The ‘bailing out bankers is socialism’ myth
Published Nov 9, 2008 4:08 PM
Capitalism is in disrepute these days because of the chaos it is causing
everywhere. Since no one wants to go back to feudalism or slavery—the two
previous forms of class society that once prevailed in much of the
world—the concept of socialism is arousing new interest. So of course the
enemies of socialism are trying to sow confusion about it.
There is nothing socialistic in throwing money down
the rathole of a capitalist economic crisis to rescue
institutions that have been key to the process of
exploiting the working class
In the United States, this has taken the form of labeling the
government’s recent bailout of the banks and other financial institutions
as socialism. It is a ridiculous assertion, since the bailout, which is very
unpopular, is in fact a tremendous shift of public funds into the hands of
private capitalists—funds that could be used for social programs to help
out the mass of the people in these troubled times.
It is generally right-wing demagogues who raise the specter of
socialism—the very folks who are quite comfortable with the government
spending trillions of dollars on the military, prisons and police so they can
repress the workers and poor at home and abroad. That kind of “big
government” they welcome.
Nor do they really object to the bailout of the banks. They just want it done
without any government regulation or oversight.
But is such government “intervention” into the economy a form of
socialism, even if a distorted one?
The answer is no, both in form and in essence.
Even if this bailout contained all kinds of restrictions on the bankers, which
it doesn’t, and even if it limited their profit-taking, it still would be
nothing more than a capitalist effort to strengthen the system of capitalist
There is nothing socialistic in throwing money down the rathole of a capitalist
economic crisis to rescue institutions that have been key to the process of
exploiting the working class—a process that has brought about an obscene
accumulation of society’s wealth in the hands of a small class of
Socialism is, above all, an economic and social system that comes out of the
struggle of the working class, in alliance with all the oppressed, against the
There have been many examples of the capitalist class turning to the government
for rescue in times of crisis. For instance, there was an earlier and smaller
version of the recent bailout of the banks in 1987, during the Reagan
administration. The then newly appointed head of the Federal Reserve System,
Alan Greenspan, injected “liquidity” into the markets after stocks
crashed in October of that year. The Fed bought up the stocks of failing
companies and also offered them loans at a discount rate. The bailout led
stocks to rally on Wall Street, erasing some of their losses. The big money men
engineered and welcomed this government “intervention” and no one
accused Reagan, who had built his career largely on anti-communism, of being a
Government intervention in a capitalist economy, and even the takeover of key
industries, like the British Labour Party government’s nationalization of
the coal mines, railroads and steel industry after World War II, does not
constitute socialism or the transfer of power from the hands of one class to
another. The British capitalist ruling class remained firmly seated. It was
fully compensated—in truth overcompensated—for the nationalized
property, which was in poor condition after years of depression and war. It was
free to continue to exploit the workers through other avenues.
The function of a government, whether it is elected or not, is to manage the
state for a certain period of time. But what is the state? In essence, it is
organized force and violence to preserve and promote the interests of the class
in power. It is the army, the police, the courts, the many institutions that
apply force and pressure both domestically and internationally.
The state appeared fairly recently in human history. In early communal society,
before people became divided into classes—into those who owned property
and those who didn’t—there was no state, no standing army, no
In modern times, especially, the state has had to take on many other functions
besides its essential role as enforcer. The day-in, day-out process of
exploiting the working class and making profits requires that the capitalist
state provide much of the economic infrastructure like roads, bridges, levees
and airports. Also, in order to collect taxes from the people without provoking
rebellion, the state has to be seen as providing funds for necessary services
like education, health care, libraries, parks, medical care, social security
and so on.
However, none of these things were instituted just because the capitalists were
convinced that would be the rational thing to do in order to protect their own
interests. No, every social gain came through sustained and often militant
struggles. Eventually, the powers-that-be yielded a little, often kicking and
screaming, to some of the workers’ demands in order to pacify them.
Without struggle, there is no progress, as the great abolitionist Frederick
Douglass observed. And if the struggle ebbs, gains made by the workers and the
oppressed can be taken away under this capitalist system. In recent decades,
the proportion of the state’s funds allocated to social programs has
dwindled down in relation to the enormous expenditures on the military and the
repressive state apparatus.
Schools and hospitals are overcrowded and understaffed; public housing has been
virtually dismantled; the safety net provided by welfare against abject poverty
has been shredded; Social Security and Medicare are in danger even as trillions
of dollars are being handed out to the banks and corporations.
This is further proof, if any is needed, that the U.S. government and the state
it manages do not stand above classes. They are “of the people, by the
people and for the people” only if, by people, one means the ruling
capitalist class. Yes, Bill Gates is a person. The Rockefellers are people. So,
to avoid confusion, let’s be specific and say this is a capitalist
government, it serves the interests of the superrich, and it has absolutely
nothing in common with socialism.
The objective of revolutionary socialists, of Marxists, is to accelerate the
struggle of the working class against the ravages of capitalism, which means
not only taking on the bosses in economic struggles but also raising the
political level of the workers’ movement so as to challenge and
disintegrate the capitalist state and replace it with a workers’
This is what is necessary to liberate the means of production from the hands of
private capital and use them to satisfy the needs of the people and not the
bankers. It is what will allow the true reorganization of society and the
ultimate dissolving of class differences and antagonisms—so that
eventually the state itself will have no further function and can pass into
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