The elderly – who cares? (2025)

From the June 2025 issue of the Socialist Standard

I had driven past the old mill owner’s mansion a number of times. I hadn’t really paid any heed to it other than as the marker of an obscured lane I drove down to deliver my granddaughter to her destination. This time, though, an approaching vehicle had me pulling into the sweep of its gateway. I had a moment to look up. What had once been the domicile of a very obvious capitalist had become a care home. A plaque on the gate post gave its original name below a larger, more prominent, name board. I read, therefore, ‘Saint Mary’s Residential Home’ and only then ‘The Ashes’. There’s a statement of reality, I thought.

One of the undoubted benefits of capitalism has been a general prolongation of life, at least in its heartlands. It is undeniable that more people live to a greater age than ever they did even in fairly recent history. This is an unintentional consequence of the way society has developed due to the scientific and technological advances capitalism has made, had to make, to protect and advance profitability. A growing elderly population is itself a source of profit. Age brings with it a multitude of longer-term conditions and ailments that is an expanding market for the pharmaceutical industry. And when the point is reached that medicine itself cannot sustain those with failing health, then there is another market, social care.

Capitalism is an exemplary system in providing commodities to meet people’s needs. However, there is a caveat. All commodities are available to all, just as long as they are paid for. This is not callousness, but the very essence of capitalism.

Care as a commodity

There are basically two types of social care; external, carers coming to the person’s own home, and internal, with the person accommodated in a care home. On average, external care costs between £20 and £25 an hour. Internal home care averages at £1,000 plus per week.

Care as a commodity must realise both the monetary value of those actually giving the care, care workers, and surplus value for the providers. The providers own the means for care-giving, the actual buildings and all the paraphernalia required to adequately cater for their residents’ needs. Once these expenditures have been met by the care providers – who may be individual business owners or, increasingly, care providing companies – whatever monies remain constitute the profits. This model is classical capitalism. Therefore there is always the tension between the cost of labour and the requirements for material expenditure and financial returns for owners/shareholders. Careworkers are skilled labour and yet their salaries hardly reflect this, often being on or close to the minimum wage.

The minimum wage has become the determining factor for these salaries. When that rises to accommodate cost of living increases, so do the salaries. This is, therefore, an increased cost to the providers. Also, a cost of living increase will affect other elements vital for the care of residents, food, energy and such like. These costs could be taken away from financial returns, but an increasingly less profitable business loses viability, perhaps even ends in bankruptcy.

The alternative is to increase fees, so the plus part of the aforementioned £1,000 per week gets ever larger, moving towards £2,000 per week. This becomes a growing drain on individual means to pay, more rapidly diminishing whatever assets were accumulated throughout a working life. This may lead to families contributing to elderly relatives’ care, which then becomes a strain on those families’ financial resources at a time when living costs are rising. A need to increase those family resources becomes pressing, so higher remuneration is sought. In this way some of the care costs are shifted, indirectly, to other sectors of the capitalist economy.

State funding

Perhaps the state, either directly or through local authorities, takes up the shortfall. This may be done directly through funding in part or whole, an individual’s care needs, following assessment via means testing. Further expenditure will then be incurred through the requirement to employ administrators to carry out the assessments. As the state and local authorities do not have any income other than what is raised through direct or indirect taxation, taking on a significant extra financial responsibility requires extra funding. Any subsequent tax increase, direct or indirect, initially reduces the incomes of workers who pay it.

This has a political consequence for the party imposing the tax increase. Vitriolic elements of the media will make great play of the avaricious state picking the pockets of hard-working families. Come an election, local or national, and the ‘low-tax’ party wins the vote. However, once in power, that administration is immediately faced with the same financial dilemma. The closure of underfunded care homes, with residents put out into the streets, is not a vote winner. Demanding greater contributions from individual assets would also be unpopular as prospective inheritances are reduced.

If the administrating party manages to survive the tax rises, workers whose salaries have been reduced actively seek salary increases, or perhaps reduce spending, or both. The result is the tax increase is ultimately transferred, yet again, to other sectors of the capitalist economy.

Not a drain

When a person retires from employment they do not retire from capitalism. Those, the majority, not requiring care, though receiving pensions, do not constitute a drain on the economy because they are not economically idle. They are providers of unpaid childcare. All the financial factors set out above for social care of the elderly, apply to the care of children to enable their parent(s) to work. Capitalism depends on a constant supply of labour power, so provision of childcare is crucial.

Then there is volunteering. The argument often levelled against socialists that people would not work unpaid is given the lie by the ‘retired’. An often-voiced trope amongst those no longer in paid employment is they don’t know now how they ever had time enough to go to work.

Those who take advantage of out-of-season holidays are redirecting some of their assets to businesses whose commodity is leisure. Pensions being deferred parts of wages/salaries are being spent in much the same way as parts of wages previously saved in bank accounts and such like.

Capitalism has evolved to become a highly complex organism in which each part affects other parts. The elderly requiring care, the retired, like the very young, are as much a part of that organism as any other. However, the avaricious nature of capitalism, ever trying to reduce its costs, can lead to a perception of some members of society being almost parasitic. Only a society not obsessed with money and costs can truly fully value all its citizens and willingly strive to meet their needs, whatever they are. In a word, socialism.

Dave Alton

Life and Times: Still on strike (2023)

The Life and Times column from the November 2023 issue of the Socialist Standard

In May of last year this column dealt with the industrial action that was taking place by staff in universities against their employers. It talked about how lecturers, researchers and administrators in the union I’m a member of (University and College Union) were going on strike on certain stipulated days, not doing any ‘extra’ work outside the strike periods (action short of a strike) and standing on picket lines, holding banners and giving out leaflets. It also said that the strikes were mainly about changes to pensions and real term losses in pay. I can report now that, some 18 months later and somewhat away from the public gaze, the dispute is still going on. And I can also report that, as is often the case with protracted industrial action, it has not been – and is unlikely to be – successful.

What a mess

How can we sum up? Firstly, despite the strike action, the cuts of up to 35 percent in pensions were formalised last year causing enormous anger and frustration. But then ‘market forces’ came to the rescue, when there was a sharp rise in the valuation of the pension fund meaning that the previously proclaimed deficit in the fund became a surplus, leaving no reason for the cuts not to be effectively reversed. This was a relief to most of us, even if union members were still out of pocket from the withholding of pay by employers for strike days. Secondly, despite more or less restored pensions, industrial action has continued on pay, since the union’s demand has remained unmet. This has meant further strikes and a new tactic, a marking and assessment boycott (MAB), which the union initially described as ‘nuclear’, since it threatened to put degree graduation in jeopardy and to lay universities open to legal action by students.

But the MAB tactic has not worked well. Relatively few staff have participated in it and the universities have found ways round, for example by awarding degrees based on exams and assessments previously marked. So the employers have remained firm, refusing to negotiate, which has effectively brought the union to its knees, with a member consultation now showing a clear majority against further MAB action. Then, when the union gave branches the option to call off a further strike period set for the first week of the academic year, the vast majority did just that. And this despite the fact that the lecturers who had participated in the MAB were not only having at least half their salary deducted but were now also at the mercy of their employers’ demand to them to carry out in their own time the missed marking and assessment. A double-whammy if ever there was one. What a mess.

Manoeuvres and delusions

How has this debacle come about in a well-subscribed union with highly intelligent and educated members who one might imagine would be more able than most to assess the likely consequences – positive or negative – of action they decided to take? As pointed out in the previous article, the purpose of industrial action is to force the employer into concessions. Once you think you have done that as much as is feasible then you ask the members to decide if it’s enough and they then decide whether to continue or not. But what has happened here is something quite different. When it became clear, as it did at a relatively early stage, that the employers felt no need to offer concessions and so held the upper hand, the members should have been balloted in properly democratic fashion with a clear ‘yes’ or ‘no’ question about carrying on.

But this did not happen. What happened instead was that politically motivated activists from the Trotskyists who have manoeuvred themselves into positions on the union’s national executive were able to manipulate the union’s decision-making processes and achieve results bearing little relation to the views or position of the majority of the membership. Their main concern was arguably not so much to achieve any immediate benefit for the union’s members but to create a situation in which the dispute would continue as long as possible regardless of the outcome. This in line with their deluded view that industrial action serves as some kind of consciousness-raising operation for workers, a rehearsal for bigger struggles to come when the vanguard these groups see themselves as will lead the workers to victory on the political stage.

Alternatives

In last year’s article, I wrote that, despite the manipulations which were already taking place then, I had sufficient hope that this particular action was happening for the right reasons, had the backing of the majority of members and would not end up being damaging to members’ interests. Unfortunately, as we have seen, things have not worked out like that and the union will now have to try and put the damage behind it and go back to fulfilling their correct role within the system of wage and salary work and buying and selling (capitalism) in which we’re all stuck at the moment. That role is to defend their members’ interests against the interest of their employers, something that will carry on as the majority class in society (workers) continue to see no alternative but to spend their lives selling their energies to the minority class (capitalists or their agents) for a wage or salary. This despite the fact that there is sufficient potential abundance for the money and wages system to be abolished on a global scale so that the whole of humanity can live fulfilling lives at all levels in a world of cooperative endeavour, voluntary work and free access for all to all goods and services.

Howard Moss

Material World: Too old to work, too young to die (2023)

The Material World column from the February 2023 issue of the Socialist Standard

We are all getting older and we will be older for longer. People living longer sounds good. But not for capitalism.

Improvements in healthcare have brought extended longevity and longer lifespans mean there are more older people. The population aged 65 and older is growing faster than all other age groups, especially as the global birth and fertility rates have been dropping. Over the past 50 years, the median age of the world’s population has increased by 10 years, i.e, from 20 years in 1970 to 30 years in 2020. Many countries have attained median ages well above 35 years, such as France at 41 years, South Korea at 43 years, Italy at 46 years and Japan at 48 years. The median ages of the world’s populations are expected to continue to rise, reaching 40 years by 2070. In 1970 China’s population had a median age of 18 years, i.e, half of their population were children. By 2070 the median age of China’s population is projected to triple to 55 with the proportion of children declining to 12. By 2070 the world’s average life expectancy at age 65 will be 21 more years with many developed countries having life expectancies at age 65 of 25 years or more, i.e, people surviving on average to age 90. There is less need for paediatricians and gynaecologists and much more requirement for specialists in geriatrics and care-working. There are not enough nursing home beds to cater for elderly people who need long-stay residential care.

Governments have concerns about the prospect of their populations possessing more grandparents than grandchildren and the burden on pension and healthcare budgets of their ageing populations. An ageing society is viewed as damaging to a state’s economy since it decreases the workforce numbers and increases the costs on social services and health. The need for pensions arises from the fact that as workers get older, they become surplus to requirements for the capitalists. State pensions take up a vast proportion of public spending. The capitalist class has to pay to keep workers alive upon retirement and it is one of the non-productive activities that the State has to undertake.

Within the next few decades, working-age adults will need to support a higher number of elderly people than they do now, putting pressure on welfare systems and taking up much of the future economic growth and output unless offset by increased technology delivering gains in productivity. There is also a need for greater immigration to boost the labour supply to alleviate the adverse effects of an ageing population as new migrants lower the average age of the host nation’s population. The changes in the demographic structure of various societies and the need to replenish the workforce will not be addressed by more older workers (as the evidence is that chronic ill-health is higher with advancing years) and will require a rethink on immigration policies encouraging newcomers from other regions of the world such as Africa.

Government options are to reduce benefits, increase tax revenue or raise the retirement age. Pensions are essentially a tax on the profits of the capitalists, even if ultimately these profits come from what workers produce, and increasing taxes will not be welcomed by businesses. Meanwhile cutting state benefits would only worsen the already existing poverty of old age. So the preferred choice is to make people work for longer by postponing the official retirement age and the payment of state pensions. Similarly, due to mounting costs, employers are currently scaling back their own occupational pension schemes. Pensions and the retirement age are under assault. It has happened in the UK and is taking place nearly everywhere else, despite widespread opposition from working people

Under capitalism the elderly and frail are seen as superfluous, and of little use to employers. Possessing money as consumers in our capitalist society is the only way to maintain any status in one’s old age because money has power no matter what age you are. We are seeing an increasingly unequal society with the elderly among those bearing the brunt. Capitalism leaves its senior citizens unwanted, isolated and invisible.

Growing old is inevitable but the way we get old is not. Although we are living far longer, a significant and increasing proportion of people are managing multiple health conditions and mobility problems from mid-life onwards. Current rates of chronic illness, mental health conditions, disability and frailty could be greatly reduced. The extra golden years of longer life are a gift to enjoy. Socialism will bring forth more social and community networks to build creative relationships, enhancing the quality of life for everyone, both young and old. The contributions of older persons to society are invaluable and cannot be measured in mere material terms. They offer care-sharing and the passing on of knowledge to new generations. The progress of civilisation from our increased lifespan is being squandered by capitalism.

Gulliver’s Travels features the Struldbruggs, a people who appear normal in all respects except one – they don’t die. But their immortality, instead of being a blessing, is a curse because they continue to age:

‘At 90, they lose their teeth and hair; they have at that age no distinction of taste, but eat and drink whatever they can get, without relish or appetite. The diseases they were subject to still continue…’

Socialism will not bestow immortality nor eternal youth but it will permit us all to age with dignity.

ALJO

Pensions myth (2006)

Book Review from the forthcoming August 2006 issue of the Socialist Standard

Phil Mullan: The Imaginary Time Bomb. Why An Ageing Population is not a Social Problem. (IB Taurus.)

 

There are too many old people. They are becoming an unsupportable burden on the pensions and health systems. If nothing is done about it there will be a generation war between pensioners and the decreasing proportion of those of working age.

So runs the argument consistently put over by the media. But, according to Mullan, it’s a myth based on faulty statistics, disguising a hidden agenda by people who want to cut pension and welfare benefits for other reasons and/or want to make money by selling private pensions.

He points out that while the proportion of over-64s in the population is indeed rising this is mainly a reflection of a reduced birth rate in the past, which has meant a fall in those now in the 16-64 age range. This has happened before in the last century without the dire consequences now being predicted. Most estimates, he says, don’t take into account the reduced expenditure on the under 16s that a fallen birth rate means nor the fact that a significant proportion of the 16-64s are also not working, not just the disabled and the recorded unemployed but also many who are on “incapacity” benefit as early retirees to whom capitalism denies a job.  Nor does it take into account the fact that over time the productivity of those at work rises nor that the health of the over-64s is improving.

 So, for Mullan, the “pensions time bomb” is an imaginary threat, but not just a panic cynically stirred up by vested interests. It is also a reflection of what he calls the current “age of anxiety” where : 

“The feeling of uncertainty and insecurity influences discussion and debate in all sphere’s of life. Politicians have lost popular authority and have tended to limit their objectives. The main idea coming out of political think tanks on both sides of the Atlantic seems to be that there are no more ‘big ideas’. Most Western governments have adopted a narrower agenda of managing what exists rather than seeking to intervene in society in pursuance of more ambitious aims. . . Interacting with the élite’s loss of nerve, the erosion of previous collectivities is a major source for this popular mood. The demise during the 1980s of trade unions and of less formal mechanisms of support, solidarity and community have left people more on their own than ever to face the problems of everyday life. The social fragmentation and individuation thas made life seem more insecure”.

This pessimism, bred (we would add) by the inability of capitalism to meet needs and by the failure of reformism last century, is the fertile ground on which the vested interests concerned have been able to sow this particular panic.

Adam Buick

Finance and Industry: Even more Superfluous (1967)

The Finance and Industry column from the May 1967 issue of the Socialist Standard

Even more Superfluous 

A common defence of capitalism is that now-a-days millions of people are investors, directly or indirectly, in industry. Pension funds, insurance policies and unit trusts are cited as examples. The suggestion is that wealth is more evenly distributed. Harold Wincott, in the Financial Times of 7 March, in discussing a survey on how big business gets its hands on our savings, puts it this way: 

And, finally, a word on the alleged enormous discrepancies of wealth in this country we are always being told about How does one reconcile the recurring calculations that x (a tiny) per cent of the population owns y (a vast) per cent of our wealth with Dr. Richebacher’s figures of the massive and continuing movement away from private hands into the hands of institutions which hold them in trust for the people?

If Wincott thinks that the calculations showing “enormous discrepancies of wealth” are wrong it’s up to him to show where. In fact these calculations do take into account pension schemes, insurance policies and unit trusts. Wincott asked a question and got his answer from a correspondent who made the simple point:

The short answer may be to ask why one should attempt it. Surely the types of assets owned can vary without affecting x and y.

In fact the whole argument bears all the marks of a public relations trick to gain popular support for Big Business and the Stock Exchange against any measures they feel might harm their interests.

A study by the London Stock Exchange, How Does Britain Save?, was published last May. It shows 33.5 million out of the 36 million adults in Britain save in one way or another. These savings are broken down:

The two-and-a-half million share owners (only 7 per cent of the adult population) are further broken down (some have more than one type):

There has been a shift from individual to institutional investors on the stock exchanges though not all these institutions hold shares “in trust for the people.’’ The insurance companies and banks are profit-making bodies whose own shares are traded on the stock exchange. In any event, the wealth of institutions can be traced back to individuals in the end and this is done to get estimates of the concentration of the ownership of wealth.

It is difficult to see how the growth of institutional investors is a justification of capitalism. In fact it makes the basic absurdity of capitalism—social production yet sectional ownership—even more obvious. When the joint-stock company appeared a hundred or so years ago, Marx wrote that in separating management from ownership it meant that “the capitalist disappears as superflous from the productive process." Engels was less polite. He spoke of “parasites”.

Now the last in the long list of social functions the capitalists imagined they had has gone: as individuals they can no longer claim to be the main source of finance for industry. Even this function, only necessary under capitalism, is now carried out by anonymous institutions. The individual capitalist — one-time alleged abstainer, organiser and risk-taker —is shown to be superfluous even in the realm of finance.

The savings of wage and salary workers, such as they are, are mainly funds to use when not employed. Having a few hundred or even a few thousand pounds worth of savings doesn’t turn anybody into a capitalist. Even the slaves in Ancient Rome had a fund called a peculium, collected from tips, which they could use to buy their freedom when old. A capitalist is someone who has enough wealth to live without having to sell his mental and physical energies.

Accepting that shareowners are now

functionless, Labour theorists argue that ordinary shares should be abolished and all investors receive just a fixed rate of return. Callaghan, the present Chancellor, told the 1952 Party Conference:

Instead of making the Ordinary shareholders residuary legatees of all profits that are made, let us make the workers the residuary legatees. Let the shareholders be content with a fixed dividend. Let us abolish Ordinary shares.

The government has brought in a new Companies Bill but, needless to say, even Callaghan’s suggestion is now too radical. Not that converting equities into fixed interest stocks will end the exploitation of man by man or abolish the right of property-owners to a property income.

The real solution should be obvious: convert the already socially-operated means of wealth-production into the property of the whole community. Then production can be organised for use without the restrictions of profit-making, finance and commerce.

Adam Buick

Life and Times: The Strike (2022)

The Life and Times column from the May 2022 issue of the Socialist Standard

Over the last two months the University and College Union, which I’m a member of, has been taking strike action against the universities that employ them. This has involved not going into work during the strike periods, not doing any ‘extra’ work outside the strike periods (action short of a strike) and standing on picket lines holding banners and giving out leaflets to people. In the past, efforts, physical ones sometimes, would have been made to persuade those people not to cross the picket lines. But those days are over, and now it’s mainly a question of politely informing them, if they’ll listen, why you are striking. The days when postal vans and commercial vehicles would turn away from a picket are also over and now they come merrily through, sometimes hooting their horns in support, but that’s the extent of it.

Pensions

The strike in some universities is mainly about changes to pensions (in others it is more focused on pay, which has fallen significantly in real terms since 2009). University employers are planning to bring in cuts to university employees’ pensions in the USS scheme of around 35%. Staff and their unions are resisting this, as workers will naturally try to resist cuts to their living standards, whether in the present or in retirement. Negotiations have been tried but so far failed, so the only weapon workers have left is to withhold their labour, a tactic that can be successful but in this case has not so far brought about any change in employers’ intentions. And in the meantime we are losing the pay withheld by those employers for the days we are on strike.

Built-in antagonism

It’s not an easy situation, but it’s one that’s existed for workers ever since the antagonism of interests between employee and employer first started, in fact ever since the capitalist system first existed. And capitalism, in its current more advanced stage, shows no signs of removing that antagonism. Nor can it, because it’s an integral part of the system of workers selling their energies to an employer for a wage or salary and pits one’s interests against the others. It’s true to say, therefore, that the organisations that exist to defend workers’ interests, unions, are a necessary feature of capitalism, even if they don’t always manage to do that.

We’ve had no joy in this dispute yet and it may well be that we end up not having any and having to swallow lost pay for time on strike now and diminished pensions later. I hope not of course and it’s not always like that when workers go on strike. Sometimes the balance of forces is tilted in the workers’ favour, if, that is, they can cause enough disruption to the working of the enterprise they’re employed in. And then they might manage to get the pay rise or improved conditions they’re looking for and so secure a slightly larger share of the surplus value they generate. And throughout the history of capitalism, workers organising in trade unions has been a necessary and beneficial accompaniment to their struggle to maintain and, if possible, improve their living and working conditions.

Political agendas

What isn’t beneficial, however, is when unions get used for political ends by groups who see an advantage in manipulating or controlling them. These are usually Trotskyist groups who work, and often manage, to have influence in trade unions far in excess of their numbers in order to further their own political ends. This usually means urging workers to strike come what may, as a kind of article of faith. They view industrial action as a consciousness-raising operation for workers, as a rehearsal for bigger struggles to come when the vanguard these groups see themselves as will lead the workers to a different society. It’s a society in which they see the state as playing an overriding role, and, though they often call that socialism, it bears no relation to the moneyless, wageless and leaderless society of free access to all goods and services that is socialism for the Socialist Party.

And, in the strike I’ve been involved in, there seems to be a significant number of Trotskyists who’ve managed to get themselves elected to the National Executive of the UCU and are seeking to drive an agenda of strikes come what may. And in so doing, though claiming to be Marxists, they ignore Karl Marx’s own 150-year old warning that action by unions, though necessary in capitalism, cannot be more than ‘fighting with effects… applying palliatives, not curing the malady’. But for the time being union members, including myself, have sufficient hope that this particular strike is happening for the right reasons, has the backing of the majority of members and will not end up being damaging to our interests.

The struggle for money

Time will tell, but one thing is clear. The dispute I have talked about and almost all such disputes are driven by one overriding factor – money. Employers are constantly seeking to find ways of maintaining or increasing the amount of money or profit that their enterprise can yield for them, while their employees, using unions as a means of defence, are seeking to maintain (or even improve) their conditions of work or living standards, and this usually means pressing their employer not to reduce the money spent on them, or indeed to spend more on them in order to improve their conditions of work or give them better pay packets. This is just one of a multitude of ways in which life under capitalism is an ongoing struggle over money – absurd in fact at a point in history where there is sufficient potential abundance for the money and wages system to be abolished on a global scale so that the whole of humanity can do work that truly fulfils them and live fulfilling lives at all levels in a world of cooperative endeavour, voluntary work and free access for all to all goods and services.

Howard Moss

The meaning of the Pensions Bill (1925)

From the September 1925 issue of the Socialist Standard

“I submit that this scheme is a social insurance scheme in more than one sense. It is a good scheme of insurance for the poor, and it safeguards them against some of the risks and anxieties of life, but it is also a good insurance scheme for the rich. The rich should pay up and so avoid the dangers of the social revolution.” Speech of Lord Henry Cavendish-Bentinck (Hansard, 19/5/25, Column 354).

The Pensions Struggle: The Financial Iceberg (2020)

From the February 2020 issue of the Socialist Standard

Pensions have loomed large into the political landscape again. As an issue for our masters, they are like submerged icebergs that from time to time bob to the surface to impede ongoing profitability: agreements that stretch far into the future, which hamper the capitalists’ ability to invest today.

In December, France was gripped by days of a General Strike, which featured riots in the streets, and ongoing clashes between police and protestors. These clashes had all the appearances of being a continuation of the running battles between police and Gilets Jaunes that have been happening in France all year.

(As an aside, this situation is an instructive illustration of how propaganda in the media works. Clashes between police and protestors in Hong Kong made the top of the UK news schedule, but similar clashes in France, Haiti, Iraq and other countries around the world only made footnotes in an online resource to show that coverage is comprehensive.)

President Macron has sought to create a unified pension system, with an effective higher retirement age, to try to curb the cost of the French pension system, with workers getting points based on days worked (which will be to the advantage of those workers with broken career patterns, such as women who take maternity leave).This would replace a maze of different retirement ages and calculation methods. At the same time, some people will have their expectations lowered, and find themselves working longer for less.

Reform of pensions is the iceberg the Juppé government foundered upon, faced down with mass action by the trade unions in the 1990s. Small changes in pensions mean vast effects on the life expectations of millions of workers, and whilst they are for many far in the future, the understanding that one day we will all be too old and tired to be able to work looms large for each of us. Further, that sliver of comfort and leisure is a quid pro quo incentive to keep on working until we can get out of the exploitation system.

Likewise, in this country, and also little reported, tens of thousands of university workers have been striking. This despite the tightening of laws over calling strike action, which require a double majority both of turnout and of those eligible to vote in the strike ballot as well. As we reported earlier this year, this strike action has previously brought employers back to the negotiating table, and saw off their initial schemes which would have greatly reduced the benefits accruing to members of the USS pension scheme.

It was understood at the time that this was only round one, and it was likely that a subsequent round of action would be required to bring matters to a conclusion, thus the UCU (University and College Union) has successfully won a second strike and action short of a strike ballot, with pay and equalities now included as a part of the dispute. At the time of writing, employers are refusing to discuss pay levels.

They maintain that USS is an excellent pension scheme, and note that employers have seen their contributions rise dramatically (50 percent increase in employer contributions over 10 years).They argue that to guarantee the pension is funded in line with state regulations, employees should contribute more than the current 8 percent (the fact that that 8 percent comes from employees in any case is neither here nor there, and cost of living will continue to dictate employers will have to pay in net terms in order to attract and retain staff).

It is clear that the little they are offering at all is only in response to the solid strike action by university workers, and even if the union eventually accepts some increase in employee contributions, it will represent a huge improvement over the original offer.

Similar arguments can be heard over the WASPI women (Women Against State Pension Inequality). The Tory government brought in legislation to raise the retirement age for women in the UK to 65 in 1995, the WASPI campaign notes that many women born in the 1950s weren’t even notified formally until 14 years later. This has led to great difficulties in retirement planning for millions of women. As the WASPI campaign notes, a 1 year difference in birthdate can now mean a 3 year difference in retirement date. In 2011 the Coalition Government sought to raise the retirement age for the same cohort again.

In an election bombshell, Labour promised £58 billion of extra money (above their published plans) to compensate the WASPI women effected. Television pundits wittered on about why should Theresa May (who would qualify) get the money, but the principle, Labour argued, was that what was agreed all those years ago when those women entered the workforce should stand.

Other pundits noted that the interaction between the policy, which would see the women given compensation, and the benefits system would see women in the lowest income groups getting no benefit from the scheme.

The theme running through all this is one of ‘affordability’, but that is not affordability relative to the productive capacity of society, but relative to profitability. Pensions are a part of wages, they are not paid out because of the goodness of employer’s hearts, but instead because of a recognition that workers who are too old to work would be more of a hindrance than a use in the workplace, and, ultimately, they would end up having to pay the cost of looking after such workers one way or another (either in higher wages to working family members with dependents, or through charity).

Legally, pensions are commitments with individuals, and past agreements cannot be unilaterally altered. They form a part of wages which employers agree to pay when they take on staff – like the cartoon character, they will gladly pay us Tuesday for a hamburger today. All of their efforts to structure pension payments this way and that is about trying to minimise the individual and collective cost to employers.

The pensions issue is not about us living longer, but is the class struggle red in tooth and claw.

Pik Smeet

What about pension rights? (1992)

From the May 1992 issue of the Socialist Standard

Last month we looked at figures provided by the Inland Revenue and concluded that although the distribution of all forms of wealth was unequal enough—the top 1 percent own 18 percent, the top 10 percent own 53 percent while the bottom 50 percent own a mere 6 percent—the distribution of capital, as forms of wealth yielding an unearned income, was even more unequal. The top 1.5 percent of wealth-owners with £200,000 or more owned 36 percent while the bottom 65 percent owned virtually none.

Others have used a different set of figures to reach a different conclusion: those for the ownership of shares traded on the London Stock Exchange which show that only about 17 percent are now owned by private individuals (see graph). The rest are owned by commercial and financial institutions of one kind or another, in particular by insurance companies, pension funds, unit trusts and investment trusts or “institutional investors” as they are collectively known as. Since a large part of the funds of these institutions comes from small investors, the claim is made that these figures mean that the capitalist class now own only 17 percent of capital in Britain and even that the remaining 83 percent is owned by the working class.

Whatever may be the significance of the decline of the private Stock Exchange investor—what it means is that the person of the capitalist has become even more redundant, not only to organising production but now also to the specifically capitalist function of finance, making it clear that what we are up against is an impersonal system—it does not alter the figures for the distribution of capital given in last month's article.

Just because the rich no longer invest directly on the Stock Exchange to the extent that they used to does not mean that they don't do so indirectly. They too have bank accounts. They too have insurance policies (Maxwell was reportedly insured for £20 million). They too resort to investment trusts. According to the Inland Revenue figures, those with £100,000 or more (not enough at the lower end, it is true, to be a real capitalist but still only 7 percent of the population) own not only 85 percent of company shares (not just the 17 percent mentioned above but also of those held via unit trusts and investment trusts), but also 47 percent of bank accounts and 47 percent of insurance policies as well as 81 percent of other financial assets (mainly government and local authority bonds) (see Table 1).

Money invested in insurance policies, personal pensions, unit trusts, banks and building societies is taken into account in the Inland Revenue statistics—and they show that those with £100,000 or more own 61 percent of all capital. The one exception is the money in pensions funds, but would this alter the figures and who does it belong to anyway?

The Inland Revenue in fact publishes three sets of figures for the distribution of wealth. The first covers the distribution of "marketable wealth”. The second adds in occupational pension rights. The third adds in both occupational and state pension rights. The results of these additions, for what they are worth, for 1989 are given in Table 2.

Non-existent billions

The third set of figures—that incorporating state pension rights—is completely worthless. The government actuary has estimated the total value of state pension rights in 1988 to be £573 billion (Economic Trends, November 1991). As anybody who works or has worked acquires state pension rights this amount is assumed to be evenly divided amongst the adult population. So half, or £286.5 billion, is attributed to the bottom 50 percent. This is three times the total “marketable wealth” owned by this category and an average of £13.000 a person, so, by this simple device, increasing their average holding from £4000 to £17,000! Since only 1 percent of the total, or £5.73 billion, is added to the total wealth held by the top 1 percent, the overall effect is to considerably reduce the degree of inequality in the figures for the distribution of wealth. The share of the top 1 percent falls to 11 percent and that of the top 10 percent to 38 percent while that of the bottom 50 percent rises to 17 percent.

But this exercise is quite fraudulent. This figure of £573 billion—equal to more than a third of “marketable wealth”, which is wealth that really exists and is recorded in the first set of figures in Table 1—is purely fictitious. It has no real existence. There are no real assets “owned by the working class” and invested on the Stock Exchange that correspond to it. The figure is obtained by converting the flow of income represented by present and future state pensions into a notional lump sum. This is legitimate for some accounting purposes, but what is not legitimate is to go on to assume that this sum actually exists and to attribute it to individuals, in the event mostly workers, as part of their wealth.

State pensions in Britain are paid out of taxation. They are what the National Accounts statisticians call a “transfer payment”; someone else’s income is taxed and then transferred to state pensioners as their income. As taxes ultimately fall only on property incomes there are real capital assets somewhere which, through the exploitation of productive labour, yield the income out of which state pensions are paid. But these assets belong not to workers with state pension rights but to the rich property-owners on whom the taxes to pay the pensions fall.

The absurdity of converting a transfer payment into a notional capital sum and counting this as part of the wealth of the recipient can be seen when other transfer payments are given the same treatment. Income Support, for instance. It, too, could be converted into “wealth" and used to show that the poor are not really poor at all. In fact, since in many instances Income Support is higher than the basic state pension and since, being paid to people below pension age, it is payable over a longer period, the “wealth” which would be attributed to many on Income Support would be much greater than the extra £13,000 state pensioners are supposed to possess. Because attributing wealth of, say, £20,000 to someone on Income Support would be dismissed as absurd, the government's statisticians have not dared to do this calculation. They’d be laughed to scorn, as they should be for doing the same thing with state pensions.

But what about occupational pensions, those paid by employers? Most occupational pensions are not transfer payments since they are paid out of a fund that really does exist and which really is invested, among other places, on the Stock Exchange. The government actuary estimated the value of occupational pension rights in 1988 to be £441.6 billion, or on average £21,800 for each of the 20 million people in occupational pension schemes (Economic Trends, November 1991). But the total value of all pension funds is only £330 billion. It is the inclusion of civil service pensions, which are transfer payments, that is the main explanation for this discrepancy. So these must be taken out before we can even begin to take the figures seriously.

Once this has been done, there still remains £330 billions worth of real capital. Who does it belongs to? Legally it is the property of the trustees of the pension fund, who are required by law to manage it in the best financial interests of the scheme's existing and future pensioners. But this is not the whole story.

Employers are not obliged to set up a pension scheme for their employees, so those that do can be assumed to have done so in what they perceive to be their own best interest; in other words, with a view to enhancing their profits and profitability. Such factors as winning the loyalty of white collar staff, attracting and keeping skilled labour, and having a generally contented, and so more productive, workforce enter into the calculation.

If an employer wants to set up a pension scheme the law lays down that the money to pay present and future pensions must be kept quite separate from the rest of the firm's capital. Otherwise of course the temptation would be there for the employers, when they needed more capital or when they get into financial difficulties, to raid the money in the pension scheme. In most schemes the trustees are employer representatives wearing another hat and, although few go as far as the late great Robert Maxwell, they sail as close to the wind as they can. The law permits up to 5 percent of a pension fund to be invested in the employer's business. Employers can also quite legally appropriate a part of any surplus in their pension scheme:

  Companies throughout the country are wondering if they can. or should, follow Lucas by siphoning cash from their own pension funds.
 The group, based in Birmingham, has swelled its coffers by £150m. using a new rule giving companies access to what has been an untouchable source. The money came at a useful time for Lucas, whose automotive arm has been hard hit by the recession: it reduces the ratio of shareholders’ funds to company debt from 39 to 16 per cent.
 Attempted raids on the pension fund are a favourite tactic by finance directors looking to shore up balance sheets and are usually the catalyst for heart-rending schemes in which pensioners, having given the company the best years of their lives, feel distraught. insecure and betrayed . . .
 The freeing of the Lucas pension fund surplus results from a change to tax legislation governing occupational—that is, funds linked to employers’—pension schemes. (Independent, 26 November 1991).

There have also been cases where firms have been taken over by rivals hoping to get their hands on the surplus in their pension fund.

So, who do pension funds belong to? As can be seen, a strong case can be made for saying that they belong to the employers who set them up. The existence of the scheme benefits them; they have the final say in how the scheme is run and what benefits it provides; they pay most of the money into the scheme and, as the Lucas case shows, they can get some of it back when there is a surplus. On this view, the funds belong to the employers but are kept, by a legal device, in a fund separate from the rest of the capital of the business.

That there are serious difficulties in saying that pension funds are owned by the workers who receive or are due to receive payments from them is in part recognised by the Inland Revenue itself which excludes them from the figures it issues for the amount and distribution of “marketable wealth”. Their grounds for doing so are that, although in their view the capital in pension funds can be attributed to individuals and then counted as part of their wealth in the same way that they do for state pensions, these individuals don't exercise full ownership rights over it— they can't sell it or bequeath it to their inheritors; in short, they can't “market” it. To get round this the Inland Revenue has invented the strange concept of “non-marketable wealth” as wealth owned by individuals but over which they cannot exercise the basic right of ownership, namely, to sell it!

Workers have a more sensible conception of what occupational pensions are, seeing them, not as part of their “wealth”, but as deferred wages paid by their former employers.

Adam Buick

Next month: Do the rich get richer?

Voice From The Back: Pollution And Capitalism (2011)

The Voice From The Back Column from the November 2011 issue of the Socialist Standard

Pollution And Capitalism

In their mad demand for profit the capitalist class are polluting our world more and more. “Ozone loss over the Arctic this year was so severe that for the first time it could be called an ‘ozone hole’ like the Antarctic one, scientists report.  . . . Ozone-destroying chemicals originate in substances such as chlorofluorocarbons (CFCs) that came into use late last century in appliances including refrigerators and fire extinguishers.  . . .  The ozone layer blocks ultraviolet-B rays from the Sun, which can cause skin cancer and other medical conditions.” (BBC News, 3 October) On the face of it a scientific report on the BBC may not appear to mean that much to you, until your child develops skin cancer or some other awful medical condition. It will mean a lot then.

The Sick Society

Inside capitalism everything has a price. If you can afford it you can get the best food, clothing, housing and entertainment. Conversely if you don’t have the money you have to do with the cheap, the shoddy and the second-rate. Regretfully this applies to health-care too. “Half of hospitals ‘failing to feed elderly patients properly’. Staff forgetting to give food and water, while dignified care is lacking at 40% of hospitals, Care Quality Commission says. … The figures for England, compiled from reports published over the summer, will be officially released next week by the CQC. At Sandwell general hospital inspectors found serious issues with nutrition, especially for people who needed help with eating. Staff did not check whether patients had eaten and did not keep track of their fluid intake. One nurse said: ‘Sometimes I am the only staff member to feed on the ward. How can I feed all these people? Sometimes by the time I get to the last bay, either the food is cold or it has been taken away.’” (Guardian, 8 October) They call it the National Health Service: the national ill-health service would be more accurate.

From Dream To Nightmare

As they near retirement age many workers console themselves with the notion that they will at last be free from money worries, but recent research may lead them to reconsider their dreams of rocking-chair contentment. “Research published today suggests that many people with private pensions will be as much as 30 per cent worse off compared with those with similar savings who finished work in 2008, because of a combination of tumbling stock markets and interest rates at a record low. PricewaterhouseCoopers, the accountants, said those facing retirement this year would be left ‘between a rock and a hard place’, forced to consider putting off claiming a pension until market conditions improve.” (Daily Telegraph, 8 October) Even after a lifetime of work and money anxiety capitalism still holds no respite for many workers.

Empty Promises

Politicians vie with each other in claiming that they can solve capitalism’s boom and burst cycle of trade. Beyond their empty boasts there is a reality that they dare not recognise in their bombastic promises. It is that booms and bursts are the way capitalism operates and politicians are powerless to do anything about it. A recent survey by the Institute for Fiscal Studies shows what the future is likely to be. “Falling incomes will mean the biggest drop for middle-income families since the 1970s, says a report from the Institute for Fiscal Studies. The IFS forecasts two years ‘dominated by a large decline’ in incomes, pushing 600,000 more children into poverty. By 2013 there will be 3.1 million children in poverty in the UK, according to the IFS projections.” (BBC News, 11 October) All the politicians can do is make empty promises while we suffer empty pockets.

Skint But Not Poor

For centuries politicians, philanthropists and social observers have tried to solve the problem of the poor, but poverty has remained despite their best efforts. Now, however, a so-called think-tank has ridden to the rescue. “One of Britain’s foremost think-tanks wants to ban the phrases ‘poor people’ and ‘the poor’ to describe those in poverty, claiming they amount to discrimination akin to racism and sexism. The Joseph Rowntree Foundation (JRF) says politicians and members of the public are guilty of ‘povertyism’, an unacknowledged form of prejudice which stigmatises deprived people.” (Sunday Times, 9 October) The findings of this think-tank must be a great consolation to those workers who find themselves unemployed, homeless and desperate. They may be skint but they are not poor. Thanks very much JRF!

TA(TA) for Nothing! (2017)

From the May 2017 issue of the Socialist Standard

On 15 February, the Community, Unite and GMB unions announced the results of a ballot of members employed by Tata Steel on the union recommendation to support an end to the final salary (or defined benefit) pension scheme. Three-quarters of those voting agreed with the recommendation. In effect, they were intimidated by the employers’ threats of job losses.

Understandably, when they were interviewed on the box, officials and lay members of all three unions talked about how hard that decision had been, as many must surely have realised they were being forced to surrender a benefit to which they have contributed over several decades, more or less ensuring a reduction in their whole-lifetime wages.

We sympathise with the dilemma our fellow unionists faced. Plant closures would have devastating effects on workers in the areas where Tata operates, as those of us who live in former textiles, shipbuilding and mining areas can testify.

We wonder if they got any comfort from this gem on the Tata website:

  ‘The notion of social stewardship, integral to the way business is conducted at Tata Steel, together with a continual improvement philosophy has been driving the Company’s excellence orientation for over a hundred years!’

Anyone idiot enough to fall for such nonsense? Like any other capitalist grouping, Tata is there to extract as much profit as possible, and it will bear down on conditions of employment whenever they are able to get away it. The Tata defeat is indicative of the erosion of workers’ conditions. We are now to be forced to work longer (later retirement age), many are stuck with zero-hours contracts or forced to work for nowt (so called interns) or in the cool-sounding ‘gig economy’ (no paid leave, no guarantee of earnings, no sick pay, no union representation, reduced safety – it’s what building workers used to call ‘the lump’, and doesn’t sound quite so cool, does it?)

Coincidentally, within a week of the union decision, the government announced a consultation with industry and ‘consumers’ because many company pension schemes have shortfalls in their funds because ‘Increased life expectancy, changes to working patterns and the economy mean that defined benefit schemes are operating in very different circumstances from when they first became popular’.

So, in part, you’re to blame, for living longer. No mention, by the way, of the fact that when pension funds were in surplus in the 1980s, employers were quick to take a ‘contributions holiday’, despite pressure from unions. In other words, the owners did what they always do – they kept hold of as much as they could for themselves.

It now seems highly likely that changes will be made to make it easier for companies to reduce benefits to pensioners.

And one more thing: measure it how you wish, over the last 100, 50 or even 20 years, there have been enormous increases in productivity in any field we could mention, be it transport, textiles, engineering, food production, whatever… And yet …. despite the huge potential for wealth and comfort, we workers are faced with having our working lives forcibly extended, we can achieve no lasting economic security and, with increasingly inadequate social care, can’t even be sure of a dignified old age. 

We have always argued that, our class, working on a shop-floor, building site, in an office or in a field, must organise and maintain democratic trade unions. As wage slaves, we have to defend ourselves as best we can via unionisation, and this includes the issue of pensions. But any advances we can force out of the employers are always threatened whenever capitalism hits one of its inevitable crises of production, or whenever a cheaper source of labour power can be found. The only way for us to guarantee our future is to call time on this system – put the tiny minority out of business and bring an end to out-dated capitalism and its anti-worker practices.

Finch.

The Lecturers’ Strike: More than the employers could chew (2018)

From the June 2018 issue of the Socialist Standard

Pause in the lecturers’ strike

The [April] Socialist Standard reported on how the strike by university lecturers over pensions took the employers by surprise.  Of course they were not surprised that a strike should be occurring.  After all the lecturers had voted for it – in large numbers and by a large majority. What surprised them – and caught them out – was how long it lasted and how many of their employees actually struck, despite losing significant amounts of salary.

Anger and disruption

In the past, strikes have been one or two day affairs causing the universities little pain, hardly noticed by the students and, when it came to the strike days themselves, not very well supported by the staff. But this one was very different. The lecturers had been well informed by their union, the University and College Union (UCU) , about the issues, in particular the fact that, if the pensions changes proposed by the employers went through, they would lose a significant proportion of their pensions – in some cases possibly more than 50 percent. This struck a chord of anger and actually led to hundreds of university staff who hitherto hadn’t been union members joining to be able to express that anger by going on strike despite the loss of earnings this would mean. And the lecturers struck in their thousands in adverse weather conditions – rain and snow – and carried out picketing and protest demonstrations.

The university employers didn’t take long to become aware of the potential consequences of what was happening: students asking for their money back for lectures undelivered, serious legal consequences and costs if exams were not set or taken. In fact the whole system potentially falling apart. This is an over-dramatic scenario perhaps – and it’s actually hard to know quite what would have happened – but the view quickly hardened among the employers that it was best not to take any chances. They realised they had bitten off more than they could chew and effectively sued for peace – something unheard of in the history of industrial action in British universities.

Climbdown

The article in our [April] issue outlined how their first attempt at offering a deal was unceremoniously rejected by the striking lecturers who were already scenting serious worry on the part of the University bosses, i.e. the Vice-Chancellors. They clearly had the right scent, because the employers came back with a far better offer then before which took the main plank of their own platform, the removal of a final salary pensions, completely off the table. They agreed furthermore to an independent examination of the whole basis on which the pension scheme had been valued and declared as showing a large deficit. The union’s argument that the scheme’s valuation methodology had always been faulty and that, if valued correctly, it would be shown to have a surplus not a deficit, had been contemptuously brushed aside before. Now it was, or so it appears, being taken seriously and would be subjected to serious exploration. In the meantime the pension scheme would stay as it is and there was also a commitment ‘to provide a guaranteed pension broadly comparable with current arrangements’ – a massive climbdown by an initially imperious employer.

The Left and the ballot

The term ‘ broadly comparable’ was seized upon by some in the union as being open to interpretation and as suggesting that it could still mean significant detriment to members. This was in particular an argument of the ‘UCU Left’ group who are dominated by the SWP, which habitually seeks to use trade unions as a political weapon to further their aim of involving people ‘in struggle’. They mounted a strong campaign to prevent a ballot of members taking place on the employers’ offer and then, when they were outmanoeuvred on this by the union leadership and a ballot was declared, they set up a deafening cacophony to try to persuade members to vote ‘no’ in the ballot. The ballot of members was, they argued, somehow ‘anti-democratic’. They knew of course that the new offer, if put to a one-person one-vote ballot of members and not to some meeting consisting largely of their own supporters, was highly likely to result in an acceptance of the offer – particularly as it was clear that the employers were not only running scared but would now think twice before ‘re-interpreting’ any commitment given the potential for disruption the lecturers had shown they were capable of. And so it was that, when the outcome of the ballot was announced on 13 April, 64 percent of the lecturers voted in favour of the offer, a majority of almost 2 to 1, and the dispute – at least for the time being – was over and in a way that could hardly have been predicted by anyone when it started just a couple of months before. 

The lessons

What lessons can be drawn from this strike?

Firstly, though, in most strike situations, the employers have the whip hand because they know that workers who depend on their salaries week-to-week, month-to-month will be unlikely to stay out for long, a strike that is well supported and underpinned by a determination on the part of workers not to suffer a significant detriment being proposed can bring the employer to heel and make them realise that what they are proposing isn’t worth the candle. In this, as in any employment dispute – and indeed in efforts to establish the completely different kind of society we advocate – workers’ solidarity is an essential element.

Secondly, and following on from the need for solidarity, large-scale participation by workers is a necessary prerequisite of any successful trade union action. And in this respect it may well be that at least one element of the recent anti-trade union legislation brought in by the present government (minimum 50 percent participation in strike ballots by union members) will have the unforeseen consequences of trade unions pulling out all the stops to make sure more of their members participate in strike ballots and so making strikes more effective when called because they will be well supported. In the case of the lecturers’ strike, so strong was the feeling against what the employers were proposing that, in the space of just a few weeks, several thousand new members joined the union in order to take part in the industrial action.

Thirdly, the efforts of the Left to dominate trade unions and to glorify strikes for their own sake (i.e. as a ‘consciousness raiser’) and not just as a necessary defensive measure by workers are most effectively resisted when there is widespread participation by members in all aspects of union activity including ballots and any action which may arise therefrom. 

HM

Why I am Striking: A Diary of the Universities Strike (2018)

From the April 2018 issue of the Socialist Standard

Day 5: Lecturers are on strike again, with the first tranche scheduled to last fourteen days in all. Cue jokes about academics sat at home not thinking, or troops being sent in to give seminars on the use of Christian symbolism in late-period Anglo Saxon poetry.

I am not an academic, nor am I even in their pension scheme, the root of the conflict. I am a university worker, and I have been standing on the freezing cold picket line, asking staff and students not to cross it.

I understand that academics have achieved something very difficult. The Tories have introduced a new law to make it so that public sector workers proposing a strike have to achieve not only a majority of those voting, but a majority of those eligible to strike must vote as well. (Universities claim to be public sector for this purpose, but have managed to get themselves declared private sector for the purposes of procurement, because a majority of their money comes from fees now).

The result of this is that instead of the gentlemanly dance of previous university strikes – two days here and there – the difficulty of getting a strike called at all means it has to be decisively disruptive: these are the counter-productive aspects of the Tories trying to regulate strikes out of existence, the pressure valve is gone, and it will make strikes more bitter.

The root cause is an attempt to change the Universities Superannuation Scheme (USS) pension from being a defined benefit scheme (where the academics will receive a guaranteed pension based on their career average salary), into a defined contribution scheme (where the benefit pays depending on the returns of the scheme’s investments, throwing all the liabilities of the Universities onto the vagaries of the bond and stock markets). The scheme has already changed from being final salary to being career average related (and employer and employee contributions have both been raised in recent years).

The cause of this is that under accounting rules, the scheme must be funded so that if all universities went bankrupt tomorrow, all the liabilities could be met. This creates a phantom deficit of billions of pounds, despite all universities not being bankrupt, and the scheme currently being able to manage its liabilities.

Make no mistake, universities are far removed from the rarefied world of a David Lodge novel: today they are vast Dickensian factories employing thousands of staff and servicing tens of thousands of students each. This is indicated in the scale of the strike, with a rough (low) estimate of 20,000 workers out. As Boris Johnson noted in his recent farcical speech on Brexit, Britain stands a long way up the value chain, not producing raw materials or components, but designs and innovation. Thousands of foreign, particularly Chinese, students come to the UK to study, bringing in much needed revenue.

When I discuss this matter, friends tell me that academics are lucky to still have defined benefit pensions, or that they themselves have had their pension downgraded. For me, this makes it all the more important to put a marker in the sand to stop this downgrading of all our deferred salaries.

I understand that what is at stake here is the ability to strike at all, and to have a conscious say in our workplaces: the academics are being attacked as workers, and they recognise their position as workers by calling this strike. They deserve support and solidarity, even at the cost of 14 days’ pay, because anything that makes employers think twice about downgrading terms and conditions of their employees is a benefit for all workers, everywhere.

Capitalism draws increasing numbers into the condition of wage slavery, many academics are on the equivalent of zero hours contracts, or have to continually search for funding for their own salaries. Of course, ending capitalism and abolishing the wages system is the necessary political act, but in the meanwhile the class struggle rumbles on, and we have to engage with the struggle to defend ourselves and pursue the best living standards we can manage within the labour market.

If we don’t strike, we all lose: and maybe, for all those students who smile wanly, shrug and say they have to go in to lectures, the library or to study, they can learn the lesson that they too will soon be waged workers, who will need solidarity to protect them in their workplaces.

Day 14: The strikes have succeeded so far in dragging the employers to the negotiating table, and throwing their ranks into disarray. The Vice Chancellors of several leading universities have come out in favour of returning to defined benefit. The talks, however, produced an offer which would have still seen lecturer’s pensions reduced by at least 19%, and threw in the added insult that lecturers should reschedule classes (which they have been deducted pay for not holding).

I was lucky enough to attend the rally outside UCU headquarters (down an alley in Camden Town), where hundreds of strikers turned up to lobby the committee and delegate meetings considering the offer. The usual toy-town revolutionaries are trying to paint this as a ‘revolt by the members’ against the leadership, where it was in fact the normal and proper functioning of democracy in a trade union. Indeed, my local branch have been running daily strike meetings to run the operation of the strike, and further, credit where it is due, a useful daily strike bulletin has been brought out by Socialist Worker.

There is a question of why the offer was accepted and put to the members given that it was so terrible (and promoted to and by the media as a resolution of the conflict, but some of that will be down to the way ACAS operates, as well as to the mandate given to the negotiators). It was heavily voted down by strikers on the picket lines, and voluble cries of ‘no capitulation’ on social media.

The scene is set then, for the strike to continue, and a further fourteen days in April and June have been approved (but not yet set). We’ve marched through the streets of London twice now (in relatively well-attended marches), and there is talk of the need to pressure government to agree to underwrite the pension scheme. Many academics are enjoying taking the details of the pension plan apart showing how the deficit is not real. A lecturer at Birkbeck has uncovered documents that show there has been a determination to end the defined benefit scheme since at least 2014 – the general idea is by curtailing the scheme’s liabilities, universities will be able to borrow more for building and expansion projects.

Students up and down the country have been occupying spaces on campus in solidarity, and ‘teach outs’ are commonplace across the country.

On a theoretical side, this strike is a demonstration of how commodity fetishism isn’t just a feature or process of capitalism, but a social strategy by the rich and powerful: they are trying to limit their responsibility to their employees through throwing it onto the market, rather than guaranteeing a level of income after we are superannuated.

Ptolemy S.

Will there be too many pensioners? (2004)

From the November 2004 issue of the Socialist Standard

Last month the former head of the CBI, Adair Turner, presented his report to the government on future pension provision. It made for scary headlines. “Pension crisis looming for 12 million workers”, worried the Times (13 October).  “Harsh truth is that we must save more or risk retiring in penury,” and went on:

“The root of the problem is increasing life expectancy and lower birth rates. By 2050, the proportion of British people over the age of 65 will increase from 28 percent today to 48 percent. This will leave Britain with dwindling numbers of taxpayers to support a massive retired population.”

Is this true? Will society be unable to cater for future pensioners at the same standard of living as they have today? Is there going to be a sort of class war between the generations, between those at work and those who have retired over how the national income should be divided between wages and pensions?

    

The short answer is: No. These are scare stories put around by employers, who want to reduce the contributions they pay into company pension schemes and the taxes they pay for state pensions, and by insurance companies, who want to sell more private pensions.

    

They've got one thing right though: in any society those who don’t work have to be maintained out of what is produced by those who do work. Everybody would agree that this is fair enough as far as people over a certain age are concerned, as well as for younger people who for one reason or another are unable to work.

    

But, in present-day, capitalist society there is another group of people who don’t work, and have to be maintained by those who do, namely, those who live off what used to be called “unearned income”, income in the forms of rents, interest and dividends derived from property ownership. That in fact is a good starting definition of a member of the capitalist class: someone owning sufficient profit-yielding assets to be able to live without having to work.

   

The source of all such unearned income (and indeed of the fat cat incomes of top directors, which is only unearned income disguised as earned income) is what Marx called the surplus value produced by wage and salary workers over and above what they are paid, which generally speaking corresponds to what they need to keep themselves fit to work at their particular trade or profession. It is out of this unpaid labour that not only the idle rich but the whole non-productive superstructure of capitalist society (the armed forces, civil service, legal system, banks, insurance and other money-handling activities) has to be maintained. What allows capitalism to maintain an enormous – and still growing – non-productive sector is the high level of productivity in the productive sector, a productivity which increases slowly but steadily all the time, historically at a rate of one to two percent a year.

    

Pensioners too are maintained out of this surplus but pensions are not a transfer payment from workers to pensioners, as the scare stories suggest; they are not paid for by ‘workers paying taxes’ since the burden of taxes paid by workers is in the end passed on via labour market forces to employers. Pensions are a transfer payment from the profits of the capitalists, even if ultimately these profits come from what workers produce. So, even if the ‘over-burdened pension system’ was to be reduced, this would not benefit the working population since the capitalist class would not dream of passing this on as higher wages and salaries.

Growth of pension schemes

One of the non-productive activities that the capitalist State has to undertake is the maintenance of the poor, those members of the working class who are unable to work and therefore have no income from a wage or salary paid by an employer: the sick, the handicapped, the unemployed and of course the old. This used to be done under what was called, appropriately enough, the Poor Law, which required local parishes to maintain the poor from within their boundaries. The fate of poor old people was the workhouse.

    

The history of the “Poor Law” is the gradual nationalisation of the system, accompanied by changes of name such as social insurance, national insurance, social security, national assistance, income support, pension credits, and the substitution of money payments for so-called “indoor relief” in a workhouse. By the turn of the last century, the authorities began to discover that so-called “outdoor relief” – a monetary payment – was actually cheaper than “indoor relief” and in 1909 stingy old age pensions were introduced for some workers aged 70 and over. This was financed by contributions from employers and workers and from general taxation and was baptised “social insurance”. It is still the basis of the State Old Age or Retirement pension in Britain today.

    

The level of the basic State pension has always been fixed as below the official poverty line, with the result that an increasing proportion of pensioners are on means-tested benefits to bring them up to the poverty line. As these top-up “pension credits” are tied to average earnings, the number of pensioners on means-tested benefits is expected to go up year by year. Turner – and the so-called “pensions industry” – are against this scheme as it discourages people from buying private top-up pensions (what they mean by “saving”) since most of any such pensions are deducted from the State's means-tested benefit.

    

To start with and until 1948, the State scheme only applied to a section of the working class, essentially manual workers in private industry. A different situation had evolved for people working for national and local government – so-called “superannuation” schemes (superannuation is just another word for pension), under which in return for contributions related to their salary, workers received a pension also related to their salary. These schemes were not funded, i.e. the money from contributions did not go into a fund that was invested, but went directly towards paying existing pensioners, a system known as “pay-as-you-go”. The logic was that funding was unnecessary since it would always be possible to find the money to pay pensions as governments don’t go bankrupt.

    

Superannuation schemes were also introduced, for office and supervisory staff, in the private sector. Eventually, these all came to be funded, to separate the money for pensions from the firm’s capital and so stop it being raided if the firm ran into cash flow problems or went bankrupt (a protection which has exactly not proved 100 percent efficient in recent years.)

    

A funded scheme means that contributions from members and their employers are paid into a fund which is then invested in government bonds or in shares or in property, and pensioners are paid out of the interest and capital gains on these. In recent years, with the slump in stock market prices, there have been capital losses rather than capital gains and these schemes have run into financial difficulties. Employers have been using this as a reason for cutting benefits, at least for new entrants. Increasingly, these are being forced into schemes which offer smaller and less secure pensions that are no longer related to wages or salary but purely to the amount invested and to the vagaries of the stock market.

    

A third type of pension arrangement is an entirely personal one where the pension payable depends on the contributions (and the income from investing them) of  the individual person concerned. These are basically savings for retirement arrangements which also involve placing the money on the stock exchange and so have run into difficulties for the same reasons as funded pension schemes. They are the ones that are notoriously subject to so-called “mis-selling”.

    

Funded schemes are based on strict actuarial principles and have to be to remain financially viable in the sense of having enough money to be able to meet all their obligations to future as well as present pensioners. What actuaries do is to take statistics on life expectancy and a likely real interest rate over a long term to work out, given the pension benefits under the scheme, how much money needs to be paid into a pension fund to allow it to pay all the pension rights acquired at a particular time. Clearly, if people are living longer – as they are – that means pensions are going to be paid for longer, which means that the scheme is going to need more money to pay them. In actuarial terms, this means more money has to be paid into the scheme, i.e. contributions have to be increased.

    

In this sense, for funded schemes, the fact of people living longer does indeed mean that the pension contributions for working members have to increase. But actuaries have known for years about likely future population trends and pension schemes will have already taken this into account. What has caused the current financial problems for such schemes has been the unanticipated slump in stock exchange prices. This is mentioned by Turner but almost in passing, since he is all in favour of people’s pensions being dependent on the vagaries of the stock market.

    

One idea mooted by Turner to save money on pensions is for the normal pension age to be raised from 65 to 70. This of course would mean that pensions wouldn’t have to be paid for so long and, as the TUC has pointed out, no pension at all would have to be paid to those who die between 65 and 70, as one in five existing pensioners do (Times, 19 July).

The ghost of Malthus

But this problem only applies to invested, funded pension schemes and cannot be validly extended into a general social problem of “too many old people” or “people living too long” (even though it would be typical of capitalism to regard what is after all an improvement in the human condition as a problem). The fallacy is that the narrow financial criteria that apply to funded pension schemes don’t apply when it comes to considering the economy as a whole. Here the broad economic, rather than the narrow financial, position is what counts:

“Over the twentieth century the British population grew from about 36 million in 1900 to 56 million in 2000. People aged over 64 grew from about 1.8 million (five percent of the total population) to about 8.6 million (fifteen percent of the population). So the total number of mouths to feed and support rose by one-half, the proportion of elderly rose three times and the numbers of elderly rose nearly five fold. All these increases were dwarfed by the seven-fold rise in annual wealth production.”

And for the future:

“The long-term record of productivity growth alone undermines the claim of a demographic time bomb in the future. Even without any increase in the size of the active workforce, productivity growth at this long-run trend of about two percent a year means a near doubling of annual output over the next 40 years” (The Challenge of Longer Life: Economic burden or social opportunity?, Catalyst pamphlet, 2002, p. 28).

The “too many old people” doom merchants are making the same mistake as Malthus made two hundred years ago with his (completely wrong) predictions about “overpopulation”: they are ignoring that productivity also increases over time, so that whereas there are indeed proportionately less workers engaged in production they are able to produce proportionately more wealth. It is the increasing productivity that will go on between now and when existing workers retire that will mean that society, even capitalist society, will be able to support the expected increased proportion of retired people in the population. There is in principle no problem here.

    

So why the scare? Basically, because there’s a vested interest involved – the self-styled “pensions industry”. They want to reduce the State’s involvement in pension provision to paying a basic minimum pension so that they can themselves make money out of providing any pension over and above this. They’ve got their greedy eyes on the £57 billion a year “shortfall” mentioned by Turner and on the commissions they can make on this if the government forces both employers and employees to “save” this amount, or even a proportion of it, each year.

    

What in fact is ironic – or rather, it’s a bare-faced cheek – is that they are not an “industry”, i.e. not part of the productive sector, at all. They are part of the non-productive sector maintained, just as much as pensioners are, out of the surplus-value produced in the productive sector. Not one person working in insurance companies and other private companies engaged in pensions provision produces a single item of wealth. From an economic point of view they, too, are a burden on surplus value. But don’t expect any government report to point that out.

    

The real question facing workers is whether they should continue to support the whole non-productive superstructure of capitalist society when, if it were to go, along with capitalism itself, how we they going to survive in old age wouldn’t be a perpetual worry, since in socialism every member of society, including the old, would have free access, as a matter of right, to what they needed to live and enjoy life.

Adam Buick