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Socialism for the rich capitalism for the poor

Marxist Analysis · 2008-09-15

Core Argument

The central thesis is that the $700 billion US bank bailout of September 2008, alongside the UK government's orchestration of the Lloyds-HBOS merger, was not an intervention to protect ordinary working people but a deliberate rescue of finance capital at public expense. Roberts argues that these measures constitute "socialism for the rich" — the state assuming the liabilities of private capital while leaving the social costs of the crisis (unemployment, home repossessions, cuts to public services) to fall on the working class. The claim is that the capitalist state, when faced with systemic collapse, abandons free-market rhetoric and deploys the full apparatus of public finance to restore the profitability of the ruling class, while imposing austerity on everyone else.

Theoretical Grounding

The analysis draws on the Marxist understanding of the capitalist state as an instrument of class rule, not a neutral arbiter between competing interests. Roberts implicitly invokes Engels's formulation in The Origin of the Family, Private Property and the State — that the state is "a product of society at a certain stage of development" which "asserts itself as a force for the purpose of keeping down the antagonisms" between classes. In this case, the state intervenes not to abolish capitalist relations but to preserve them.

The article also sits within the Marxist tradition of analysing financial crises as expressions of the underlying contradictions of capital accumulation. The bailout is presented not as an exceptional measure but as the logical response of a system that socialises losses while privatising profits. This connects to Marx's discussion of fictitious capital in Volume III of Capital — the bailout effectively converts bad private debts into public debt, shifting the burden from the financial sector onto the broader population through future taxation and spending cuts.

Conjunctural Relevance

The article was written in the immediate aftermath of the Lehman Brothers collapse (15 September 2008) and the subsequent freezing of credit markets. Roberts references specific events: Bush's 20 September proposal for the Troubled Asset Relief Program (TARP), the nationalisation of Fannie Mae and Freddie Mac ten days earlier, and Brown's intervention to facilitate Lloyds TSB's takeover of HBOS. The scale is emphasised — $700 billion initially, but Roberts notes the total exposure would reach $6 trillion, or 45% of annual US output, making it "the biggest nationalisation in world history."

The conjuncture is the opening phase of the Great Recession, when the dominant narrative from both US and UK governments was that bailouts were necessary to protect ordinary homeowners and savers. Roberts directly counters this, arguing that the bailout would not prevent the unfolding slump — rising unemployment, falling real incomes, and declining public services — but would instead accelerate it by loading the costs onto the working class.

Where the Argument Continues

This article is an early, sharp intervention in what became a sustained body of analysis by Michael Roberts and the In Defence of Marxism tradition throughout the Great Recession. The argument is developed further in:

  • "The credit crunch – one year on" (Roberts, September 2008) — examines the trajectory of the crisis after the initial bailout.
  • "Capitalism beared" (Roberts, March 2008) — an earlier analysis of the emerging crisis.
  • "1929: Can it happen again?" (Brooks, March 2008) — draws historical comparisons with the Great Depression, a theme Roberts returns to repeatedly.

The broader corpus extends into the long-term consequences: the shift from private to public debt, the imposition of austerity across Europe after 2010, and the question of whether the capitalist system can recover without a fundamental restructuring of class relations. Later articles by Roberts on the rate of profit and the long downturn provide the theoretical backbone for the empirical claims made here.

Connections

  • Marx, Capital Volume III — particularly the chapters on credit and fictitious capital, which explain how the financial system generates claims on future surplus value that can become detached from the underlying accumulation process.
  • Engels, The Origin of the Family, Private Property and the State — the theoretical basis for understanding the capitalist state's class character.
  • Lenin, The State and Revolution — on the state as an instrument of class rule, relevant to understanding why bailouts take the form they do.
  • Michael Roberts' later work on the rate of profit — particularly his empirical studies showing the long-term decline in profitability in advanced economies, which provides the structural explanation for why financial crises recur.
  • The broader IDOM corpus on the 2008 crisis — articles by Mick Brooks on hedge funds, speculation, and the dollar, which contextualise the financial mechanisms behind the bailout.

Key Quotes

  1. "They were not taking these actions to help working people. They did it to save finance capital from disaster."

  2. "This is not expropriating the banks. On the contrary it is saving them - with nearly full compensation, so they can resume their operations and restore their profitability."

  3. "And what will the taxpayer get for this huge bailout? Just a load of defaulted and non-paying mortgages, along with higher taxes, cuts in public spending on health, education and social security."

  4. "You see, when it comes down to the impending collapse of capitalism, suddenly socialism is a good idea. It's just this is socialism for the rich, while the rest of us have to continue to live under capitalism."