|
|
|
Pension propaganda by Martin McIvor Review of The Cold War in Welfare: Stock Markets versus Pensions, by Richard Minns (Verso, 2001) As the debate over the future of health and education begins it is worth remembering that pension provision in the UK has already now been effectively privatised - no one can now survive on the dwindling basic state pension and today's workers are being told to arrange personal "stakeholder" schemes with private providers if they want to expect even a bare subsistence in retirement. Richard Minns has been elucidating the political economy of pension privatisation for the labour movement for over two decades (his early work on the nationalisation of financial institutions should be required reading for anyone for whom such ideas now seem an absurd Bennite fantasy). Here he pulls back the curtain on the ideologies and interests that lurk behind seemingly domestic, almost parochial, debates about SERPS and earnings links, forces every bit as global as those that shape government policy on international trade and third world debt. The new reform agenda, promoted throughout the world by neo-liberal economists and particularly the World Bank, argues that it is everywhere better both for the economy and for social security that retirement is funded by personal savings invested on stock markets than by state transfers drawn from current tax revenue. But every plank of this theory has been seriously contested in the academic literature. The prophecies of impending bankruptcy for "pay-as-you-go" systems are based on shaky statistical projections. Categorizations of the elderly as national "liabilities" depend on incredibly narrow understandings of their social and even economic roles and activities. And it is mere prejudice to view dependence on public schemes subject to "political risk" (ie. democratic accountability) as necessarily worse than dependence on fluctuating markets, personal ability to pay, and the honesty of private corporations (cf Maxwell, mis-selling, etc.) Minns concludes that behind the unsupportable dismissals of public sector provision is an economic argument that privatisation will feed an expanding capital market that will itself serve as an engine of improved economic growth. But neither is this well supported. First of all because there is no strong reason for privatisation to increase net savings. And secondly, as has become familiar since Will Hutton's popularisations, there is little to recommend capital-market-based systems for financing production, as seen in Britain and the US, over bank-based systems, as seen in continental Europe. Stock markets are not about the investment of new capital in productive stock but about secondary transactions of existing shares - sometimes quite damaging mergers and acquisitions and occasionally disastrous financial crashes. And indeed, as Minns shows, pension funds now make up a major part of those vast, deregulated financial flows that since the 1998 Asian crisis have been increasingly recognised as one of the most serious threats to economic, political and social stability in the twenty-first century. "Pension funds", says Minns, "are a fundamental part of the speculative, post-Cold War capitalism that has arisen particularly during the 1990s" - a regression to what, influenced by theorists like Altvater and Arrighi, he calls "arbitrage" capitalism. Thus, Minns concludes, "the stock-market model of pensions fails by its own criteria of improving savings, investment, economic growth and thereby addressing the issue of the allegedly increasing burden of public old-age payments". And yet this model is now rapidly spreading out from its Anglo-American homeland into South America, Central and Eastern Europe, and the Pacific Area, and is being aggressively asserted against the older social democratic models of Western Europe in what Minns calls a new "Cold War" between competing "Welfare Blocs". Why? Because while the "European" model is sustained only by an alternative philosophy of intergenerational solidarity and the social embeddedness of industry, the privatised model is driven by vested commercial, political and social interests: the financial sector itself, governments and international institutions committed to fiscal austerity, even trade unions entwined in the negotiation and delivery of non-state supplementary schemes. Faced with such a "formidable consensus" the alternative policy proposals with which Minns ends seem all too far from realisation. But at a more fundamental level, especially in some of the later more philosophical chapters, this book contains rich resources for the profound rethinking of our understanding of welfare and its relation to production that must form the basis for developing a sufficiently powerful political alternative. Published in Red
Pepper magazine, August 2001. |
 |
|
