The new collectivism: Pension reform, grey capitalism and complex socialism

New Left Review

Volumn , Issue 233, 1999, Pages 3-64

  Blackburn, Robin ^a  

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References (146)

1. would like to thank Perry Anderson, Stanley Engerman, Keith Hart, Richard Minns, Bob Pollin, Bob Rowthorn, Mike Sprinker, and Susan Watkins for comments on this text, and the following for guidance and information: Sebastian Budgen, Zhiyuan Cui, Hugo Fazio, Andrew Glyn, Peter Gowan, Geoff Harcourt, Lucy Heller, Göran Therborn, Manuel Riesco, Rudolf Meidner, Thomas Mertes, and Vella Pillay. Of course, none of the foregoing necessarily agree with the particular approach adopted here. I am grateful to the Lipman-Miliband Trust for a grant towards the project of which this text forms a part.
2. Giovanni Arrighi, The Long Twentieth Century, Verso, London 1994.
3. Promoting Prosperity: A Business Agenda for Britain, Report of the Commission on Public Policy and British Business, London 1997, p. 97; Keith Ambachtsheer and D. Don Ezra, Pension Fund Excellence: Creating Value for Stakeholders, New York and Chichester 1998, pp. 224-5.
4. Promoting Prosperity: A Business Agenda for Britain, Report of the Commission on Public Policy and British Business, London 1997, p. 97; Keith Ambachtsheer and D. Don Ezra, Pension Fund Excellence: Creating Value for Stakeholders, New York and Chichester 1998, pp. 224-5.
5. Richard Minns, 'The Social Ownership of Capital', NLR 219, September-October 1996, pp. 42-61. This article furnishes a helpful optic on many of the questions I raise here.
6. William Lewis, 'The Closed World of Pensions', The Financial Times, 7-8 June 1997, Money Section.
7. Michel Aglietta, 'Capitalism at the Turn of the Century: Regulation Theory and the Challenge of Social Change', NLR 232, November-December 1998, p. 69. (Michel Aglietta, 'Postface', Régulation et crises du capitalisme, Paris 1997, p. 446). See also Le capitalisme de demain. Note de la Fondation Saint Simon, November 1998, pp. 14-16.
8. Michel Aglietta, 'Capitalism at the Turn of the Century: Regulation Theory and the Challenge of Social Change', NLR 232, November-December 1998, p. 69. (Michel Aglietta, 'Postface', Régulation et crises du capitalisme, Paris 1997, p. 446). See also Le capitalisme de demain. Note de la Fondation Saint Simon, November 1998, pp. 14-16.
9. Michel Aglietta, 'Capitalism at the Turn of the Century: Regulation Theory and the Challenge of Social Change', NLR 232, November-December 1998, p. 69. (Michel Aglietta, 'Postface', Régulation et crises du capitalisme, Paris 1997, p. 446). See also Le capitalisme de demain. Note de la Fondation Saint Simon, November 1998, pp. 14-16.
10. Because S&L deposits were covered by a Federal guarantee, their theft cost the us taxpayer between $150 and $175 billion. See Kitty Calavita, Henry Pontell and Robert Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis, Berkeley and Los Angeles 1997, p. 1.
11. 'Union Forces Pru Pensions Climb Down', The Guardian, 21 January 1997.
12. See, for example, Kim Moody, 'Towards an International Social-Movement Unionism', NLR 225, September-October 1997, pp. 52-72, especially pp. 68-70.
13. Tom Nobel and Vefa Tarhan, 'Share Repurchases and Firm Performance', Journal of Financial Performance, no. 49, 1998, pp. 187-222.
14. Robert Brenner, 'The Economics of Global Turbulence', NLR 229, May-June 1998, pp. 4-5, 202.
15. British capital stock has grown by only one per cent a year for two decades; see Andrew Glyn, 'Manufacturing: to Take (Capital) Stock', The Financial Times, 8 July 1998.
16. Steven Kaplan, 'Corporate Governance and Corporate Performance: A Comparison of Japan, Germany and the United States', Journal of Applied Corporate Finance, vol. 9, no. 4, Winter 1997.
17. Brenner, 'The Economics of Global Turbulence'. Brenner cites the declining tendency of retained earnings, and dividends growing share of profit, from 1950 to 1996 (p. 210) and slowing rate of growth of capital stock (p. 235).
18. John Plender, 'Stock Market Splits', The Financial Times, 16-17 August 1997.
19. Jim Slater, The Zulu Principle: Making Extraordinary Profits from Ordinary Shares, London 1997 (second edition), p. 20. This much reprinted work comes garlanded with praise from City giants like Lord Hanson; it is assigned on training courses for fund managers as well as being bought in quantity by private investors. There is, of course, a well-established critique of the anti-industrial bias of British financial institutions. See Will Hutton, The State We're In, London 1994 and Perry Anderson, English Questions, Verso, London 1992.
20. Jim Slater, The Zulu Principle: Making Extraordinary Profits from Ordinary Shares, London 1997 (second edition), p. 20. This much reprinted work comes garlanded with praise from City giants like Lord Hanson; it is assigned on training courses for fund managers as well as being bought in quantity by private investors. There is, of course, a well-established critique of the anti-industrial bias of British financial institutions. See Will Hutton, The State We're In, London 1994 and Perry Anderson, English Questions, Verso, London 1992.
21. Jim Slater, The Zulu Principle: Making Extraordinary Profits from Ordinary Shares, London 1997 (second edition), p. 20. This much reprinted work comes garlanded with praise from City giants like Lord Hanson; it is assigned on training courses for fund managers as well as being bought in quantity by private investors. There is, of course, a well-established critique of the anti-industrial bias of British financial institutions. See Will Hutton, The State We're In, London 1994 and Perry Anderson, English Questions, Verso, London 1992.
22. The Economist, 9 January 1999.
23. Coverage of occupational pensions is nearly 90 per cent in companies with more than 100 employees and drops steadily to 31 per cent in companies with 5 or fewer employees. Report by the Pension Provision Group, We All Need Pensions - the Prospects for Pension Provision, London 1998, p. 63.
24. The Financial Times, 5 January 1998, p. 26. The credit problems of small companies in Britain are documented in Robert Gavron, Marc Cowling, Gerard Holtham and Andrea Westall, The Entrepreneurial Society, London 1998, pp. 103-34.
25. The Financial Times, 5 January 1998, p. 26. The credit problems of small companies in Britain are documented in Robert Gavron, Marc Cowling, Gerard Holtham and Andrea Westall, The Entrepreneurial Society, London 1998, pp. 103-34.
26. The Financial Times, 21 October 1998. For analysis of the differing logics of different financial régimes see Robert Pollin, 'Financial Structures and Egalitarian Economic Policy', NLR 214, November-December 1995, pp. 26-61.
27. The Financial Times, 21 October 1998. For analysis of the differing logics of different financial régimes see Robert Pollin, 'Financial Structures and Egalitarian Economic Policy', NLR 214, November-December 1995, pp. 26-61.
28. Adam Harmes, 'Institutional Investors and the Reproduction of Neoliberalism', Review of International Political Economy, vol. 5, no. 1, Spring 1998, pp. 92-121. In this very informative study, Hames points out that, for those not able to undertake up-to-date research into the 'fundamentals' of a company or area of investment, the movements of other investors become a source of information. Even in the largest investment concerns, there are people devoted to so-called 'technical analysis', which is nothing other than an attempt to second-guess share price movements by identifying thresholds and barriers. According to Harmes, the increasing resort to leveraged or borrowed assets also exacerbates pressure for short-term horizons. Harmes points out that some large institutions do have a significant enough stake in some companies to persuade them to use 'voice' rather than 'exit' to influence it. But, even when this happens, the pressure of the institutional investor will be in the direction of a short-term fix aimed at improving the corporate balance-sheet - this can often be done by firing workers, selling assets and buying back shares with the proceeds. As a case in point, Harmes cites the new policies of General Motors in 1992, consequent upon a change in the CEO in response to institutional shareholder pressure (p. 117). In an article in The Economist on financial analysts entitled 'Selling Bull' it is pointed out that the overwhelming majority of expertise is concentrated on the sales side of financial concerns, leading to neglect of awkward information related to fundamentals. In one study cited, of 30,000 pieces of investment advice, only one per cent urged the customer to sell rather than buy. The Economist, 14 November 1998.
29. Adam Harmes, 'Institutional Investors and the Reproduction of Neoliberalism', Review of International Political Economy, vol. 5, no. 1, Spring 1998, pp. 92-121. In this very informative study, Hames points out that, for those not able to undertake up-to-date research into the 'fundamentals' of a company or area of investment, the movements of other investors become a source of information. Even in the largest investment concerns, there are people devoted to so-called 'technical analysis', which is nothing other than an attempt to second-guess share price movements by identifying thresholds and barriers. According to Harmes, the increasing resort to leveraged or borrowed assets also exacerbates pressure for short-term horizons. Harmes points out that some large institutions do have a significant enough stake in some companies to persuade them to use 'voice' rather than 'exit' to influence it. But, even when this happens, the pressure of the institutional investor will be in the direction of a short-term fix aimed at improving the corporate balance-sheet - this can often be done by firing workers, selling assets and buying back shares with the proceeds. As a case in point, Harmes cites the new policies of General Motors in 1992, consequent upon a change in the CEO in response to institutional shareholder pressure (p. 117). In an article in The Economist on financial analysts entitled 'Selling Bull' it is pointed out that the overwhelming majority of expertise is concentrated on the sales side of financial concerns, leading to neglect of awkward information related to fundamentals. In one study cited, of 30,000 pieces of investment advice, only one per cent urged the customer to sell rather than buy. The Economist, 14 November 1998.
30. Jean Peyrelevade, 'Fonds de pension et gouvernent des sociétés commerciales', Commentaire, vol. 21, no. 83, Autumn 1998, pp. 689-90. This author's remarks on rentier hegemony chime in well with the analysis of Alan Milward in The Question of Europe, edited by Peter Gowan and Perry Anderson, Verso, London 1996.
31. Jean Peyrelevade, 'Fonds de pension et gouvernent des sociétés commerciales', Commentaire, vol. 21, no. 83, Autumn 1998, pp. 689-90. This author's remarks on rentier hegemony chime in well with the analysis of Alan Milward in The Question of Europe, edited by Peter Gowan and Perry Anderson, Verso, London 1996.
32. Information on both company reserves and demographics is from The Financial Times, 9 April 1996.
33. 'Pension Funds Seek Bigger Slice of the EU's Retirement Funding', The Wall Street Journal, 19 June 1996.
34. The World Bank, Averting the Old Age Crisis: Policies to Protect the Oldand Promote Growth, Oxford 1994.
35. Ibid., p. 192.
36. World Bank, Averting the Old Age Crisis, pp. 93-6.
37. A New Contract for Welfare: Partnership in Pensions, Cm 4179, HMSO, December 1998, p. 21.
38. The centrality of tax concessions to the pension fund industry is urged by an author who favours removing them entirely; see Michael Littlewood, How to Create a Competitive Market in Pensions: the International Lessons, London 1998, especially pp. 52-114.
39. Partnership in Pensions, p. 12.
40. According to Jim Slater, 'American management, when negotiating with unions, could be very generous with shareholder funds by increasing post-retirement medical benefits for employees and themselves', The Zulu Principle, pp. 162-3. For a study which shows this to be an unduly narrow reading of US management motivation see Steven Sass, The Promise of Private Pensions: the First Hundred Years, Cambridge, MA 1997 and also, stressing the role of tax breaks, Gene E. Mumy, 'The Role of Taxes and Social Security in Determining the Structure of Wages and Pensions', Journal of Political Economy, vol. 93, no. 3, June 1985, pp. 574-585. On the other hand, top executives in the us have recently been able to award themselves extraordinary concessions relating to retirement deals and stock options. Thus, the head of the Travellers group received an income of $7.4 million in 1997, but this was accompanied by 'long term compensation' of no less than $223 million; the CEO at Coca Cola was paid just over $4 million in salary but received $109 million in long-term compensation. Business Week found such arrangements to be widespread even where companies were performing badly. While employees could modestly benefit from stock options and 401(k) tax favoured retirement schemes, the CEO'S 'compensation' is in an entirely different league. It reported that shareholders were finding it difficult to invigilate or control this orgy of managerial reward-taking but reported the efforts of the State of Wisconsin Investment Board to insist on shareholder approval and repricing of options where share prices had fallen, see Business Week, 20 April 1998.
41. According to Jim Slater, 'American management, when negotiating with unions, could be very generous with shareholder funds by increasing post-retirement medical benefits for employees and themselves', The Zulu Principle, pp. 162-3. For a study which shows this to be an unduly narrow reading of US management motivation see Steven Sass, The Promise of Private Pensions: the First Hundred Years, Cambridge, MA 1997 and also, stressing the role of tax breaks, Gene E. Mumy, 'The Role of Taxes and Social Security in Determining the Structure of Wages and Pensions', Journal of Political Economy, vol. 93, no. 3, June 1985, pp. 574-585. On the other hand, top executives in the us have recently been able to award themselves extraordinary concessions relating to retirement deals and stock options. Thus, the head of the Travellers group received an income of $7.4 million in 1997, but this was accompanied by 'long term compensation' of no less than $223 million; the CEO at Coca Cola was paid just over $4 million in salary but received $109 million in long-term compensation. Business Week found such arrangements to be widespread even where companies were performing badly. While employees could modestly benefit from stock options and 401(k) tax favoured retirement schemes, the CEO'S 'compensation' is in an entirely different league. It reported that shareholders were finding it difficult to invigilate or control this orgy of managerial reward-taking but reported the efforts of the State of Wisconsin Investment Board to insist on shareholder approval and repricing of options where share prices had fallen, see Business Week, 20 April 1998.
42. According to Jim Slater, 'American management, when negotiating with unions, could be very generous with shareholder funds by increasing post-retirement medical benefits for employees and themselves', The Zulu Principle, pp. 162-3. For a study which shows this to be an unduly narrow reading of US management motivation see Steven Sass, The Promise of Private Pensions: the First Hundred Years, Cambridge, MA 1997 and also, stressing the role of tax breaks, Gene E. Mumy, 'The Role of Taxes and Social Security in Determining the Structure of Wages and Pensions', Journal of Political Economy, vol. 93, no. 3, June 1985, pp. 574-585. On the other hand, top executives in the us have recently been able to award themselves extraordinary concessions relating to retirement deals and stock options. Thus, the head of the Travellers group received an income of $7.4 million in 1997, but this was accompanied by 'long term compensation' of no less than $223 million; the CEO at Coca Cola was paid just over $4 million in salary but received $109 million in long-term compensation. Business Week found such arrangements to be widespread even where companies were performing badly. While employees could modestly benefit from stock options and 401(k) tax favoured retirement schemes, the CEO'S 'compensation' is in an entirely different league. It reported that shareholders were finding it difficult to invigilate or control this orgy of managerial reward-taking but reported the efforts of the State of Wisconsin Investment Board to insist on shareholder approval and repricing of options where share prices had fallen, see Business Week, 20 April 1998.
43. According to Jim Slater, 'American management, when negotiating with unions, could be very generous with shareholder funds by increasing post-retirement medical benefits for employees and themselves', The Zulu Principle, pp. 162-3. For a study which shows this to be an unduly narrow reading of US management motivation see Steven Sass, The Promise of Private Pensions: the First Hundred Years, Cambridge, MA 1997 and also, stressing the role of tax breaks, Gene E. Mumy, 'The Role of Taxes and Social Security in Determining the Structure of Wages and Pensions', Journal of Political Economy, vol. 93, no. 3, June 1985, pp. 574-585. On the other hand, top executives in the us have recently been able to award themselves extraordinary concessions relating to retirement deals and stock options. Thus, the head of the Travellers group received an income of $7.4 million in 1997, but this was accompanied by 'long term compensation' of no less than $223 million; the CEO at Coca Cola was paid just over $4 million in salary but received $109 million in long-term compensation. Business Week found such arrangements to be widespread even where companies were performing badly. While employees could modestly benefit from stock options and 401(k) tax favoured retirement schemes, the CEO'S 'compensation' is in an entirely different league. It reported that shareholders were finding it difficult to invigilate or control this orgy of managerial reward-taking but reported the efforts of the State of Wisconsin Investment Board to insist on shareholder approval and repricing of options where share prices had fallen, see Business Week, 20 April 1998.
44. Giuliano Bonoli, 'Pension Politics in France: Patterns of Cooperation and Conflict in Two Recent Reforms', West European Politics, vol. 20, no. 4, October 1997, p. 118.
45. Beveridge was quite aware that the language of a contributory scheme would help to enlist popular consent. See John Macnicol, The Politics of Retirement in Britain: 1878-1948, Cambridge 1998, p. 223.
46. Paul Johnson, 'The Economics of Pensions', New Economy, vol. 5, issue 3, September 1998, p. 149.
47. Barbara Castle, Bryn Davies, Hilary Land, Peter Townsend, Tony Lynes and Ken Macintyre, Fair Shares for Pensioners: Our Evidence to the Pensions Review Body, January 1998; Security in Retirement for Everyone, January 1998, pp. 32-5, available from Security in Retirement for Everyone, 27-29 Amwell St, London ECIR IUN.
48. Barbara Castle, Bryn Davies, Hilary Land, Peter Townsend, Tony Lynes and Ken Macintyre, Fair Shares for Pensioners: Our Evidence to the Pensions Review Body, January 1998; Security in Retirement for Everyone, January 1998, pp. 32-5, available from Security in Retirement for Everyone, 27-29 Amwell St, London ECIR IUN.
49. Edward Berkowitz and Kim McQuaid, 'Social Security and the American Welfare State', Research in Economic History, Supplement 6, 1991, p. 178.
50. As the Lewinsky scandal broke, the President, no doubt prompted by the best polls, foregrounded defence of social security, and specifically old age provision, in his 1998 State of the Union message in an effort to buttress his popularity. By the time of the 1999 State of the Union message, Clinton urged that the social security retirement fund should receive no less than $2,800 billion, of which $700 billion would be invested in the stock market. Gerard Baker and Mark Suzman, 'Clinton To Use Surplus in Boost for Social Services', The Financial Times, 20 January 1999.
51. Partnership in Pensions, p. 17.
52. Richard Poynter and Clive Martin, Rights Guide to Non-Means-Tested Benefits, London 1994, P. 112. The authors mention unspecified further 'residence qualifications for Category C claimants - a cemetery address, perhaps?
53. The financial press itself is sceptical about the real benefits that will result from the creation of a few mega-banks. See 'Fools Gold', The Economist, 13 December 1997, pp. 91-3 and Jane Martinson, 'A Hurrying Sickness', The Financial Times, 10 December 1997.
54. The financial press itself is sceptical about the real benefits that will result from the creation of a few mega-banks. See 'Fools Gold', The Economist, 13 December 1997, pp. 91-3 and Jane Martinson, 'A Hurrying Sickness', The Financial Times, 10 December 1997.
55. Rebecca Bauen, 'Pensions for Progress: Targeting Union Retirement Money to Save Jobs', Dollars and Sense, January-February 1996.
56. The Times, 14 June 1997.
57. 'Pension Move by Lloyds-TSB Rouses Fury', The Guardian, 29 September 1997.
58. See the excellent account of this extraordinary affair in Paul Foot, 'Taken For a Ride', The Guardian Review, 15 November 1997, pp. 22-9.
59. For an interesting attempt to push through reform from below by trade union pressure, see Hilary Wainwright, The Lucas Plan, London 1982, pp. 78-80.
60. Peter Drucker, The Unseen Revolution, Oxford 1976.
61. In Canada and the United States, a number of trade union sponsored funds have begun to employ social criteria when placing their investments. See Bauen, 'Pensions for Progress'.
62. John Plender, A Stake in the Future: the Stakeholding Solution, London 1997.
63. Frank Field and Matthew Owen, National Pensions Savings Plan: Universalising Private Pension Provision, Fabian Society, March 1994. See also Frank Field and Matthew Owen, Private Pensions for All: Squaring the Circle, Fabian Society Discussion Paper no. 16, July 1993 and Frank Field and Matthew Owen, Making Sense of Pensions, Fabian Pamphlet no. 557, March 1993.
64. Frank Field and Matthew Owen, National Pensions Savings Plan: Universalising Private Pension Provision, Fabian Society, March 1994. See also Frank Field and Matthew Owen, Private Pensions for All: Squaring the Circle, Fabian Society Discussion Paper no. 16, July 1993 and Frank Field and Matthew Owen, Making Sense of Pensions, Fabian Pamphlet no. 557, March 1993.
65. Frank Field and Matthew Owen, National Pensions Savings Plan: Universalising Private Pension Provision, Fabian Society, March 1994. See also Frank Field and Matthew Owen, Private Pensions for All: Squaring the Circle, Fabian Society Discussion Paper no. 16, July 1993 and Frank Field and Matthew Owen, Making Sense of Pensions, Fabian Pamphlet no. 557, March 1993.
66. Field and Owen, Private Pensions for All, p. 9.
67. We All Need Pensions - the Prospects For Pensions Revision, London 1998, pp. 16, 21. This report also cites data showing that the numbers of pensioners in the poorest fifth of the population declined from 47 per cent to 25 per cent between 1979 and 1995 (p. 18), though the general increase in poverty during these years made this a very relative achievement.
68. If we look at the money paid out in state pensions, then British pensioners are worse off than their counterparts in all OECD states except Greece, Ireland and Portugal. However, the material position of British pensioners is considerably improved for about 40 per cent of the population, if private pensions receipts are taken into account. Other factors which somewhat improve the relative position of British pensioners in international comparisons are their access to free health care, 'income support' and subsidized housing. Taking all these factors into account, the numbers of old people with an income less than 50 per cent of average earnings was actually less than in West Germany in the mid-eighties, though, since German wages were much higher, this was not the case for absolute living conditions. Peter Whitehead and Steven Kennedy, Incomes and Living Standards of Older People: a Comparative Analysis, York 1995.
69. Barbara Castle and Peter Townsend, We Can Afford the Welfare State, London 1996. See also Castle, Davies, Land, Townsend, Lynes and Macintyre, Fair Shares for Pensioners.
70. Barbara Castle and Peter Townsend, We Can Afford the Welfare State, London 1996. See also Castle, Davies, Land, Townsend, Lynes and Macintyre, Fair Shares for Pensioners.
71. Richard Minns, Pulp Fiction: Pensioning Off the State, Political Economy Research Centre, University of Sheffield, Policy Paper no. 2. It should be noted that, even in the heyday of the welfare state, the state pension did not suffice to furnish full subsistence, so that about a quarter of those drawing state pensions were sufficiently needy to qualify for other public benefits. Right from the beginning, the Treasury objected to the expense of furnishing a full subsistence pension for all. See Macnicol, The Politics of Retirement, p. 398.
72. Richard Minns, Pulp Fiction: Pensioning Off the State, Political Economy Research Centre, University of Sheffield, Policy Paper no. 2. It should be noted that, even in the heyday of the welfare state, the state pension did not suffice to furnish full subsistence, so that about a quarter of those drawing state pensions were sufficiently needy to qualify for other public benefits. Right from the beginning, the Treasury objected to the expense of furnishing a full subsistence pension for all. See Macnicol, The Politics of Retirement, p. 398.
73. Tony Lynes, Our Pensions: A Policy for a Labour Government, London 1996, p. 9.
74. Lynes, Our Pensions, p. 24.
75. John Denham, Stakeholder Pensions: a Consultation Document, Department of Social Security, November 1997, p. 2. John Denham had been thanked in the introduction to Lynes's pamphlet, Our Pensions, p. 1.
76. John Denham, Stakeholder Pensions: a Consultation Document, Department of Social Security, November 1997, p. 2. John Denham had been thanked in the introduction to Lynes's pamphlet, Our Pensions, p. 1.
77. For a detailed review and response see, 'Stakeholder Pensions; Consultation Document', Draft Response from the Independent Pensions Research Group and the Northern Pensions Resource Group. This is available from Sue Ward, 5 Goldspink Lane, Newcastle upon Tyne, NE2 INQ.
78. 'Building a Better World: The Role of Socially Responsible Pensions', a lecture delivered by John Denham, MP, Parliamentary Under-Secretary of State for Social Security, 9 July 1998, to the UK Social Investment Foundation meeting.
79. Some idea of the business input to Partnership in Pensions may be gleaned from such publications as Pension Provision: Building Consensus for the future, Report of the Fabian Business Seminar, May 1998 and We All Need Pensions, the Report of the Pension Provision Group. The September 1998 issue of Social Economy ran a number of pieces devoted to the technical elaboration of the plan, some implicitly signalling problems with Field's approach.
80. Some idea of the business input to Partnership in Pensions may be gleaned from such publications as Pension Provision: Building Consensus for the future, Report of the Fabian Business Seminar, May 1998 and We All Need Pensions, the Report of the Pension Provision Group. The September 1998 issue of Social Economy ran a number of pieces devoted to the technical elaboration of the plan, some implicitly signalling problems with Field's approach.
81. These objectives are based on the work of Susan St. John and Toni Ashton as reported by Littlewood, How to Create a Competitive Market in Pensions, p. 117. It should be stressed that the problems of old age do not solely stem from economic want but also from social isolation and cultural marginalization, a point already registered by Talcott Parsons in the forties.
82. See Talcott Parsons, 'Age and Sex in the Social Structure of the United States', Essays in Sociological Theory, London 1949, pp. 89-105, especially pp. 102-3.
83. Following his resignation, Field placed articles in newspapers ranging from the conservative Daily Mail and The Independent to the left-wing weekly Tribune. In one article, he wrote: 'The proposal I have put forward is for a pension guarantee, paid from National Insurance and Investments, which links the interests of poorer and richer in a single scheme', 'An Almost Criminal Waste of Welfare', The Independent, 2 August 1998. In another, he urged the merits of a 'radical pension scheme', no doubt signalling that he will again agitate the issue from the back benches. Frank Field, 'Disquiet on the Pensions Front', Tribune, 25 September 1998. See also Frank Field, 'A Hand-Up or a Put-Down for the Poor?', New Statesman, 27 November 1998.
84. Following his resignation, Field placed articles in newspapers ranging from the conservative Daily Mail and The Independent to the left-wing weekly Tribune. In one article, he wrote: 'The proposal I have put forward is for a pension guarantee, paid from National Insurance and Investments, which links the interests of poorer and richer in a single scheme', 'An Almost Criminal Waste of Welfare', The Independent, 2 August 1998. In another, he urged the merits of a 'radical pension scheme', no doubt signalling that he will again agitate the issue from the back benches. Frank Field, 'Disquiet on the Pensions Front', Tribune, 25 September 1998. See also Frank Field, 'A Hand-Up or a Put-Down for the Poor?', New Statesman, 27 November 1998.
85. Following his resignation, Field placed articles in newspapers ranging from the conservative Daily Mail and The Independent to the left-wing weekly Tribune. In one article, he wrote: 'The proposal I have put forward is for a pension guarantee, paid from National Insurance and Investments, which links the interests of poorer and richer in a single scheme', 'An Almost Criminal Waste of Welfare', The Independent, 2 August 1998. In another, he urged the merits of a 'radical pension scheme', no doubt signalling that he will again agitate the issue from the back benches. Frank Field, 'Disquiet on the Pensions Front', Tribune, 25 September 1998. See also Frank Field, 'A Hand-Up or a Put-Down for the Poor?', New Statesman, 27 November 1998.
86. Following his resignation, Field placed articles in newspapers ranging from the conservative Daily Mail and The Independent to the left-wing weekly Tribune. In one article, he wrote: 'The proposal I have put forward is for a pension guarantee, paid from National Insurance and Investments, which links the interests of poorer and richer in a single scheme', 'An Almost Criminal Waste of Welfare', The Independent, 2 August 1998. In another, he urged the merits of a 'radical pension scheme', no doubt signalling that he will again agitate the issue from the back benches. Frank Field, 'Disquiet on the Pensions Front', Tribune, 25 September 1998. See also Frank Field, 'A Hand-Up or a Put-Down for the Poor?', New Statesman, 27 November 1998.
87. Castle et al., Fair Shares for Pensioners, p. 6.
88. Partnership for Progress, p. iv. For the minimum income guarantee
89. see pp. 4, 34.
90. Gordon Brown's pre-budget speech was extensively published in The Financial Times for 4 November 1998 and his remarks on the fund managers were the subject of critical comment in the FT's Lex column on 5 November.
91. The Lord Mayor of the City of London used his address to the annual banquet for the Prime Minister to signal awareness that the workings of the pension funds are controversial: 'Lord Levine flagged that the shift from the State to the private sector in providing for retirement marks a fundamental change in the way that society is organized. Because of this, society can be expected to take a much greater interest in what happens to its money, how it is managed and what power is exercised by those who control it', Anthony Hilton, 'City Must Think Hard About Shift on Savings', Evening Standard, 17 November 1998.
92. Speaking on 27 January 1998, he also said: 'many people also believe that the investment which will result from increasing the level of funding will lead to stronger economic growth and more stable capital markets', cited in Castle et al., Fair Shares for Pensioners, p. 23.
93. Quoted Pat Thane, 'Non-Contributory Versus Insurance Pensions', in The Origins of British Social Policy, edited by Pat Thane, London 1978, pp. 84-106, 103. This interesting account shows remarkable parallels between the debate over pensions a century or so ago and the recent see-saw, with Canon Blakley playing the part of Frank Field and the Treasury playing the part of . . . the Treasury.
94. Berkowitz and McQuaid, 'Social Security and the American Welfare State', p. 177.
95. Dorothy Wedderburn, 'Pensions, Equality and Socialism', NLR 24, March-April 1964, P. 77.
96. Congressman Bill Archer quoted by Deborah McGregor, 'Social Security Plans Opposed', The Financial Times, 20 January 1999. Quoted in Stephen Fidler and Deborah McGregor, 'Greenspan Attacks Clinton Plan', The Financial Times, 21 January 1999.
97. Congressman Bill Archer quoted by Deborah McGregor, 'Social Security Plans Opposed', The Financial Times, 20 January 1999. Quoted in Stephen Fidler and Deborah McGregor, 'Greenspan Attacks Clinton Plan', The Financial Times, 21 January 1999.
98. Jonas Pontusson, 'Sweden - After the Golden Age', in Mapping the West European Left, edited by Perry Anderson and Patrick Camiller, Verso, London 1997.
99. Stephen Fidler, 'Lure of the Latin Model', The Financial Times 9 April 1997, p. 31; Manuel Riesco, 'Employee Ownership in Chile', The Journal of Employee Ownership Law and Finance, Fall 1995; Manuel Riesco and Hugo Fazio, 'Pension Schemes in Chile', NLR 223, May-June 1997, pp. 90-100; World Bank, Averting the Old Age Crisis, pp. 224-5. The Chilean trade unions now demand a reform of the AFPS concerning both coverage and administration, see the interview with Apolonia Ramirez, 'La "prevision" social de los chilenos', Punto Final, January 1998.
100. Stephen Fidler, 'Lure of the Latin Model', The Financial Times 9 April 1997, p. 31; Manuel Riesco, 'Employee Ownership in Chile', The Journal of Employee Ownership Law and Finance, Fall 1995; Manuel Riesco and Hugo Fazio, 'Pension Schemes in Chile', NLR 223, May-June 1997, pp. 90-100; World Bank, Averting the Old Age Crisis, pp. 224-5. The Chilean trade unions now demand a reform of the AFPS concerning both coverage and administration, see the interview with Apolonia Ramirez, 'La "prevision" social de los chilenos', Punto Final, January 1998.
101. Stephen Fidler, 'Lure of the Latin Model', The Financial Times 9 April 1997, p. 31; Manuel Riesco, 'Employee Ownership in Chile', The Journal of Employee Ownership Law and Finance, Fall 1995; Manuel Riesco and Hugo Fazio, 'Pension Schemes in Chile', NLR 223, May-June 1997, pp. 90-100; World Bank, Averting the Old Age Crisis, pp. 224-5. The Chilean trade unions now demand a reform of the AFPS concerning both coverage and administration, see the interview with Apolonia Ramirez, 'La "prevision" social de los chilenos', Punto Final, January 1998.
102. Stephen Fidler, 'Lure of the Latin Model', The Financial Times 9 April 1997, p. 31; Manuel Riesco, 'Employee Ownership in Chile', The Journal of Employee Ownership Law and Finance, Fall 1995; Manuel Riesco and Hugo Fazio, 'Pension Schemes in Chile', NLR 223, May-June 1997, pp. 90-100; World Bank, Averting the Old Age Crisis, pp. 224-5. The Chilean trade unions now demand a reform of the AFPS concerning both coverage and administration, see the interview with Apolonia Ramirez, 'La "prevision" social de los chilenos', Punto Final, January 1998.
103. Stephen Fidler, 'Lure of the Latin Model', The Financial Times 9 April 1997, p. 31; Manuel Riesco, 'Employee Ownership in Chile', The Journal of Employee Ownership Law and Finance, Fall 1995; Manuel Riesco and Hugo Fazio, 'Pension Schemes in Chile', NLR 223, May-June 1997, pp. 90-100; World Bank, Averting the Old Age Crisis, pp. 224-5. The Chilean trade unions now demand a reform of the AFPS concerning both coverage and administration, see the interview with Apolonia Ramirez, 'La "prevision" social de los chilenos', Punto Final, January 1998.
104. Robert Wade and Frank Veneroso, 'The Battle Over Capital Controls', NLR 231, September-October 1998, p. 24. See also, Robert Pollin 'Finance and Inequality', and Linda Weiss, 'Globalization and the Myth of the Powerless State', NLR 225, September-October 1997, pp. 3-27.
105. Robert Wade and Frank Veneroso, 'The Battle Over Capital Controls', NLR 231, September-October 1998, p. 24. See also, Robert Pollin 'Finance and Inequality', and Linda Weiss, 'Globalization and the Myth of the Powerless State', NLR 225, September-October 1997, pp. 3-27.
106. The strong case for moving to a higher tax régime was made in Bob Rowthorn, 'Saving the Welfare State: Why Taxes Have To Go Up', Social Economy, Autumn 1993. He pointed to the fact that welfare expenditure should be sufficiently well-financed to give benefits attractive to those on middle incomes and to bring the disadvantaged up to their level. In the mid-nineties New Labour shrunk from advocating such a change of course but it will soon have to decide on entry to the eurozone, where a much more generous welfare régime is found. For the logic of the latter see Matts Persson, 'Why Are Taxes So High in Egalitarian Societies?', Scandinavian Journal of Economics, vol. 97, 1995, pp. 569-80.
107. The strong case for moving to a higher tax régime was made in Bob Rowthorn, 'Saving the Welfare State: Why Taxes Have To Go Up', Social Economy, Autumn 1993. He pointed to the fact that welfare expenditure should be sufficiently well-financed to give benefits attractive to those on middle incomes and to bring the disadvantaged up to their level. In the mid-nineties New Labour shrunk from advocating such a change of course but it will soon have to decide on entry to the eurozone, where a much more generous welfare régime is found. For the logic of the latter see Matts Persson, 'Why Are Taxes So High in Egalitarian Societies?', Scandinavian Journal of Economics, vol. 97, 1995, pp. 569-80.
108. A. Asimkopulos, 'Financing Social Security: Who Pays?', Journal of Post-Keynesian Economics, vol. 11, no. 4, Summer 1989, p. 656.
109. Teresa Gilarducci, 'US Pension Investment Policy and Perfect Capital Market Theory', Challenge, July-August 1994.
110. The workings of such funds are helpfully reported on by the magazine Business Ethics: Insider's Report on Responsible Business, published from Minneapolis. Thus, a report on p. 20 of its issue for July-August 1998 shows that the UK-based Stewardship Fund operated by Friend's Provident had assets of around £1 billion, with companies screened out for poor quality or service, lack of equitable relations with staff or the community, or a poor environmental record. Nike had been dropped for labour conditions in its East Asian suppliers' factories. This fund also shuns investment in arms or gambling casinos. However, those who on principle oppose investment in any capitalist enterprise should look elsewhere; its top holdings were in the stock of Coca Cola, Microsoft, Merck and IBM. Like trade unions, these 'ethical' funds are engaged in seeking to change the policies of corporations via pressure and negotiation. They would clearly become far more effective if backed by favourable legislation.
111. For 'quality assurance' benchmarking, see Guy Palmer, ed., Quality Assurance or Benchmarking? Presenting Information About Pensions, London 1998. A government regulatory office, similar to OFGAS, OFTEL and so forth, could draw up a register of social funds and monitor their performance. Its procedures could be highly visible, subject to frequent review and provide for communication with members of funds involved.
112. In Britain, some unions already give modest support to such a body; the Union Pensions Services provide comparative details on occupational pension schemes, assessing their quality and performance from the members' point of view. They are based at 50 Trinity Gardens, London SW9 8DR.
113. For a unified and funded pension plan which helpfully tackles some technical questions not addressed here, see Jane Fakenham and Paul Johnson, 'A Unified Funded Pension Scheme for Britain', Welfare State Programme Discussion Paper, WSP/90, London School of Economics, 1993; the same authors summarize their approach in an article in Soundings, Issue 4, Autumn 1996. However, these authors take for granted current financial institutions and do not mention the possible role of pension funds in fostering a wider social political economy. Even within a 'harmonized' European approach to social policy, there could be considerable variation so long as its fiscal impact was broadly similar. There would be a strong case for exploring alternative design structures and for adapting institutions which have achieved widespread recognition.
114. For a unified and funded pension plan which helpfully tackles some technical questions not addressed here, see Jane Fakenham and Paul Johnson, 'A Unified Funded Pension Scheme for Britain', Welfare State Programme Discussion Paper, WSP/90, London School of Economics, 1993; the same authors summarize their approach in an article in Soundings, Issue 4, Autumn 1996. However, these authors take for granted current financial institutions and do not mention the possible role of pension funds in fostering a wider social political economy. Even within a 'harmonized' European approach to social policy, there could be considerable variation so long as its fiscal impact was broadly similar. There would be a strong case for exploring alternative design structures and for adapting institutions which have achieved widespread recognition.
115. For an account and defence of the mutual-ownership concept, where each member has an equal vote, see Christopher Hird, 'Building Societies: Stakeholding in Practice', NLR 218, July-August 1996, pp. 40-52. Following the Nationwide vote, British mutuals began taking market share from their de-mutualized competitors and featured well in 'best buy' surveys. See Christopher Brown-Humes, 'Future of Mutuality', The Financial Times survey, 10 March 1998.
116. For an account and defence of the mutual-ownership concept, where each member has an equal vote, see Christopher Hird, 'Building Societies: Stakeholding in Practice', NLR 218, July-August 1996, pp. 40-52. Following the Nationwide vote, British mutuals began taking market share from their de-mutualized competitors and featured well in 'best buy' surveys. See Christopher Brown-Humes, 'Future of Mutuality', The Financial Times survey, 10 March 1998.
117. The approach I am outlining here links up with the case for indexation of the basic pension to earnings, since it gives pensioners, and the funds representing them, an interest in the advance of employee earnings. Since these funds would be influential economic actors, it would help to strengthen ties of solidarity between the two groups.
118. One example of how a top-up might operate is given by Falkingham and Johnson, 'A Unified Funded Pension Scheme for Britain', pp. 23-5. Note that this solution could, at least for a time, render unnecessary the payment of contributions on behalf of those not in employment. For another approach to achieving a guaranteed minimum within an integrated pension policy see A.B. Atkinson, State Pensions for Today and Tomorrow, London School of Economics, Working Paper, Welfare State Group, June 1994, especially pp. 21-9.
119. One example of how a top-up might operate is given by Falkingham and Johnson, 'A Unified Funded Pension Scheme for Britain', pp. 23-5. Note that this solution could, at least for a time, render unnecessary the payment of contributions on behalf of those not in employment. For another approach to achieving a guaranteed minimum within an integrated pension policy see A.B. Atkinson, State Pensions for Today and Tomorrow, London School of Economics, Working Paper, Welfare State Group, June 1994, especially pp. 21-9.
120. Victor Mallet, 'Stock Declines Threaten Black Ownership Deals', The Financial Times, 14 October 1998. This article claims that no-one has actually lost money in the 'black empowerment' schemes, though evidently a handful of former trade union leaders have enriched themselves. The complex pyramid of holding companies and investment vehicles, tying together some union owned enterprises with the financial structures of 'black empowerment', was described and criticized by a special correspondent in 'Union Investment: New Opportunities, New Threats', South African Labour Bulletin, vol. 20, no. 5, October 1996. See also Ravi Naidoo, 'Union Invesrment: Can It Drive Transformation?', South African Labour Bulletin, vol. 20, no. 3, June 1997. These articles stressed the absence of union membership control over investment companies and trust funds set up in their name and the predominance of inappropriate commercial investment criteria.
121. Victor Mallet, 'Stock Declines Threaten Black Ownership Deals', The Financial Times, 14 October 1998. This article claims that no-one has actually lost money in the 'black empowerment' schemes, though evidently a handful of former trade union leaders have enriched themselves. The complex pyramid of holding companies and investment vehicles, tying together some union owned enterprises with the financial structures of 'black empowerment', was described and criticized by a special correspondent in 'Union Investment: New Opportunities, New Threats', South African Labour Bulletin, vol. 20, no. 5, October 1996. See also Ravi Naidoo, 'Union Invesrment: Can It Drive Transformation?', South African Labour Bulletin, vol. 20, no. 3, June 1997. These articles stressed the absence of union membership control over investment companies and trust funds set up in their name and the predominance of inappropriate commercial investment criteria.
122. Victor Mallet, 'Stock Declines Threaten Black Ownership Deals', The Financial Times, 14 October 1998. This article claims that no-one has actually lost money in the 'black empowerment' schemes, though evidently a handful of former trade union leaders have enriched themselves. The complex pyramid of holding companies and investment vehicles, tying together some union owned enterprises with the financial structures of 'black empowerment', was described and criticized by a special correspondent in 'Union Investment: New Opportunities, New Threats', South African Labour Bulletin, vol. 20, no. 5, October 1996. See also Ravi Naidoo, 'Union Invesrment: Can It Drive Transformation?', South African Labour Bulletin, vol. 20, no. 3, June 1997. These articles stressed the absence of union membership control over investment companies and trust funds set up in their name and the predominance of inappropriate commercial investment criteria.
123. An analogous point is made by Erik Olin Wright in his discussion of John Roemer's 'Coupon Socialism', in NLR 210, March-April 1995, pp. 153-60.
124. Malcolm Crawford, 'The Big Pensions Lie', New Economy, vol. 4, issue 1, Spring 1997, pp. 38-44.
125. The call for the thirty-five hour working week has been widely taken up in France, Italy and Germany and it is now coming forward in rank-and-file 'action programmes' in Britain. For 'associational democracy' see Paul Hirst, From Statism to Pluralism, London 1997.
126. Aglietta, 'Capitalism at the Turn of the Century', p. 49. See also Aglierra, Le capitalisme de demain, pp. 34-41.
127. Aglietta, 'Capitalism at the Turn of the Century', p. 49. See also Aglierra, Le capitalisme de demain, pp. 34-41.
128. Diane Elson, 'Socialization of the Market' in NLR 172, November-December 1988, pp. 3-44; John Roemer, The Future of Socialism, Verso, London 1994; Roberto Mangabeira Unger, Politics: the Central Texts, Verso, London 1997, pp. 35-61 and Democracy Realized, Verso, London 1998.
129. Diane Elson, 'Socialization of the Market' in NLR 172, November-December 1988, pp. 3-44; John Roemer, The Future of Socialism, Verso, London 1994; Roberto Mangabeira Unger, Politics: the Central Texts, Verso, London 1997, pp. 35-61 and Democracy Realized, Verso, London 1998.
130. Diane Elson, 'Socialization of the Market' in NLR 172, November-December 1988, pp. 3-44; John Roemer, The Future of Socialism, Verso, London 1994; Roberto Mangabeira Unger, Politics: the Central Texts, Verso, London 1997, pp. 35-61 and Democracy Realized, Verso, London 1998.
131. Diane Elson, 'Socialization of the Market' in NLR 172, November-December 1988, pp. 3-44; John Roemer, The Future of Socialism, Verso, London 1994; Roberto Mangabeira Unger, Politics: the Central Texts, Verso, London 1997, pp. 35-61 and Democracy Realized, Verso, London 1998.
132. Some authors point to the possibility of such sharp fluctuations as a decisive argument against pension funds ever investing in equities; see, for example, Dan Atkinson and Larry Elliott, The Age of Insecurity, Verso, London 1998, pp. 284-5 and Doug Henwood, Wall Street, Verso, London 1997, p. 303. The arguments made by these authors against privately run schemes accord well with the argument I am developing. More generally these two books furnish vivid and compelling accounts of the reckless speculative frenzies to which the markets are prone, and which it would be the purpose of the approach proposed here to bring under effective control. But, to the extent that they oppose all pension fund investment in equities on grounds of risk, they confuse the high volatility of equity investments, in the short-run, with their long-run performance, which has certainly been much better than investments in public bonds.
133. Some authors point to the possibility of such sharp fluctuations as a decisive argument against pension funds ever investing in equities; see, for example, Dan Atkinson and Larry Elliott, The Age of Insecurity, Verso, London
134. Wolfgang Munchau, 'Return of Keynes', The Financial Times, 26 October 1998, p. 22. For a succinct statement of Lafontaine's views, see the text of his speech to the SPD Hamburg Conference in late 1997, 'The Future of German Social Democracy', NLR 227, January-February 1998, pp. 72-87.
135. Wolfgang Munchau, 'Return of Keynes', The Financial Times, 26 October 1998, p. 22. For a succinct statement of Lafontaine's views, see the text of his speech to the SPD Hamburg Conference in late 1997, 'The Future of German Social Democracy', NLR 227, January-February 1998, pp. 72-87.
136. John Maynard Keynes, 'How to Pay for the War', in The Collected Writings of John Maynard Keynes, Volume IX, Essays in Persuasion, London 1972, p. 403.
137. Keynes, ibid. Keynes advocated these ideas in a very public campaign of articles in the press and meetings with ministers, TUC officials and the like, but they were only taken up in much weakened and corrupted forms, despite the fact that he subsequently joined the Treasury himself.
138. This is where the welfare state became uncomfortably similar to a pyramid-selling scheme, in which middle-aged workers, having contributed all their lives to generous pension schemes for their elders, found that there simply is not enough tax revenue to ensure that they received the same treatment. As globalization made it more difficult to tax the rich, it was increasingly those on average earnings who bore the brunt of taxation. This generated a species of 'political' alienation that has already proven as pernicious as the economic alienation represented by 'grey capitalism', contributing over the last decade and a half to such phenomena as the Margaret Tharcher's hold over skilled workers, the 'Reagan Democrats', the Lega Nord in Italy, and a part of the working-class support for the Far Right in Italy, Austria and France.
139. The lead editorial in The Guardian, 1 November 1996, claimed that the total of unfunded pension liabilities in the EU was as much as £10,000 billion. To fully fund all pension obligations requires, it has been estimated, a fund nearly three times as large as GNP. In the UK, pension fund assets stand at 88.5 per cent of GNP, with insurance companies holding funds equivalent to 67.1 per cent. In the EU taken as a whole, the respective figures are 20.3 per cent for pension funds and 24.9 per cent for insurance funds. The aim of fully funding pensions is no doubt excessive, but, in many EU states, there is manifestly a funding deficit. This gives openings to those who advocate something like the Anglo-Saxon model. See Jean-Luc Leblanc, 'Autopsie des régimes complementaires de retraites', Commentaire, Autumn 1998, pp. 693-702.
140. The lead editorial in The Guardian, 1 November 1996, claimed that the total of unfunded pension liabilities in the EU was as much as £10,000 billion. To fully fund all pension obligations requires, it has been estimated, a fund nearly three times as large as GNP. In the UK, pension fund assets stand at 88.5 per cent of GNP, with insurance companies holding funds equivalent to 67.1 per cent. In the EU taken as a whole, the respective figures are 20.3 per cent for pension funds and 24.9 per cent for insurance funds. The aim of fully funding pensions is no doubt excessive, but, in many EU states, there is manifestly a funding deficit. This gives openings to those who advocate something like the Anglo-Saxon model. See Jean-Luc Leblanc, 'Autopsie des régimes complementaires de retraites', Commentaire, Autumn 1998, pp. 693-702.
141. The Euresa/ETUC Workshop on Pension Funds', Barcelona, Spain 24 and 25 June, 1997, pp. 3, 4.
142. Grunval Grip, 'The Pension Debate with Proposals for a European Trade Union Pension Fund', ibid., pp. 7,46. Since Gunval Grip here again uses the notion of pensions as 'deferred pay', it is worth clarifying the point that this is not a denial that the cost of future pensions have to be covered by future production, something this author explicitly acknowledges.
143. Ludwig von Mises, Social Action, Chicago 1947, pp. 61-70.
144. Karl Marx, Capital, Volume III, London 1991, p. 567.
145. See Wolfgang Abendroth, A Short History of the Working Class, New Left Books, London 1972.
146. W.G. Runciman, Social Theory, Volume III, Cambridge 1997, p. 53. Runciman goes on to say: 'as always in social evolution, it is not the origin of practices which counts, but its subsequent function'. While a degree of public responsibility was assumed by the state pension, to be paid for by taxation, 'the egalitarian implications were modest and the sanctity of private property remained untouched' (p. 54). Moreover, those who introduced the state pension did not 'ever envisage that the needy, however deserving, should themselves control the allocation of resources distributed to them' (p. 54). The time has surely come to repair this omission.