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Britain Bradford Bingley nationalised lets take the rest

Marxist Analysis · 2008-09-29

Core Argument

The central thesis is that the nationalisation of Bradford & Bingley in September 2008 was not an aberration from capitalist logic but its purest expression: the state socialises losses while private capital pockets the profitable assets. Mick Brooks argues that the "rescue" is structurally identical to the US Paulson plan — a mechanism for transferring bad debts to the public purse while selling off viable operations to the highest bidder. The article insists this is not a matter of Labour Party ideology or its absence, but of the state's fundamental class character. The demand that follows is not for more nationalisation of the same type, but for the socialist expropriation of the entire banking system under working-class control.

Theoretical Grounding

The analysis draws on the Marxist theory of the state as an instrument of class rule, operating through the distinction between the form of state intervention (nationalisation) and its class content (socialising losses, privatising profits). This is a direct application of Engels' observation in Socialism: Utopian and Scientific that the capitalist state, even when it takes over industries, remains a "ideal personification of the total national capital." Brooks implicitly contrasts bourgeois nationalisation — which leaves property relations intact and serves capital accumulation — with the socialist expropriation demanded by the labour movement.

The article also deploys a Marxist understanding of financial crisis as rooted in the contradiction between the fictitious capital of the housing bubble and the real economy. The "buy to let" and self-certificated mortgage markets are analysed not as mere fraud or mismanagement, but as logical expressions of a system that must constantly inflate asset prices to sustain accumulation — until the bubble bursts and the underlying contradictions are exposed.

Conjunctural Relevance

This article was written on 29 September 2008, the day the US House of Representatives initially rejected the $700 billion Troubled Asset Relief Program (TARP), sending global markets into freefall. The piece captures the precise moment when the 2008 financial crisis shifted from a series of discrete bank failures (Northern Rock, Bear Stearns) into a systemic meltdown requiring state intervention on an unprecedented scale.

The specific details are sharply observed: Bradford & Bingley's market capitalisation had fallen to less than £300 million — a tenth of its value two years prior — despite having made over £350 million in pre-tax profit the previous year. The £400 million rights injection had failed to stem the collapse. Spanish bank Santander acquired the healthy deposits and 200 branches at a fire-sale price, while the UK taxpayer was left with £41 billion in toxic mortgages. The article notes that Belgian bank Fortis was the next domino poised to fall.

Brooks connects the financial crisis to the real economy through the collapse of the "buy to let" market, worth £120 billion the previous year, and the mechanism by which falling house prices and falling rents create a downward spiral of negative equity and defaults — a process that would inevitably impact unemployment and production.

Where the Argument Continues

This article is part of a dense sequence of IDOM pieces from September 2008 that track the crisis as it unfolds. It explicitly references Brooks' own earlier article on Bradford & Bingley from earlier that month, and connects to Michael Roberts' "Financial meltdown deepens" and "Socialism for the rich, capitalism for the poor!" from the same period. Alan Woods' "World capitalism in crisis" provides the broader theoretical framework for understanding the crisis as a manifestation of the tendency of the rate of profit to fall.

The argument continues in subsequent IDOM analyses of the 2008 crisis, particularly around the distinction between nationalisation as crisis management and nationalisation as a transitional demand. The broader corpus — including the Against the Stream podcast series on financial crises — develops the argument that the working class must counterpose its own programme of expropriation under democratic control to the state's "socialism for the rich."

Connections

  • Marx, Capital Vol. 3 — particularly the chapters on credit and fictitious capital, which provide the theoretical basis for understanding how financial bubbles develop and burst.
  • Engels, Socialism: Utopian and Scientific — the analysis of the capitalist state as the "ideal personification of total national capital."
  • Lenin, The State and Revolution — the distinction between bourgeois nationalisation and the expropriation of the expropriators.
  • Trotsky, The Transitional Programme — the method of counterposing working-class demands to capitalist crisis management.
  • Michael Roberts' IDOM articles from September 2008 — provide the empirical and theoretical depth on the rate of profit and the credit crunch.
  • Alan Woods, "World capitalism in crisis" (26 September 2008) — the companion piece situating the financial crisis within the long-term decline of global capitalism.

Key Quotes

  1. "The basic idea is that the good stuff is sold off to the private sector while the taxpayer is lumbered with the bad debts, the toxins. Socialism for the rich and the rigours of free enterprise for the rest of us!"

  2. "As Ben Bernanke, boss of the Fed says, 'There are no atheists in foxholes and no ideologues in financial crises.' Whether it's not intervening (as it did before) or intervening (as it has over the weekend) the government is acting in the interests of the bankers and the capitalist class, not the people who voted for them."

  3. "The 'buy to let' market, worth £120bn last year is now effectively dead in the water. And of course all those people jumping ship from the housing market will make the house price collapse that much worse."

  4. "We have to ask – will $700bn save the US banking system? Not necessarily. Not if confidence continues to evaporate – as it rightly will. Not if house prices continue to fall – which they certainly will. Not if the financial crisis continues to impact on the real economy and on unemployment – which it definitely will."

  5. "The labour movement must commit itself to campaign to nationalise all the banks, not just the loss makers, as part of the socialist transformation of society."

  6. "It's the same old story – 'socialism' for the rich. We're sick of paying for their mistakes."