wealth would benefit both current and future generations. At least 25 percent of all revenues from oil reserves are placed into the fund. The fund’s most recognizable feature is its annual dividend, which has been distributed to eligible residents since 1982. While payments have averaged around $1,000 per person per year, they have been as high as twice that amount. 
• The Government Pension Fund Norway (GPFN), often cited as the gold standard of sovereign wealth funds, is also described by some as a social wealth fund. Established to manage the nation’s immense oil and gas revenues, its core purpose is to save for future generations, especially in preparation for the rising costs of pension obligations. The fund is now one of the world’s largest investors, with a small ownership stake in more than 8,500 companies worldwide, owning almost 1.5 percent of all listed shares globally.
• The Texas Permanent School Fund (PSF) provides a different model for a public wealth fund, one focused not on direct dividends but on direct investment in public services. Created in 1854 with an initial appropriation of $2 million, the fund was established for the “sole benefit of the public schools of Texas.” Its unique funding mechanism relies on the proceeds from land sales and royalties on mineral interests from state-owned lands. The PSF’s purpose is twofold: it provides direct funding for education and guarantees debt issued by independent school districts and charter schools. As of 2023, the fund had grown to a net market value of $59 billion. 

A Tale of Two Fund Proposals

A national social wealth fund for the United States would directly challenge the nation’s entrenched wealth inequality. Proposals like the American Solidarity Fund, put forth by Matt Bruenig, seek to gradually shift a substantial share of national wealth from private to public control, thus democratizing ownership. Every American adult would own a single “share” of the fund, which would pay an annual “universal basic dividend.”

The American Solidarity Fund proposes an innovative solution to funding: a “script tax” where profitable corporations would be required to issue new shares to the fund as a form of levy. This approach sidesteps the difficulties of taxing multinational corporations, which are skilled at sheltering income offshore, by instead transferring direct ownership. By gradually acquiring these shares, the public would gain a direct, collective stake in the economy’s most successful enterprises.

In contrast to the American Solidarity Fund, President Trump’s recent attempt to establish a U.S. sovereign wealth fund reveals the potential for such a vehicle to be subverted for political and private gain. While the stated goals to “promote U.S. economic and strategic leadership internationally” may seem laudable, the Executive Order itself was vague on details, particularly on governance. The proposal lacked specifics on how it would operate, what assets it would acquire, and how it would be insulated from political influence. 

A profound risk emerges when a public fund is not governed by a clear, transparent, and democratically accountable mandate. Without robust governance, there is a substantial risk that such a fund could be used corruptly to reward political allies and coerce support for a leader’s priorities. This provides a critical lesson: a fund’s mere existence does not guarantee its function will be democratic or universally beneficial.

Funding, Management, and the Path Forward

For social wealth funds to be a viable long-term strategy for a more democratic economy, they must move beyond a reliance on finite, extractive industries to more sustainable funding mechanisms  such as share levies on profitable corporations, wealth and inheritance taxes, revenues from leasing public assets, or taxes on carbon and financial transactions. The choice of funding mechanism is not simply a fiscal decision; it is a political and philosophical one. By capitalizing a fund through levies on wealth and corporate profits, a society directly challenges the existing concentration of capital at its source, aligning the fund’s operational model with its egalitarian purpose.

The success of any social wealth fund is also contingent upon its governance. To remain accountable to the public and resist political capture, a fund must be designed with principles of deep democracy and transparency. The key elements of sound governance include regular reporting, independent audits by watchdog institutions, and insulation from short-term political pressures. Public participation in the fund’s design and implementation is critical to ensuring community ownership including by providing citizens with a voice in investment decisions. In this way, social wealth funds channel democratically controlled dollars to publicly desired investments, shifting society away from reliance on private financing and unaccountable philanthropy.

A Bridge to a More Democratic Economy

The evidence from existing models and the blueprints for future ones strongly suggest that SWFs are more than a niche financial instrument; they can be a powerful and practical tool for building a more collective and democratic economy. By creating publicly owned investment vehicles that manage capital for the long-term benefit of all citizens, society can fundamentally shift the locus of economic power. These funds provide universal asset ownership, reducing the alienation inherent in a system where capital is concentrated in private hands.

The analysis has shown that the success of these funds lies not just in their existence, but in their purpose and governance. While traditional sovereign wealth funds serve the strategic interests of the state, social wealth funds are distinguished by their explicit mandate to empower the citizenry. The Alaskan and Norwegian models demonstrate the potential to generate long-term wealth and distribute its benefits directly, while the Texas fund shows how public capital can be leveraged to fund essential public services. 

Critically, the Trump proposal serves as a cautionary tale, underscoring that without a clear, democratically accountable mandate, a public fund can be corrupted to serve private and political ends. The path forward lies in embracing social wealth funds as a bridge—one that moves beyond extractive funding, embraces democratic governance, and ultimately provides a tangible, collective stake in the prosperity of the nation for every single citizen.