Why Won't The Unions Fight For Control Of Our Pensions

Over the last few years, I've written quite a few posts about Pensions. From early on, I was interested in the ideas put forward by Robin Blackburn, who spoke about the Swedish example, from the 1980's, where the Trades Unions were able to get a law passed whereby employers had to create new shares that were then paid into a central Pension Fund. Within a short time, it had grown to account for 7% of the value of shares on the Swedish Stock Market. I put forward a similar idea recently as a means by which the Liberal-Tories could raise the funds needed to pay for the deficit - How To Pay For The deficit. The problem with the Swedish model, as with any system that is in the hands of the bosses or their State, was that, when it suited that State, when it was in a position to do so, it simply scrapped the scheme. That should be no surprise. That is what bosses always do, it is what their State always does. Control comes from ownership, and if workers want to have control over their pensions, they have to own them.

But, the irony is that, in Britain, workers do own their Pension Funds, the money in them is our money to pay our pensions, and even the money paid into them by employers is done so as part of a bargaining process. It is their contribution to our deferred wages. Yet, even though these pensions, this money, is our property, we have no control over it. That is at odds even with every tenet of bourgeois property law, and bourgeois ideology, which stresses that the owners of property should have the unfettered ability to dispose of it as they choose. No one would dream of suggesting that if I buy a house, I should not be able to exercise control over how I use it, decorate it, or who I sell it to. So why, should I not have control over the money in my Pension Fund, why should I not, along with every other worker, be able to exercise a collective control over it, decide where it should be invested or not invested, and when and how I should be able to access it, to take my Pension? The Left frequently talks, in the abstract, about Workers Control. It does so by attaching it as a meaningless, utopian demand to the reactionary demand for nationalisation, in the hope, as Marx described, in attacking such demands, to hide their shame. But, when it comes to something immediate and practical, such as the simple demand for workers to have control over their own pensions the same Left is remarkably silent. Why?

In the last couple of decades, we have seen that workers cannot rely on the State Pension. It has been manipulated and mangled in every way conceivable. The Tories broke the link with earnings, at a time when earnings were rising faster than prices. New Labour failed to restore the link, and insulted Pensioners with a 75p rise. Now, in the midst of further cuts, the Liberal-Tories propose to restore the link with earnings just as wages are being frozen, and prices are let rip. Even in its guarantee against prices, it is changing the link from that with RPI to that with the much lower CPI. For the first few decades of the introduction of National Insurance and Pensions, the vast majority were paying in, whilst never living long enough to draw out. Now that workers are living long enough, that they might be able to actually draw Pension, for a few years of active life, the State proposes changing the rules, so that they can't draw their pension until they are much older. Yet, already, workers in Britain have to wait until they are 65, to draw a worse Pension than workers in France draw at 60!

I was watching the BBC's Newsnight last week, where they were discussing the issue. So much nonsense I have not heard in a long time. I've shown in the past that the argument about the increasing number of Pensioners to people in the working population is false. The reality is that since pensions were first introduced productivity per worker has increased many-fold, probably 100 times what it was. If 1 worker then could support 1 pensioner, then today they could support 100 pensioners. We should be reducing the retirement age not increasing it. The problem is not more pensioners, but the fact that an increasing amount of the surplus, produced by workers, is taken by Capital, to finance the Capitalists consumption, to finance the increasing amounts that go to buying means of production, and to finance the burgeoning Capitalist State. One worker on the programme put it succinctly. He had started work at 15, and paid NI for nearly 50 years since then, on the understanding that he had a contract with the State to retire at 65. Now, the State was breaking that Contract. Anne Widdicombe tried to deny this argument saying his contributions were not to pay for HIS Pension, but the pensions of all those who had gone before. But, this is nonsense. Firstly, she was right to say that the first pensioners had paid nothing or little in to the system. But, the reality is that these first pensioners took very little out of it either. The level of pension was a pittance, it was limited as to who could claim it, and most of them died within a few years at most of receiving it. And over the next few decades that continued to be true, money was paid in by workers who never got to take it out. Moreover, no one would agree, in the first place, to such an arrangement if they did not believe that the provision they were making for others would not likewise be made for themselves.

But, I did a quick calculation. I reckoned that, from when I left school, up to retirement age, I would have paid in £50,000 in NI contribuitons. A few years after I left school I started paying into a Life Insurance Endowment. Its currently worth around 4 times what I've paid into it. Given that for the last 10 years returns on Endowment Polices have been pretty abysmal, its not excessive to suggest that had I invested that £50,000 over the longer period, I should reasonably have been able to expect that it would be worth 6 times what was paid in. So, in fact, I would be quite happy for the State to simply give me what I've paid in, in NI contributions, plus that return, in exchange for it not having to pay me a pension. The £300,000 it would owe me, I think I could quite easily live on for the rest of my life, in fact, more comfortably than the Pension it may or may not eventually pay me.

But, its not just the State pension. The last couple of decades have seen the outright criminality of Robert Maxwell who simply stole money from the workers pension scheme, we have seen the fiasco with Equitable Life, and we have seen first the dishonesty involved in the selling of private pensions fostered by the Thatcher Government, and the subsequent wiping out of billions of pounds of workers savings in them due to the Stock Market collapse of 2000.

I have just been reading an old review by Hugo Radice of a book, “Pension Funds and British Capitalism”, from 1982. Radice begins by pointing out that although this is our money, even getting basic information is not easy. He had been trying to obtain information himself, he says, but gave up after a few months, because he found it hopeless. Minns he says, had the advantage of writing his book just at the time of the Wilson Committee reviewing financial institutions, which perhaps made them more willing to be less secretive. Minns study provided the details for the situation in 1975. With £7.5 billion of holdings they were the second most important share owners after private individuals. Today, that figure is more like £800 billion. Control now as then of these massive amounts of financial power is in the hands not of the workers whose funds they are, but of powerful financial institutions - Merchant Banks, Stockbrokers and Insurance Companies. Radice argues that because these organisations are themselves increasingly linked to the large clearing banks, operational control over the workers funds is exercised by Banking Capital. The significance of that, today, we might want to relate to the fact that this is the same Banking Capital whose speculation and irresponsibility caused the financial meltdown of 2008! In 1975, where Pension Funds (i.e. workers) owned 16.8% of ordinary shares, they controlled only 5.6%. In contrast, where Banks owned only 0.7%, they controlled 17.6%.

Minns figures showed that the funds were concentrated in larger companies, and in the financial sector rather than in industry. The reason for this is that the Fund Managers would not take a stake in any company that gave them more than a few percent of the company, and because they wanted to avoid the management costs of having large numbers of small holdings. Where Funds have specialised in investing in smaller companies, the Banks and Financial Institutions have insisted on much higher returns on the basis of higher risks. The Financial Institutions, through their control of these funds, could also use them to support their own activities, for example, by buying shares in a Company whose Public Offering they were also managing.

But, as Radice says, the role of the Trades Unions has been pathetic. The schemes have Trade Union Trustees, but they are effectively excluded from exercising any kind of influence, even if they were in a position to do so. Even with Local Authorities, where one would expect the unions to have some possibility of demanding control over their members funds, the funds are often managed by the Local Authority itself, although since Minns work, many of them also utilise investment companies for advice, if not actual management of the investments. And, as he says, with private sector employers, the Trustees are appointed by the employer and they have a say only in administration and the payment of benefits, not over investment. Where they have any involvement in investment, it is almost always under the control of external “Experts” and the National Association of Pension Funds, which Radice says is “wholly in thrall to the City”.

Radice argues that control of these funds “is the most obvious area for immediate political mobilisation. If the collective bargaining strength of the unions was combined with a serious educational campaign on the pension funds issue, then the disengagement of the funds from the privately-owned financial sector could proceed without the latter being nationalised. Of course, it implies a very different politics than the proposals for central or local state intervention, but in the long run it would provide a much more solid basis for such intervention than the insertion of clauses into the Labour Party manifesto” (Radice – Capital & Class 16)

He was right, but that was nearly 20 years ago, and not only have the Trades Unions shown no interest in fighting for such a basic democratic right as that workers should control their own Pension Funds, but the Left has shown no interest in pushing them to do so either. Why?

The answer is quite simple. The Trades Unions exist not to fundamentally challenge or replace Capitalism, but only to bargain within it. Without that function the Trades Union bureaucracy, that has a lifestyle similar to that of the petit-bourgeoisie, would have to look for proper jobs, which might not be so lucrative. The basic ideology of the Trades Unions is to respect the sanctity of capitalist property, and the right of management to manage. That is why there is so frequently hostility to actions which challenge that idea, such as occupations of factories etc., and why such actions have almost always been led by ordinary rank and file workers. But, that ideology also leads to the idea that the laws and norms set down by Capital in relation to investment has to be respected too. The purpose of a Pension Fund, under that ideology, is to do no more than to provide workers with the best possible pension in retirement, and that requires that the laws of Capitalist Accumulation be adhered to, and the best people to achieve that are the “experts” from the financial world. Any idea that this massive resource in the hands of the workers could be used for other purposes, could be used as a weapon of class struggle, have to be rejected, because ultimately the basis of the Trades Unions is that there is no class struggle, it is that workers and bosses can have shared interests in ensuring growth of the Capitalist economy. If one wanted to be entirely cycnical, one could also imagine that the Trades Union bureaucracy might not want to see these vast resources used to gain control over large profitable firms, and place them in the hands of a Workers' Co-operative, because the success of such an operation would mean that the bureaucrats themselves would lose their function in such a Co-operative.

This latter also explains the reason that the Left has not taken up the demand that workers should have control of their Pension Funds. The Left, in the sense of the organised Left sects, is a thoroughly sectarian left in the true sense of the word. It places its own narrow interests above the interests of the working class. For the last 100 years it has worked with a dogma. That dogma is that Co-operatives cannot work, and are Utopian. As I've shown elsewhere this idea has no validity in Marxist theory. It certainly has nothing in common with the position of Marx or Engels. The dogma effectively says, nothing significant can be achieved short of the revolution, understood as a repeat of 1917. Everything has to be geared to such a repetition, so that, although the revolutionaries support workers in struggle, they do so mainly for the purpose of building the revolutionary party – for which actually read building their particular sect. Workers self-activity is reduced to the trivial – strikes or other industrial action, to win concessions from an employer or to seek reforms from the Capitalist State – rather than the meaningful self-activity that Marx and Engels envisaged of workers creating their own Co-operatives, organising their own self-government, including the provision of Funds for Education, and Welfare. In fact, rather than this self-government argued for by Marx and Engels, the left adopted the position of Lassalle and the Fabians, and whose importance was recognised by Big Capital itself, of the Capitalist State exercising these functions, and thereby establishing another layer of dominance and control over the lives of workers, in addition to that already existing in the workplace. In this respect that Left's approach to the question of the State has been truly schizophrenic. On the one hand it tells workers that the Capitalist State is their enemy, their oppressor, the agent of the bosses, and that they should not rely on it to be neutral. On the other they repeatedly raise demands for that State to do precisely that, to act on workers behalf, to provide them with essential services, to nationalise their industry and so on, and therefore, to strengthen its grip over them, to exploit and oppress them even more!

But, its precisely for this reason that the Left itself cannot argue for control over the workers' Pension Funds either. It has repeatedly told them that only the revolution will do. If workers really did gain control over that £800 billion in their Pension Funds, and did begin to use it in an active manner to further their interests as workers then much of that ideology, purveyed by the left, would be undermined. The fact, that many of the examples of Workers Co-operatives, have been in small firms that had already failed, strengthened the arguments of that sectarian left. But, there have been plenty of examples of Workers Co-ops that even in these unfavourable conditions have succeeded – Tower Colliery is one that springs to mind. In part, even the failure of some of those other Worker Co-ops, such as at Meriden and KME in the 1970's, was due to the fact that the Co-operative Movement itself did not give them the support they needed. For example, British Steel insisted that KME paid cash in advance, and all of them faced problems raising finance from the private banks. They would have benefited from a Co-operative Bank that also saw its role in more overtly political terms, and such a Bank would benefit if it had at its disposal that £800 billion of workers funds.

£800 billion would buy around two-thirds of the companies in the FTSE 100 outright. That kind of control over companies of that size would undermine many of the arguments raised against Worker Co-operatives. Once these Co-operatives began to demonstrate their viability, it is not just bourgeois ideology that would be undermined, which says that production and distribution cannot take place without the existence of Capital and Capitalists, but would undermine the ideology of the sects, that nothing is possible until the revolution, apart from repeated struggles to defend what has previously been achieved. The sects and their leaderships reproduce themselves on the basis of their sectarianism and this ideology, just as much as the Trades Unions reproduce themselves on the basis of their ideology of bargaining within the system. If workers want to proceed they have to break out of the ideology of both, which is more related than either group would like to admit.