Wages, pensions and profits. posted by Richard Seymour

I don't want to be obvious or lacking in nuance or anything, but wouldn't you think that it would generally be considered a good thing if people are getting healthier and living for longer? I can't be sure, but I think there was a time when apologists for capitalism would happily rank among its successes its ability to overcome its need for slavery and child labour, absorb a welfare state and an education system that keeps children out of work at least until 16 years, and allows for retirement at 65. Today, we hear that we are living too long.

The problem is becoming so great that big business is terrified for its profits. State pensions cost them money in taxes, while company pensions become a permanent and ever lengthening drag on surplus value. The CBI is horrified that the government will not tear up its existing contracts with public sector workers and oblige them to work until 67. Aside from delaying the pension bill a bit and thus cutting "red tape" (taxes) on corporations and the rich, the imposition of a later retirement age in the public sector (which is already conceded for new entrants to those jobs) would strengthen the private sector's hand as it attempts to enforce the same.

The thought that we are living too long doesn't so much remind me of Scrooge channelling Malthus, as Mrs John Dashland explaining to her husband in Sense and Sensibility the discommodious burden of annuities:

[I]f you observe, people always live for ever when there is any annuity to be paid them ... An annuity is a very serious business; it comes over and over every year, and there is no getting rid of it. You are not aware of what you are doing. I have known a great deal of the trouble of annuities; for my mother was clogged with the payment of three to old superannuated servants by my father's will, and it is amazing how disagreeable she found it. Twice every year these annuities were to be paid; and then there was the trouble of getting it to them; and then one of them was said to have died , and afterwards it turned out to be no such thing.

There is no governing the rages to which Sir Digby Jones is subject over this matter. Not knowing the minuter propensities of the charming and gregarious Sir Jones' brain, I don't want to say he is an avaricious hypocrite who makes more money in one hour than his minimum wage cleaning lady does in a fortnight, but I'm certainly thinking it very loudly. Yet, as enjoyable as it is to see business leaders fume, the fact is that - as ever - they've got nothing to complain about. This government has reduced business taxes to their lowest level for decades - certainly lower than during the Thatcher years. It has also cut inheritance tax so that people like Digby can transmit wealth and every opportunity that life affords to a mewling litter of ruling class progeny. Not only that, but it has succeeded in acquiring the consent of major public sector unions for imposing a higher retirement age on the future intake of public servants.

Further, they are squeezing workers between two pincers. Consider: we are constantly told that we must save, exhorted to take advantage of 'very generous' tax relief, rebuked for not putting by enough for our weary senescence. And yet, even tonight the news reports that the City is worried by any possibility of a compulsory savings scheme, because people who save have less to spend. Consumer demand depends not only upon people not saving, but also upon them spending more and more money that they don't have. Consumer borrowing has shot up for over a decade:

Consumer borrowing in real terms increased each year between 1992 and 1998, from £0.6 billion to £15.6 billion, and then remained fairly level to 2000. That levelling was followed by sharp increases in 2001 and 2002.

Now that consumer demand is tailing off, as people find they are obliged finally to repay their bills and cover their costs, there has coterminously been a surge in home repossessions. Workers will pay with their homes as well as their jobs when the economy hits the skids. In the long run, what is happening is that profit rates in the economy have been declining since the late 1960s, with only brief interruptions, the most recent one during the mid-1990s following "structural adjustment". Unable to sustain effective demand through sufficient wage increases, the economy relies on excessive borrowing and repeated mortages. Profitability could well be restored to immediate post-war levels, but it would require such a destruction of capital as to mean that we must return to a post-war state. In the meantime, capital will avail itself of any crackdown on the gains made by the labour movement during the 20th Century (and perhaps before then). The pensions 'crisis' is really a battle, then - between the priorities of capital and those of human need. If you aren't up for this fight and instead feel like complaining of inconvenience when the rascal multitude of civil servants hits the streets with picket lines, then you may as well forfeit your pension here and now, along with any right to complain about it. Oh, I'm sorry, what I actually meant to say was it's all a state of mind.