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Goldman Sachs business as usual

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the apparent recovery of the major banks by late 2009 was not a genuine return to healthy capitalist accumulation, but a state-engineered illusion. Goldman Sachs and its peers were posting record profits not because they had resumed productive lending, but because they had been handed virtually free money by central banks through near-zero interest rates and quantitative easing. They then deployed this cash into speculative bets on government bonds, equities, and commodities — effectively becoming giant hedge funds operating on taxpayer guarantees. The central thesis is that the banking system had been restored to profitability only by being restored to its pre-crisis speculative model, and that this was a political choice, not an economic necessity. The article concludes that the only genuine solution — public ownership and democratic control — is ruled out precisely because it would mean an end to "business as usual" for the capitalist class.

Theoretical Grounding

The analysis is grounded in the Marxist understanding of the relationship between the financial sector and the state under capitalism. It draws on the concept of fictitious capital — capital that appears to generate returns through financial circulation alone, without any corresponding expansion of productive value. The article shows how the banks' profits were derived not from lending to productive enterprises, but from arbitrage on state-backed securities and speculative asset inflation. This is a classic illustration of the tendency for finance to become parasitic on the state when the underlying accumulation process is exhausted.

The argument also implicitly relies on the Marxist theory of the state. The state is not presented as a neutral arbiter acting in the general interest, but as an instrument of class rule — bailing out the banks, guaranteeing their losses, and channelling public money into private bonuses. The revolving door between Goldman Sachs and the Treasury (Paulson, Geithner, Summers) is not treated as corruption in the liberal sense, but as the normal operation of a capitalist state whose personnel are drawn from and serve the dominant fraction of capital.

The article sits firmly within the Marxist tradition's critique of state monopoly capitalism and the Keynesian response to crisis. It rejects the notion that state intervention can resolve the contradictions of capitalism — it can only displace and defer them. The call for nationalisation under workers' control places the article in the revolutionary Marxist tradition, as opposed to reformist demands for regulation or "responsible capitalism."

Conjunctural Relevance

The article was written in January 2010, at a specific moment in the aftermath of the 2008 financial crisis. The key conjunctural features it identifies are:

  • Quantitative easing: Central banks had purchased toxic assets and flooded the banking system with cash. The article correctly identifies this as a transfer of risk from private balance sheets to the public.
  • Near-zero interest rates: The cost of borrowing for banks was effectively nil, allowing them to profit from the spread on government bonds (3-4%) — a risk-free return paid for by taxpayers.
  • Asset price inflation: The banks used cheap money to bid up the prices of equities, commodities, and emerging market debt. This was not a sign of recovery, but of speculative fever.
  • Bonus culture restored: Goldman Sachs set aside $19bn for bonuses at a time when 32 million Americans were on food stamps and unemployment stood at 16%. The inequality was not an unfortunate side-effect but a deliberate feature, defended openly by Lord Griffiths.
  • Political capture: The article names Geithner, Summers, and Paulson as Goldman Sachs alumni who directed the bailout in the bank's favour. The AIG bailout alone paid Goldman Sachs $13bn in full — a sum that would not have been recovered in normal bankruptcy proceedings.

The article's relevance extends well beyond 2010. The pattern it describes — central bank money creation, asset inflation, rising inequality, and the political protection of financial elites — became the defining features of the post-2008 era. The COVID-19 pandemic saw an even more extreme version of the same dynamic: massive quantitative easing, near-zero rates, and a stock market boom alongside mass unemployment. The article is therefore a prescient analysis of the permanent state intervention that has characterised capitalism since 2008, and of the class interests that intervention serves.

Where the Argument Continues

The article leaves several questions open, which are developed elsewhere in the Marxist tradition and in subsequent IDOM output:

  • The limits of state support: The article describes the bailout as working "so far" but does not analyse the long-term consequences of ballooning state debt and central bank balance sheets. This is taken up in later IDOM articles on sovereign debt crises and the limits of monetary policy.
  • The tendency of the rate of profit to fall: The article does not explicitly deploy this concept, but the underlying dynamic — that the banks could not profit from productive lending and turned to speculation — points to a deeper crisis of profitability in the real economy. This is a central theme in Michael Roberts' later work, including his books The Great Recession and The Long Depression.
  • The politics of nationalisation: The article calls for public ownership but does not develop the strategy for achieving it. This is addressed in the broader RCI programme, which argues that nationalisation under capitalism is insufficient and must be combined with workers' control and a revolutionary break with the state.
  • The European dimension: The article focuses on the US, but the same dynamic played out in Europe, with the ECB's later quantitative easing and the bailout of peripheral banks. IDOM articles on the Greek crisis and the eurozone are the natural continuation.

Connections

  • Marx, Capital Volume 3: The chapters on fictitious capital and the credit system are the theoretical foundation for understanding how banks create and trade claims on future value.
  • Hilferding, Finance Capital: A classic analysis of the fusion of banking and industrial capital, and the role of the state in supporting it.
  • Michael Roberts, The Great Recession (2009): Written contemporaneously, this book provides the macroeconomic framework — the falling rate of profit, the long depression — that the article implies but does not state.
  • IDOM articles on quantitative easing and the 2008 crisis: The site contains numerous pieces from 2008-2010 that develop the analysis of the bailout, the bonus culture, and the failure of regulation.
  • Against the Stream episodes on financialisation: The RCI's podcast series has covered the evolution of finance capital in the post-2008 period, including the rise of shadow banking and the role of central banks.

Key Quotes

  1. "The banks have become giant hedge funds, betting taxpayers' money on a rise in the stock market, government debt and commodity markets. In that sense, it is 'business as usual'."

  2. "The banks have resumed the role that they had adopted at the start of the credit crisis in 2007 – betting on the prices of financial assets financed through borrowing. So far, it's working because governments are financing it all for virtually nothing."

  3. "This is a perfect circle of financial trickery."

  4. "GS has got free money worth around $70bn in the last year. It has paid back about $20bn of that. But in the meantime, it has been able to make over $30bn in profit!"

  5. "This year, GS employees will get about $19bn in bonuses on top of their salaries – at a time when a record number of Americans (32m) are on food stamps, unemployment of various sorts has reached 16% of the workforce and people are losing their homes."

  6. "Bring them all into public ownership and make them democratically accountable to the elected institutions with a measure of control for the workers in them. Then the top bankers and their bonuses can be reined in; then the risk of excessive borrowing and speculation can be stopped; then banks can be made to lend money to the small businesses and individuals who desperately need it. It seems an obvious solution – does it not? But that would not be business as usual."