The Bailout State: Why Governments Rescue Banks, Not People

How did we end up in a world where social programs are routinely cut in the name of market discipline and fiscal austerity, yet large banks get bailed out whenever they get into trouble?

In The Bailout State, Martijn Konings exposes the inner workings of this sprawling infrastructure of government guarantees. Backstopping financial markets and securing banks’ balance sheets, this contemporary Leviathan manages the inflationary pressures that its generosity produces by tightening the financial screws on the rest of the population.

To a large extent, the bailout state was built by progressives seeking to buttress the institutions of the early postwar period. The resulting tide of capital gains fostered an asset-centered politics that experienced its heyday in the nineties. But ever since the financial crisis of 2007-08, promises of inclusive economic growth have looked increasingly thin. A colossus locked in place, the bailout state disburses its benefits to a rapidly shrinking group of property owners. Against the backdrop of a ferocious post-pandemic turn to anti-inflationary policy, the only remaining way to exit the logic of the bailout, Konings argues, is to challenge the monetary drivers at the heart of capitalist society.

Martijn Konings is Professor of Political Economy and Social Theory at the University of Sydney.