Lemon socialism is a pejorative term for governmental support of private sector companies whose imminent collapse is perceived to threaten broader economic stability. It is not a current within socialism per se; rather, it points to a corruption of free market capitalist systems, which would normally allow defective companies (“lemons”) to fail. The most common government interventions that earn the term involve infusions of government capital and may include some governmental control over company decision-making.
A government attempting to transition from capitalism to socialism by this method takes control of the worst industries first, which undermines such an approach. Socialists socialize the losses while capitalists keep the profits. Similarly, in post-communist societies, nationalized industries which had the least capital with which to modernize are the last targets for privatization. The Emergency Economic Stabilization Act of 2008 in the United States has been cited as an example of lemon socialism.