Socialism for the rich and capitalism for the poor
Encyclopedia
Socialism for the rich and capitalism for the poor is a classical political-economic argument, stating that in the advanced capitalist societies state policies assure that more resources flow to the rich than to the poor, for example in form of transfer payment
s. The term corporate welfare
is widely used to describe the bestowal of favorable treatment to particular corporations by the government. One of the most commonly raised forms of criticism are statements that the capitalist political economy toward large corporations allows them to "privatize profits and socialize losses
." The argument has been raised and cited on many occasions.
:
The phrase may have been first popularized by Michael Harrington
's 1962 book The Other America
. However, Harrington is actually citing Charles Abrams
, well-known authority on housing
.
Andrew Young
has been cited for calling the U.S. system “socialism for the rich and free enterprise for the poor”, and Martin Luther King, Jr.
, who was assassinated in 1968, frequently used this wording in his speeches. Since at least 1969, Gore Vidal
has used the expression “free enterprise for the poor and socialism for the rich” to describe the U.S. economic policies. Vidal used it as well since the 1980s for expressing his critique of Reagonomics.
In winter 2006/2007, in response to criticism about oil imports from Venezuela, that country being under the leadership of Hugo Chávez
, the founder and president of Citizens Energy Corporation Joseph P. Kennedy II countered with a critique of the U.S. system which he characterized as “a kind of socialism for the rich and free enterprise for the poor that leaves the most vulnerable out in the cold”. Also Robert F. Kennedy, Jr.
has become known for expressing to large audiences that the United States is now a land of “socialism for the rich and brutal capitalism for the poor”.
Economist Dean Baker
expressed similar views in his book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, in which he pointed out several different policy areas in which government intervention is essential to preserving and enhancing wealth in the hands of a few.
Also Noam Chomsky
has criticized the way in which free market principles have been applied. He has argued that the wealthy use free-market rhetoric to justify imposing greater economic risk
upon the lower classes, while being insulated from the rigours of the market by the political and economic advantages that such wealth affords. He remarked, "the free market is socialism
for the rich—[free] markets for the poor and state protection
for the rich."
Arguments along a similar line were raised in connection with the financial turmoil in 2008. With regard to the federal takeover of Fannie Mae and Freddie Mac
, Ron Blackwell, chief economist of AFL-CIO
, used the expression “Socialism for the rich and capitalism for the poor” to characterize the system. In September 2008, the US Senator from Vermont
, Democratic Socialist Bernie Sanders
said regarding the bailout of the U.S. financial system
: “This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor”. The same month, economist Nouriel Roubini
stated: “It is pathetic that Congress did not consult any of the many professional economists that have presented […] alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street”.
Former U.S. Secretary of Labor Robert Reich
adapted this phrase on The Daily Show
on October 16, 2008: "We have socialism for the rich, and capitalism for everyone else."
The journalist John Pilger
also included the phrase in his speech accepting Australia's human rights award, the Sydney Peace Prize
, on 5th November 2009: "Democracy has become a business plan, with a bottom line for every human activity, every dream, every decency, every hope. The main parliamentary parties are now devoted to the same economic policies - socialism for the rich, capitalism for the poor - and the same foreign policy of servility to endless war. This is not democracy. It is to politics what McDonalds is to food."
Vermont senator Bernie Sanders
referenced the phrase during his eight-and-a-half-hour speech on the senate floor on December 10, 2010 against the continuation of Bush-era tax cuts, when speaking on the federal bailout of major financial institutions at a time when small-businesses were being denied loans.
Transfer payment
In economics, a transfer payment is a redistribution of income in the market system. These payments are considered to be exhaustive because they do not directly absorb resources or create output...
s. The term corporate welfare
Corporate welfare
Corporate welfare is a pejorative term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less...
is widely used to describe the bestowal of favorable treatment to particular corporations by the government. One of the most commonly raised forms of criticism are statements that the capitalist political economy toward large corporations allows them to "privatize profits and socialize losses
Privatizing profits and socializing losses
In political discourse, the phrase "privatizing profits and socializing losses" refers to any instance of speculators benefitting from profits, but not taking losses, by pushing the losses onto society at large, particularly via the government....
." The argument has been raised and cited on many occasions.
History and usage
The notion that banks privatize profits and socialize losses dates at least to the 19th century, as in this 1834 quote of Andrew JacksonAndrew Jackson
Andrew Jackson was the seventh President of the United States . Based in frontier Tennessee, Jackson was a politician and army general who defeated the Creek Indians at the Battle of Horseshoe Bend , and the British at the Battle of New Orleans...
:
The phrase may have been first popularized by Michael Harrington
Michael Harrington
Edward Michael "Mike" Harrington was an American democratic socialist, writer, political activist, professor of political science, radio commentator and founder of the Democratic Socialists of America.-Personal life:...
's 1962 book The Other America
The Other America
Michael Harrington’s book The Other America was an influential study of poverty in the United States, published in 1962 by Macmillan. A widely read review, "Our Invisible Poor," in The New Yorker by Dwight Macdonald brought the book to the attention of President John F. Kennedy.The Other America...
. However, Harrington is actually citing Charles Abrams
Charles Abrams
Charles Abrams was the legendary urbanist and housing expert who created the New York Housing Authority. He was one of the first to use, maybe the very first, to use the expression Socialism for the rich and capitalism for the poor....
, well-known authority on housing
House
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...
.
Andrew Young
Andrew Young
Andrew Jackson Young is an American politician, diplomat, activist and pastor from Georgia. He has served as Mayor of Atlanta, a Congressman from the 5th district, and United States Ambassador to the United Nations...
has been cited for calling the U.S. system “socialism for the rich and free enterprise for the poor”, and Martin Luther King, Jr.
Martin Luther King, Jr.
Martin Luther King, Jr. was an American clergyman, activist, and prominent leader in the African-American Civil Rights Movement. He is best known for being an iconic figure in the advancement of civil rights in the United States and around the world, using nonviolent methods following the...
, who was assassinated in 1968, frequently used this wording in his speeches. Since at least 1969, Gore Vidal
Gore Vidal
Gore Vidal is an American author, playwright, essayist, screenwriter, and political activist. His third novel, The City and the Pillar , outraged mainstream critics as one of the first major American novels to feature unambiguous homosexuality...
has used the expression “free enterprise for the poor and socialism for the rich” to describe the U.S. economic policies. Vidal used it as well since the 1980s for expressing his critique of Reagonomics.
In winter 2006/2007, in response to criticism about oil imports from Venezuela, that country being under the leadership of Hugo Chávez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
, the founder and president of Citizens Energy Corporation Joseph P. Kennedy II countered with a critique of the U.S. system which he characterized as “a kind of socialism for the rich and free enterprise for the poor that leaves the most vulnerable out in the cold”. Also Robert F. Kennedy, Jr.
Robert F. Kennedy, Jr.
Robert Francis Kennedy, Jr. is an American radio host, activist, and attorney specializing in environmental law. He is the third of eleven children born to Ethel Skakel Kennedy and Robert F. Kennedy and is the nephew of John F. Kennedy and Edward M. Kennedy...
has become known for expressing to large audiences that the United States is now a land of “socialism for the rich and brutal capitalism for the poor”.
Economist Dean Baker
Dean Baker
Dean Baker is an American macroeconomist and co-founder of the Center for Economic and Policy Research, with Mark Weisbrot. He previously was a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D...
expressed similar views in his book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, in which he pointed out several different policy areas in which government intervention is essential to preserving and enhancing wealth in the hands of a few.
Also Noam Chomsky
Noam Chomsky
Avram Noam Chomsky is an American linguist, philosopher, cognitive scientist, and activist. He is an Institute Professor and Professor in the Department of Linguistics & Philosophy at MIT, where he has worked for over 50 years. Chomsky has been described as the "father of modern linguistics" and...
has criticized the way in which free market principles have been applied. He has argued that the wealthy use free-market rhetoric to justify imposing greater economic risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
upon the lower classes, while being insulated from the rigours of the market by the political and economic advantages that such wealth affords. He remarked, "the free market is socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
for the rich—[free] markets for the poor and state protection
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
for the rich."
Arguments along a similar line were raised in connection with the financial turmoil in 2008. With regard to the federal takeover of Fannie Mae and Freddie Mac
Federal takeover of Fannie Mae and Freddie Mac
The federal takeover of Fannie Mae and Freddie Mac refers to the placing into conservatorship of government sponsored enterprises Fannie Mae and Freddie Mac by the U.S. Treasury in September 2008. It was one financial event among many in the ongoing subprime mortgage crisis.On September 6, 2008,...
, Ron Blackwell, chief economist of AFL-CIO
AFL-CIO
The American Federation of Labor and Congress of Industrial Organizations, commonly AFL–CIO, is a national trade union center, the largest federation of unions in the United States, made up of 56 national and international unions, together representing more than 11 million workers...
, used the expression “Socialism for the rich and capitalism for the poor” to characterize the system. In September 2008, the US Senator from Vermont
Vermont
Vermont is a state in the New England region of the northeastern United States of America. The state ranks 43rd in land area, , and 45th in total area. Its population according to the 2010 census, 630,337, is the second smallest in the country, larger only than Wyoming. It is the only New England...
, Democratic Socialist Bernie Sanders
Bernie Sanders
Bernard "Bernie" Sanders is the junior United States Senator from Vermont. He previously represented Vermont's at-large district in the United States House of Representatives...
said regarding the bailout of the U.S. financial system
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
: “This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor”. The same month, economist Nouriel Roubini
Nouriel Roubini
Nouriel Roubini is an American economist. He claims to have predicted both the collapse of the United States housing market and the worldwide recession which started in 2008. He teaches at New York University's Stern School of Business and is the chairman of Roubini Global Economics, an economic...
stated: “It is pathetic that Congress did not consult any of the many professional economists that have presented […] alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street”.
Former U.S. Secretary of Labor Robert Reich
Robert Reich
Robert Bernard Reich is an American political economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford and Jimmy Carter and was Secretary of Labor under President Bill Clinton from 1993 to 1997....
adapted this phrase on The Daily Show
The Daily Show
The Daily Show , is an American late night satirical television program airing each Monday through Thursday on Comedy Central. The half-hour long show premiered on July 21, 1996, and was hosted by Craig Kilborn until December 1998...
on October 16, 2008: "We have socialism for the rich, and capitalism for everyone else."
The journalist John Pilger
John Pilger
John Richard Pilger is an Australian journalist and documentary maker, based in London. He has twice won Britain's Journalist of the Year Award, and his documentaries have received academy awards in Britain and the US....
also included the phrase in his speech accepting Australia's human rights award, the Sydney Peace Prize
Sydney Peace Prize
The Sydney Peace Prize is awarded by the Sydney Peace Foundation, a not-for-profit organisation associated with the University of Sydney. The Sydney Peace Prize is the only International Peace Prize awarded in Australia....
, on 5th November 2009: "Democracy has become a business plan, with a bottom line for every human activity, every dream, every decency, every hope. The main parliamentary parties are now devoted to the same economic policies - socialism for the rich, capitalism for the poor - and the same foreign policy of servility to endless war. This is not democracy. It is to politics what McDonalds is to food."
Vermont senator Bernie Sanders
Bernie Sanders
Bernard "Bernie" Sanders is the junior United States Senator from Vermont. He previously represented Vermont's at-large district in the United States House of Representatives...
referenced the phrase during his eight-and-a-half-hour speech on the senate floor on December 10, 2010 against the continuation of Bush-era tax cuts, when speaking on the federal bailout of major financial institutions at a time when small-businesses were being denied loans.
Variations
- Privatize profits/gains, and socialize risks/losses/debts
- Markets, free enterprise, private enterprise, and capitalism for the poor, while state protection and socialism for the rich
See also
- Business ethicsBusiness ethicsBusiness ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...
- Corporate welfareCorporate welfareCorporate welfare is a pejorative term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less...
- Crony capitalismCrony capitalismCrony capitalism is a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials...
- Economic interventionismEconomic interventionismEconomic interventionism is an action taken by a government in a market economy or market-oriented mixed economy, beyond the basic regulation of fraud and enforcement of contracts, in an effort to affect its own economy...
- Iron triangle (US politics)
- Lemon socialismLemon socialism"Lemon socialism" is a pejorative term for government support of private-sector companies whose imminent collapse is perceived to threaten broader economic stability. Some assert it is not a subcategory of socialism per se; rather, it points to a corruption of free-market capitalist systems, which...
- Market failureMarket failureMarket failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...
- NeoliberalismNeoliberalismNeoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...
- NeopatrimonialismNeopatrimonialismNeopatrimonialism is a term used for patrons using state resources in order to secure the loyalty of clients in the general population, and is indicative of informal patron-client relationships that can reach from very high up in state structures down to individuals in say, small...
- Plutarchy
- PlutocracyPlutocracyPlutocracy is rule by the wealthy, or power provided by wealth. The combination of both plutocracy and oligarchy is called plutarchy. The word plutocracy is derived from the Ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.-Usage:The term plutocracy is generally...
- Privatizing profits and socializing lossesPrivatizing profits and socializing lossesIn political discourse, the phrase "privatizing profits and socializing losses" refers to any instance of speculators benefitting from profits, but not taking losses, by pushing the losses onto society at large, particularly via the government....
- Regulatory captureRegulatory captureIn economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...
- Social costSocial costSocial cost, in economics, is generally defined in opposition to "private cost". In economics, theorists model individual decision-making as measurement of costs and benefits...
- The rich get richer and the poor get poorerThe rich get richer and the poor get poorer"The rich get richer and the poor get poorer" is a catchphrase and proverb, frequently used in discussing economic inequality...
- Too big to failToo Big to FailToo Big to Fail is a television drama film in the United States broadcast on HBO on May 23, 2011. It is based on the non-fiction book Too Big to Fail by Andrew Ross Sorkin. The TV film was directed by Curtis Hanson...
- Trickle-down economicsTrickle-down economics"Trickle-down economics" and "the trickle-down theory" are terms used in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole...