Public Bailouts Are What Keeps Our Economic System Afloat
Every time our economic system generates another crash, the state is on hand with public money to bail out private losses. It’s time we stopped seeing bailouts as individual episodes and recognized them as a core feature of contemporary capitalism.
We shouldn’t let the anti-state rhetoric of neoliberalism mislead us: instead of shrinking the state, its effect has been to create a ruinously expensive public safety net for asset ownership, a “wealthfare” state instead of a welfare state. (Roger L. Wollenberg / Pool via Getty Images)
In his book The Bailout State: Why Governments Rescue Banks, Not People, political economist Martijn Konings argues that the contemporary state has become a standing source of guarantees, subsidies, and backstops for capital. Government is no longer capitalist in the sense that it protects property rights or is easily infiltrated by moneyed interests (two logics long recognized by Marxists and other critics of capitalism). Instead, public financial management itself has become deeply interwoven with the accumulation of private wealth.
Tracing the origins of the bailout state back to the era of welfare capitalism, Konings depicts the neoliberal period not primarily as a decisive break with Keynesianism, but as a moment in the longer-term evolution of institutions that subsidize asset ownership and manage the resulting inflationary pressure with austerity measures.
Mona Khneisser
Your book develops a new analytical history of American capitalism since the New Deal. To start, could you take us through the main elements of that narrative, including the distinctive periodization and turning points it suggests?
Martijn Konings
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