Socialism for the rich and capitalism for the poor
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Socialism for the rich and capitalism for the poor is a classical political-economic argument asserting that, in advanced capitalist societies, state policies assure that more resources flow to the
rich Rich may refer to: Common uses * Rich, an entity possessing wealth * Rich, an intense flavor, color, sound, texture, or feeling ** Rich (wine), a descriptor in wine tasting Places United States * Rich, Mississippi, an unincorporated commun ...
than to the poor, for example in the form of
transfer payment In macroeconomics and finance, a transfer payment (also called a government transfer or simply transfer) is a redistribution of income and wealth by means of the government making a payment, without goods or services being received in return. Th ...
s. The term ''
corporate welfare Corporate welfare is a phrase used to describe a government's bestowal of money grants, tax breaks, or other special favorable treatment for corporations. The definition of corporate welfare is sometimes restricted to direct government subsidie ...
'' is widely used to describe the bestowal of favorable treatment to big business (particular
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
s) by the
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
. One of the most commonly raised forms of criticism are statements that the capitalist
political economy Political economy is the study of how Macroeconomics, economic systems (e.g. Marketplace, markets and Economy, national economies) and Politics, political systems (e.g. law, Institution, institutions, government) are linked. Widely studied ph ...
toward large corporations allows them to " privatize profits and socialize losses." The argument has been raised and cited on many occasions. Variations of the concept, include privatize profits/gains and socialize risks/losses/debts; and markets, free enterprise, private enterprise and capitalism for the poor while state protection and socialism for the rich.


History and usage

The phrase may have been first popularized by
Michael Harrington Edward Michael Harrington Jr. (February 24, 1928 – July 31, 1989) was an American democratic socialist. As a writer, he was perhaps best known as the author of ''The Other America''. Harrington was also a political activist, theorist, professo ...
in his 1962 book, ''
The Other America ''The Other America'' () is Michael Harrington's best known and likely most influential book. He was an American democratic socialist, writer, political activist, political theorist, professor of political science, radio commentator, and foundin ...
'', in which he cites
Charles Abrams Charles Abrams (September 20, 1901 – February 22, 1970) was a Polish-born American lawyer, writer, urbanist, and housing expert who created the New York City Housing and Development Administration in the 1960s. He was one of the first to use the ...
, a well-known authority on
housing Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether it ...
.
Andrew Young Andrew Jackson Young Jr. (born March 12, 1932) is an American politician, diplomat, and activist. Beginning his career as a pastor, Young was an early leader in the civil rights movement, serving as executive director of the Southern Christian L ...
has been cited for calling the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
system "socialism for the rich and free enterprise for the poor," and
Martin Luther King Jr. Martin Luther King Jr. (born Michael King Jr.; January 15, 1929 – April 4, 1968) was an American Baptist minister and activist, one of the most prominent leaders in the civil rights movement from 1955 until his assassination in 1968 ...
frequently used this wording in his speeches. Since at least 1969,
Gore Vidal Eugene Luther Gore Vidal (; born Eugene Louis Vidal, October 3, 1925 – July 31, 2012) was an American writer and public intellectual known for his epigrammatic wit, erudition, and patrician manner. Vidal was bisexual, and in his novels and ...
widely disseminated the expression "free enterprise for the poor and socialism for the rich" to describe the U.S. economic policies, notably using it from the 1980s in his critiques of
Reaganomics Reaganomics (; a portmanteau of ''Reagan'' and ''economics'' attributed to Paul Harvey), or Reaganism, refers to the neoliberal economic policies promoted by U.S. President Ronald Reagan during the 1980s. These policies are commonly associat ...
. In winter 2006/2007, in response to criticism about oil imports from
Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...
, that country being under the leadership of
Hugo Chávez Hugo Rafael Chávez Frías (; 28 July 1954 – 5 March 2013) was a Venezuelan politician who was president of Venezuela from 1999 until his death in 2013, except for a brief period in 2002. Chávez was also leader of the Fifth Republ ...
, the founder and president of
Citizens Energy Corporation Citizens Energy Corporation is a non-profit organization that primarily aids poor and elderly households in Massachusetts and internationally by organizing projects to provide discounted and free home heating services and supplies. They also co ...
Joseph P. Kennedy II Joseph Patrick Kennedy II (born September 24, 1952) is an American businessman, Democratic politician, and a member of the Kennedy family. He is a son of former United States Senator Robert F. Kennedy and Ethel Kennedy, and he is also a nephew ...
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 Francis Kennedy Jr. (born January 17, 1954) is an American environmental lawyer and author known for promoting anti-vaccine propaganda and conspiracy theories. Kennedy is a son of U.S. senator Robert F. Kennedy and a nephew of President ...
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 (born July 13, 1958) is an American macroeconomist who co-founded the Center for Economic and Policy Research (CEPR) with Mark Weisbrot. Baker has been credited as one of the first economists to have identified the 2007–08 United Sta ...
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. Linguist and political scientist
Noam Chomsky Avram Noam Chomsky (born December 7, 1928) is an American public intellectual: a linguist, philosopher, cognitive scientist, historian, social critic, and political activist. Sometimes called "the father of modern linguistics", Chomsky is ...
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 In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...
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 is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
for the
rich Rich may refer to: Common uses * Rich, an entity possessing wealth * Rich, an intense flavor, color, sound, texture, or feeling ** Rich (wine), a descriptor in wine tasting Places United States * Rich, Mississippi, an unincorporated commun ...
reemarkets for the poor and state protection for the rich." He has stated that the rich and powerful "want to be able to run the
nanny state Nanny state is a term of British origin that conveys a view that a government or its policies are overprotective or interfering unduly with personal choice. The term likens such a government to the role that a nanny has in child rearing. An early ...
" so that "when they are in trouble the taxpayer will bail them out," citing "
too big to fail "Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...
" as an example. Economist
Ha-Joon Chang Ha-Joon Chang (; ; born 7 October 1963) is a South Korean institutional economist, specialising in development economics. Chang is the author of several widely discussed policy books, most notably ''Kicking Away the Ladder: Development Strateg ...
widens the concept towards self-serving
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
policies of the West that disadvantage the developing world as
Keynesianism Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and ...
for the rich, and
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on measures ...
for the poor. 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 In September 2008 the Federal Housing Finance Agency (FHFA) announced that it would take over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Both government-sponsored enterpri ...
, Ron Blackwell, chief economist of
AFL–CIO The American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) is the largest federation of unions in the United States. It is made up of 56 national and international unions, together representing more than 12 million ac ...
, used the expression "Socialism for the rich and capitalism for the poor" to characterize the system. In September 2008, U.S. Senator
Bernie Sanders Bernard Sanders (born September8, 1941) is an American politician who has served as the junior United States senator from Vermont since 2007. He was the U.S. representative for the state's at-large congressional district from 1991 to 2007 ...
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 Nouriel Roubini (born March 9 1958) is a Turkish-born Iranian-American economist. He is Professor Emeritus (2021–present) and was Professor of Economics (1995–2021) at the Stern School of Business, New York University, and also chairman of Ro ...
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.
Senator Sanders also referenced the phrase during his -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. Former
U.S. Secretary of Labor The United States Secretary of Labor is a member of the Cabinet of the United States, and as the head of the United States Department of Labor, controls the department, and enforces and suggests laws involving unions, the workplace, and all ot ...
Robert Reich Robert Bernard Reich (; born June 24, 1946) is an American professor, author, lawyer, and political commentator. He worked in the administrations of President of the United States, Presidents Gerald Ford and Jimmy Carter, and served as United S ...
adapted this phrase on ''
The Daily Show with Jon Stewart ''The'' () is a grammatical article in English, denoting persons or things already mentioned, under discussion, implied or otherwise presumed familiar to listeners, readers, or speakers. It is the definite article in English. ''The'' is the m ...
'' on October 16, 2008: "We have socialism for the rich, and capitalism for everyone else." Comedian
Jon Stewart Jon Stewart (born Jonathan Stuart Leibowitz; November 28, 1962) is an American comedian, political commentator, and television host. He hosted ''The Daily Show'', a satirical news program on Comedy Central, from 1999 to 2015 and now hosts ''Th ...
later characterized this in a debate with Bill O'Reilly by asking, "Why is it that if you take advantage of a tax break and you're a corporation, you're a smart businessman—but if you take advantage of something that you need to not be hungry, you're a moocher?" Journalist
John Pilger John Richard Pilger (; born 9 October 1939) is an Australian journalist, writer, scholar, and documentary filmmaker. He has been mainly based in Britain since 1962. He was also once visiting professor at Cornell University in New York. Pilger ...
included the phrase in his speech accepting
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
's human rights award, the
Sydney Peace Prize The Sydney Peace Prize is awarded by the Sydney Peace Foundation, a non profit organisation associated with the University of Sydney. The prize promotes peace with justice and the practice of nonviolence. It aims to encourage public interest and d ...
, on November 5, 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
McDonald's McDonald's Corporation is an American Multinational corporation, multinational fast food chain store, chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechri ...
is to food.
In 2022, economist
Yanis Varoufakis Ioannis "Yanis" Varoufakis ( el, Ιωάννης Γεωργίου "Γιάνης" Βαρουφάκης, Ioánnis Georgíou "Giánis" Varoufákis, ; born 24 March 1961) is a Greek economist and politician. A former academic, he served as the Gree ...
offered a similar version of this phrase in his critique of the response of governments and central banks to the 2008 financial crisis and the
2021–2022 inflation surge The 2021–2022 inflation surge is the higher-than-average economic inflation throughout much of the world that began in early 2021. It has been attributed to the 2021 global supply chain crisis caused by the COVID-19 pandemic, and unexpected ...
, describing these measures as "nothing short of lavish socialism for capital and harsh austerity for labor."


See also

*
Business ethics Business ethics (also known as Corporate Ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business co ...
* Concentrated benefits and diffuse costs *
Corporate welfare Corporate welfare is a phrase used to describe a government's bestowal of money grants, tax breaks, or other special favorable treatment for corporations. The definition of corporate welfare is sometimes restricted to direct government subsidie ...
*
Crony capitalism Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is ...
*
Economic interventionism Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare of ...
*
Ethical consumerism Ethical consumerism (alternatively called ethical consumption, ethical purchasing, moral purchasing, ethical sourcing, or ethical shopping and also associated with sustainable and green consumerism) is a type of consumer activism based on the conc ...
*
Inverted totalitarianism The political philosopher Sheldon Wolin coined the term inverted totalitarianism in 2003 to describe what he saw as the emerging form of government of the United States. Wolin analysed the United States as increasingly turning into a managed dem ...
*
Iron triangle (US politics) In United States politics, the "iron triangle" comprises the policy-making relationship among the congressional committees, the bureaucracy, and interest groups, as described in 1981 by Gordon Adams. Earlier mentions of this ‘iron triangle’ ...
*
Lemon socialism Lemon socialism is a pejorative term for a form of government intervention in which government subsidies go to weak or failing firms (''lemons''; see Lemon law), with the effective result that the government (and thus the taxpayer) absorbs part ...
*
Market failure In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where indiv ...
*
Neoliberalism Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
*
Neopatrimonialism Neopatrimonialism is a system of social hierarchy where patrons use state resources to secure the loyalty of clients in the general population. It is an informal patron–client relationship that can reach from very high up in state structures do ...
*
Plutocracy A plutocracy () or plutarchy is a society that is ruled or controlled by people of great wealth or income. The first known use of the term in English dates from 1631. Unlike most political systems, plutocracy is not rooted in any established ...
* Privatizing profits and socializing losses *
Regulatory capture In politics, regulatory capture (also agency capture and client politics) is a form of corruption of authority that occurs when a political entity, policymaker, or regulator is co-opted to serve the commercial, ideological, or political interests ...
*
Right-wing socialism Bourgeois socialism or conservative socialism was a term used by Karl Marx and Friedrich Engels in various pieces, including in ''The Communist Manifesto''. ''Conservative socialism'' was used as a rebuke by Marx for certain strains of socialism, ...
*
Social cost Social cost in neoclassical economics is the sum of the private costs resulting from a transaction and the costs imposed on the consumers as a consequence of being exposed to the transaction for which they are not compensated or charged. In other w ...
*
The rich get richer and the poor get poorer "The rich get richer and the poor get poorer" is an aphorism due to Percy Bysshe Shelley. In '' A Defence of Poetry'' (1821, not published until 1840) Shelley remarked that the promoters of utility had exemplified the saying, "To him that hath, ...
*
Too big to fail "Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...
*
Trickle-down economics Trickle-down economics is a term used in critical references to economic policies that favor the upper income brackets, corporations, and individuals with substantial wealth or capital. In recent history, the term has been used by critics of ...


References


Sources

* * *
Chomsky, Noam Avram Noam Chomsky (born December 7, 1928) is an American public intellectual: a linguist, philosopher, cognitive scientist, historian, social critic, and political activist. Sometimes called "the father of modern linguistics", Chomsky is ...
,
How Free is the Free Market?
'' Resurgence'' no. 173. November-December 1995 * * *
What will real economic change look like?
August 1, 2008
The Real News The Real News Network (TRNN) is an independent, nonprofit news organization based in Baltimore, MD that covers both national and international news. History TRNN was founded by documentary producer Paul Jay and Mishuk Munier in September 20 ...

The U.S. Economy Is Socialism for the Rich
* Bakan, Joel (2004). ''Corporation: The Pathological Pursuit of Profit and Power'', Free Press, 2004. p. 151 {{DEFAULTSORT:Socialism for the rich and capitalism for the poor 1962 neologisms Adages American political catchphrases Capitalism Corporate taxation Criticism of capitalism Distribution of wealth Economic planning Economic problems Economic sociology Economics of regulation Law and economics Lobbying Market failure Political corruption Political economy Privatization Right-wing politics Subsidies Taxation and redistribution Wealth