Pensions crisis shows capitalism has no future (2006)

George W. Bush is worried about the future. He thinks there are too many of us living too long and if we live to too ripe an old age we’re going to break the government’s piggy bank, draining all that money out for social security pensions and medicare. Having failed last year to slash the living daylights out of the social security system, now he’s ordered the creation of a special commission to investigate the impact of the impending retirement of millions of baby boomers. What the pension crisis shows unequivocally is that capitalism is mired in economic crisis, is bankrupt and offers no future for humanity. It is no longer fit to rule.

In response to growing global economic crisis, the capitalist state in every country pursues policies designed to make the working class bear the brunt of the crisis. This includes above all a concerted effort to slash to the bone the social wage—that portion of the cost of reproduction of the working class paid directly by the state. In nation after nation the ‘welfare state’ is being dismantled wholesale, cutting the standard of living to make the working class bear the brunt of the economic crisis. In the U.S. the government and its media deprecate these “benefits” by talking about the need to trim “entitlements” from the federal budget, as if we were spoiled children with inappropriate expectations of what we’re entitled to.

At the same time that the government is trying to rid us of our false sense of entitlement, contributory pension plans at the workplace, both in the public and private sectors, are under fierce attack. The pension crisis is so serious that a recent New York Times editorial reported, “traditional corporate pension plans are disappearing” (NYT Feb. 5, 2006).  In the troubled airlines industry, company after company has been permitted by the state to simply abandon financial obligations for their pension plans as part of their bankruptcy court settlements. Pension plans in the auto industry, at GM and Ford, will soon follow suit. Of course the state has an entirely less charitable and forgiving attitude about permitting financially strapped workers to walk away from their financial obligations, as evidenced by the recent federal legislation tightening up personal bankruptcy policies.

So serious is the trend towards collapse of private pension funds, that the federal agency that bails out these failed pension plans and assumes responsibility for payments to retirees (paying  perhaps 25% of what workers were legally entitled to) has paid out so much, and   is now operating with more than a $24 billion deficit. IBM has announced a freeze on its pension plan, and, like the government and other private companies is trying to put the onus for retirement income on workers themselves by pushing employees to open up 401(k) retirement saving account, which have now become the norm. But this is an impossible solution. Since the standard of living is so much under attack,  American workers and other strata are increasingly forced to live beyond their means, accumulating massive personal debt to the point where in 2005 for the first time since 1933, there was a negative savings rate. According to the Times, 401(k)’s are “now the main retirement plan for 42 million Americans, about half the work force.” However, at the same time, “half of the people with 401(k)’s have saved less than $20,000; and about one-third of households have saved nothing for retirement” (NYT Feb. 5, 2006).

 In a nutshell, the message is work until you drop. This applies especially to the poorest sections of the working class, whose life expectancy is well below the national average. 

A new society is needed

Remember the ‘leisure society’? Not so long ago we were being told that with the increase in automation we would all have much more leisure time. Unfortunately things don’t work like that under capitalism, which can only squeeze profit from living labor power, and which uses technological developments to intensify its exploitation. Far from having a laid-back leisure society, we have seen massive global unemployment on the one hand, and a brutal lengthening of the working day on the other. The current attempt to lengthen working lives is just another prong of this same attack.

None of it is justified on the criterion of human need. If we could end the gigantic waste of human labor power that capitalism pours down the drain of unemployment, of military production, and a whole host of useless unproductive activities (advertising, bureaucracy, etc…); if new machines could be used to reduce the burden of work rather than speed it up – then there could be massive reductions in the working day, or the working week, or the working life. And if, in Marx’s words, labor was transformed from “a means of life to life’s prime need”, to a truly creative activity, there would in any case be no more need for this rigid separation between work and leisure and work and retirement.

All this, however, can only come about through the overthrow of capitalism and the creation of a world communist society. This in turn will only become a real possibility through a vast development of class struggle and of class consciousness. But the capitalist crisis and the attacks on workers’ living standards provide the material foundations for this development. The attempt to ‘reform’ pensions, in particular, has already led to large-scale mobilizations of workers in France and Austria, and the recent strike by transit workers in New York shows that the same could happen in the U.S. These attacks are directed against all workers: they can thus help workers see the need for a united response. They are being spearheaded by the state: they can thus help workers see that the state is not their protector but the boss of all the bosses, their principal enemy. And they are an assault on our very future: they can thus help workers see that they must make their own future.

In 1880, when Germany’s ‘Iron Chancellor’ Bismarck introduced a national insurance system, he said: “Whoever has a pension for his old age is far more content and far easier to handle than one who has no such prospect” and will “put up with much more because he a has pension to look forward to”.

What the pensions crisis is showing is that workers have less and less to look forward to from capitalism.—Internationalism