A fight that must challenge capital

Author: 

Robin Blackburn

Robin Blackburn, author of Banking on Death, or, Investing in Life: The history and future of pensions, spoke at the Alliance for Workers’ Liberty London forum on 17 February 2005.

The pension issue is the one which has proved time and again that it can get really large numbers of working people fighting for their rights and for a better world.

In the 1990s three European governments were overthrown as a result of strikes, demonstrations, and agitation relating to pensions. The most dramatic example was the November–December 1995 strike of French workers against the so-called pension reform of the Alain Juppé government. He was forced to abandon his plans, and he was defeated at the subsequent general election.

Around the same time, the first Berlusconi government was defeated in a similar way, and Helmut Kohl too. In this country, I think pension issues were an element in the defeat of the Major government. The pension mis-selling scandal, which swindled one and a half million people out of an important part of their pension rights, contributed to the deep discredit of the Major government. Also, more long term, the fact that Thatcher had begun the immiseration of British public pensions, by removing the earnings link, was a subterranean factor.

Last year we had demonstrations of more than a million people in Italy, in France, and in Austria over pension rights. In recent weeks we have had the largest opposition to the Putin government in Russia over the same issue.

The existence of public pension schemes, and of some collective occupational schemes, especially in the public sector, was the fruit of industrial and political struggle. Here in Britain it is almost exactly a century ago that the trade unions set up a body called the Trade Union Campaign to Endow Old Age. Its agitation was one of the things that led Lloyd George to the first state pension proposals just four years later, in 1908.

The struggle for pension rights is in some ways an extension of the wage struggle. It is a struggle for deferred wages. But it is also about relations between generations — how we view the sacrifices of the older generations — and it is about the struggle for free time, a struggle to live within capitalism and in the end to surpass it.

The struggle for free time takes many forms — the struggle for holiday entitlements, for educational breaks, but also for a decent economic support for life in old age.

The pension issue taps into something deep here. The ideal of expanded free time — which also includes the right to uncoerced free work — is one factor in why the pension issue mobilises so many people.

It is very important that we should be defending the line of no raising of the state retirement age. Part of what the Blair government is doing, and part of the trend of the capitalist society we live in, is to get back to the old days of “work until you drop”, and to add onto it the new imperative of financialised capitalism, which is to make everything you do into a commodity, to commodify your whole existence.

If we can defend people’s right to decent pensions, it does not just mean defending their right to be passive. In fact we know that if people have a decently funded old age, they will be more active, helping their family, helping the community, or maybe getting another job, maybe a part-time one, without any loss of their pension entitlements.

Pension rights were won above all in the period after World War 2. Good occupational schemes were set up, based on a guaranteed link to final salary or an average of the best working years.

Now we are living through a crisis of both public and private pensions, alongside a growing trend to entice the whole population into various forms of debt. Debt is currently at about 120% of disposable income. That is another expression of the imperative of commercialisation and commodification.

The Blair government is currently studying introducing compulsory private pensions. You would have to pay taxes to a bank or an insurance house. That is what is being proposed. There is an Atlantic axis on this. Bush is planning to privatise a whole chunk of Social Security in the United States.

The most obvious aspect of crisis in the public pension system in Britain today is that the pension is simply not enough. It is an insult. It is down to 15% of average earnings. It has declined from being over 20% around 1980, and it is due to go down to about 10%. It is indexed to prices, not earnings, and as earnings have gradually crept ahead of prices that leaves pensioners behind.

The average pension of single women is only £95 a week. It’s a curious feature of discussion of the public pension system is that it is always done in terms of pounds per week. The state pension is described as being £75 per week, or £110 for a couple. Normally it is children’s pocket money we think of in terms of pounds per week, and we describe adult incomes in round annual sums. What pensioners are being asked to live on is considerably less than £5000 a year, and many are on less than £4000.

Of course, the state pensioner can supposedly get a bit more if they apply for an incredibly complicated means-tested supplement, the Pension Credit. But we know that at least half a million older people, and maybe more, for one reason or another, do not in fact claim the credit to which they are entitled.

The answer is to go back to what the TUC was demanding a hundred years ago. There should be a universal right to a decent state pension. And it should be indexed to earnings and not to prices.

It’s not very good to have the whole pension system based on a payroll tax. If you do that, the tax becomes high, and it creates a deflationary climate. Europe still has a strong economy, but unemployment has been very high now for two decades, and that is partly because of the whole baby-boomer generation being in work and so much money being taken out of circulation through the payroll taxes. You have had too few pensioners and too many workers, just the opposite of what you may have been told.

I think we should look at new funding mechanisms which do not attach to labour incomes, a new pension regime which taxes capital.

The answer was already seen by someone who was, in my opinion, one of the most far-sighted strategists of the European workers’ movement of the last fifty years — Rudolf Meidner, the chief economist of LO, the main Swedish trade union organisation.

Meidner understood that the Swedish welfare state was a sort of compromise between labour and capital. In the 1970s he said, comrades, we have come to the point where either capital moves against us, or we move against capital. At the 1975 national convention of LO, he set out the need for what he called wage-earner funds.

He argued for requiring every corporation employing more than 50 people to contribute 20% of its profits each year in the form of new shares, to be held by the wage-earner funds as a social reserve.

He saw the problems looming up, and he said that either they would tip the balance in favour of labour, or in favour of capital. The wage-earner funds were the way to tip things in favour of labour and its social allies.

Meidner was a social democrat, but from a Marxist tradition. He was German-Jewish, not Swedish, in origin, and was a disciple of Rudolf Hilferding.

From the 1950s onwards he designed the Swedish welfare system to ensure decent benefits without unemployment. Right down to this day, even though aspects of Meidner’s proposals have not been introduced, and Sweden has abandoned many of Meidner’s ideas, official unemployment is under 5% in Sweden while it is 10% in Germany and France.

The wage-earner funds proposal was implemented by Olof Palme in a quite diluted way in 1982. It worked for about ten years, and the funds acquired a stake of about 7% of the Swedish stock market. Workers did not have proper control of the wage-earner funds, which had been the original idea, but even so they were seen as a big threat by the twenty families which dominate Sweden’s economy.

The conservatives repealed the wage-earner funds law when they came into office in 1992, and the Social Democrats have been too craven since then to reintroduce it. The money from the funds was used to set up six research institutes, and as a result Sweden has one of the strongest knowledge-based economies in Europe.

We ought to explore Meidner’s idea as a way of properly funding a new layer of state pensions on top of the basic minimum. But first I want to say something about occupational and private schemes.

The big distinction among private pensions is between “defined benefit” and “defined contribution”. In the “defined contribution” method you put in your money — usually the employer puts in not very much — and you get out of it whatever pension the market will grant when you come to retire. With “defined benefit” there is a definite pension promise, usually related to final salary or the best working years or some such formula.

In recent years, increasingly, large companies have phased out the “defined benefit” schemes, where they bear the market risk, and replaced them with “defined contribution” schemes where the worker bears the market risk. The employers used to contribute 12 or 15% of salary to the “defined benefit” schemes, and they are now unlikely to contribute more than 3 or 4% to the “defined benefit” schemes. In some cases they contribute nothing.

Over the lifetime of a scheme, say 30 years, charges will reduce the value of your pension pot by 30% or more.

Occupational pension schemes are much better than the private purchase schemes. The expenses are under control. Sometimes workers have won the right to some say over the conduct of the pension fund. In the USA the unions have made more progress on that than there. In the Californian Public Employee Retirement System, CALPERS, the largest pension fund in the world, the unions organised to get proper representation, and have been able to use it as a vehicle for insisting that the companies that the fund invests in recognise union rights, set ceilings on remuneration of CEOs, and so on.

There is a faulty structure in many private sector schemes which allows the employers to take exorbitant contribution holidays. When the stock market is going up, the employer can take a contribution holiday because they can point to the shares going up and say that the scheme is fully funded. According to the Inland Revenue, £28 billion of contribution holidays were taken by leading British companies between 1988 and 2002. Their pension funds are currently underfunded to the tune of about £70 billion. 40% of that gap — or more if you take into account that the contribution money would have grown if it had been put into the funds — is down to the contribution holidays.

What the big banks are cooking up now, with new waves of mergers and acquisitions, is “liability-shedding”. They take a company that has some assets and come up with a scheme for separating the pension fund from the company. That is what has happened with Allders, the retail chain. What they do is take a company, sell off its valuable assets, and then leave a shell company which has no assets but has the obligation to fix the pension fund. That is how tens of thousands of workers have found that the company’s promise to pay their pensions was empty.

Employers are not contributing to pensions in the way they used to in three crucial ways. Contribution holidays. Not paying tax, and thus constraining public schemes. And making lower contributions to company pension schemes. The heart of the problem is that capital, or the large corporations, are making a steadily declining contribution to pensions.

A Meidner approach is the best way. I have calculated that over 25 years, with just a 10% levy, the Meidner funds could accumulate a £500 billion fund. I have described various ways in which that could be boosted to a £1000 billion fund, capable of generating £14 billion a year in income for pension provision.

Really, what this would be doing is restoring the employers’ contribution. It would also establish new economic agencies with a power of active engagement, able to use the shareholding power to monitor what companies were doing.

It is not a formula for socialism, but it could have a certain transitional logic to it. It would make a strong contribution to a more egalitarian pattern of society. It also puts a spotlight on the wasteful practices of the financial services industry.

Grey capitalism

Much of the material in this feature is taken from Robin Blackburn’s book Banking on Death, or, Investing in Life: The History and Future of Pensions (Verso).

After summarising the history of the emergence of old-age pensions, the book looks at the rise of “pension fund capitalism” in the 1980s and ’90s.

Pension funds have gathered vast masses of what Blackburn calls “grey capital”. Legally it is not at all clear who owns the pension fund money, but certainly not the workers who have paid the contributions, since they have no say in what is done with it.

Starting from the fact that “we are already immersed in the world of grey capitalism”, Blackburn proposes a capital levy — a tax on profits in the form of compelling companies to issue new shares to hand over to socially-controlled pension funds — as the best measure both to secure a solid asset base, independent of employers and governments, to guarantee pensions, and to gain levers for social monitoring of capital.

Sometimes his argument reads a bit as if he is trying to construct a blueprint for a more “balanced” and “healthy” capitalism, in the style of writers like Will Hutton. But Blackburn criticises Hutton. He explains that he is looking for ways to develop the contradictions within the actual development of capitalism, rather than simply counterposing an alternative social blueprint.

Are there problems with workers acquiring a sort of collective ownership of large capitalist shareholdings? Yes. But workers now have pension funds, and are not going to give them up easily, so the question is, where do we go from here?

Blackburn explains about his proposals:

“Such a profound, if also curious, alteration in property relations… could not be sustained without provoking a fundamental rupture with capitalist social relations… [The] institutional proposals are made not as an alternative to social movements, class mobilisations and political campaigns, but as a complement to them… It is in the nature of both class struggle and political competition that there is a tussle over the specific direction and use of any new social measure.”

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Comments

Pensions

100 years ago, people had to work until they died. Rules about retirement age and pensions have evolved over time, as have we, as human beings.

Why should the public sector bow to what private industry is doing and the fat cats that line their pockets at the expense of thousands of ex public sector workers (BT, British Gas, British Rail etc). It should be the other way round, and for 2 reasons: History goes forward not backwards, as time goes on, people should retire at a younger, not older age. Industry was nationalised post ww2 to end hundereds of years of poverty and manipulation - why go backwards now?

Do you want to be part of the generation that undoes all that the previous generation fought for? I don't.

Pensions

The state pension and public sector pensions are going to cripple future generations of taxpayers. When pensions were first introduced the pension eligibility age was higher than average life expectancy and therefore was affordable. Now workers expect to work for 40 years and then retire in comfort for the next 20+. This is simply not affordable and the only sensible solution is for people to work longer. As life expectancy and the quality of life increases it is only reasonable to expect people to work longer. Their retirements will still be longer than their ancestors and their descendants won't be crippled by huge taxes to pay for pensioners.

Your Argument is Completely Wrong

I'm afraid that you have simply repeated here common prejudices and falsehoods put out by the Government and the press. The current "crisis" with pensions has nothing to do with people living longer - it has to do with capitalism increasing inability, particularly in the West, to make large profits. As usual in such situations it seeks to resolve that by attacking workers wages and conditions, both those that workers receive now, and those they have deferred to the future.

I have given a response to this argument in more detail her.

Tax is Not the Issue

Arthur Bough

YOU ARE COMPLETLY WRONG

I have read your link and your comment that saving more money in pensions is not much help if prices increase is of course correct. However pensions are nearly all inflation protected - if prices go up so do pensions.

Your example of two people living on an island requiring an increase in productivity for one of them to stop working is also correct. However longer life expectancy without an equivalent increase in retirement age means that a lot more people need to be supported and hence a much sharper rise in productivity is required. In addition the workers producing goods and services will not be prepared to drop their standard of living to much to support the increasing numbers of retirees.

Surely people living in retirement for longer must impose a much greater burden on the workforce? If you cannot see this you are living in a socialist cuckoo land.

Read It Again

I think you should read it again. The example of the two people living on the desert island which you say is corect is the root of the answer. The example shows indeed that is someone is to retire then productivity needs to increase to account for it. By analogy if people spend longer in retirement then productivity must rise to account for that too.

But you have completely left aside the rest of my comments that flowed from this. That is that since the retirment age was set at 65 nearly 100 years ago productivity HAS already increased phenomenally. It is not that productivity nees to increase ffrom here to accommodate a retired population that will be bigger, but that productivity has already increased by gigantic proportions in the last century such that the retirmeent age should be actually much lower now than it was 100 years ago - not higher.

Why is it that despite this phenomenal icnrease in productivity by workers that not only has the retirement age not fallen, but that the hours that people work are increasing (some of it outside working hours e.g. people using laptop computers at home, and on the train into work etc.) and the retirmeent age is being proposed to be raised? Quite simple for the reasons that both I and Martin have given. Partly its accounted for by the fact that we consume more and a wider variety of goods than 100 years ago, but that can only account for a small percentage of the reason. The main reason is that as capitalism grows a larger and larger share of what is produced is consumed by Capital itself. In other words a large amount of production goes to replace worn out machinery, or goes to produce even more machinery. Similarly, a large amount goes on things associated with production or more precisely consumption, trying to get people to buy what has been produced whether they need it or not, so advertising has been a huge wasteful drain on resources. Attendant on that are other things like an increase in the number of lawyers etc. to deal with a larger amount of legal cases arising from property disputes, trade disputes, and claims for breach of contract etc. etc. And of course a very, very sizeable and increasing amount of what is produced goes on feeding thre wasteful and excessive consumption of the capitalists themselves e.g. when Bill Gates could buy up every hotel room on an island to exclude anyone that wasn't on his wedding list, or the yacht I have referred to elswhere that cost £250 million to buld for a single individual and which has a crew of 60 people. I don't know how much the helicopter on the back of the yacht cost, but I do know the owner of the yacht has several yachts. Multiply all that wasteful consumption by a few million times to account for the several million people around the world who have the kind of wealth to command such resources, then add in the huge waste of resources that goes to all the other things listed above, then add in an even larger waste of resources that goes into producing things which are only useful when they are used to kill people such as half a million pounds for every cruise missile fired at Iraq, Afghanistan or Serbia, or the cost of several million pounds for a fighter aircraft, or several billion pounds developing stealth aircraft, many, many millions for warships, and on and on.

No there is absolutely no need for people to work longer for everyone to enjoy a decent standard of living both whilst they are working and during a long retirement. The only requirement is to get rid of the wasteful economic system under which we live. To get rid of capitalism, and replace it with a rational socialist economic system where the emphasis on what to produce, and how to produce it will be geared not to the interests of a very wealthy and powerful handful but to tthe needs of the vast majority.

Arthur Bough

I disagree

We are going to have to disagree on this one. Yes productivity has increased, but I don't want to have the same standard of living as we had 100 years ago!! People want new gadgets, new entertainment, better cars, better medicine, better education. As I said, current workers do not want to reduce their standard of living so that people aged 60 do not have to work.

Companies spend money on advertising because they find this increases sales. It does not force people to buy goods they don't want. If people preferred they could choose to save the money for their retirement instead.

A 'rational socialist economic system' does not exist. Having a central committee decide what should be produced to make the people happy has been found not to work. If you want to ensure that the needs of the vast majority are met the capitalist system of using market forces to determine production is the best way. You may believe that everyone wants to drive a Lada but I don't.

Most production is for the majority. You have given a few extreme examples of spending by very wealthy people. Most of these wealthy people have earnt their money - they have produced goods or services for which the masses are happy to pay.

Response

"We are going to have to disagree on this one. Yes productivity has increased, but I don't want to have the same standard of living as we had 100 years ago!!"

I dealt with that argument. Only a small proportion of the difference can be explained by the fact that we now consume a wider range, and greater quantity of things than we did 100 years ago. My argument is that productivity has already increased more than sufficiently to maintain that standard of living even with a larger number of pensioners living in retirment for longer.

"Companies spend money on advertising because they find this increases sales. It does not force people to buy goods they don't want. If people preferred they could choose to save the money for their retirement instead."

Yes it does increase sales. How? By getting people to spend and buy things they otherwise would not have done. That's tautologically true. But why is this necessary? Because instead of capitalism operating on a rational basis where consumers as workers decide what they want, what their priorities are for how resources are allocated and then producing accordingly, capitalism produces blindly and then tries to use all kinds of sophisticated methods including psychology to get people to buy what it has produced. Often it works, but the vast resources that go into that effort would not be necessary in a society which produced what it wanted to begin with. Additionally, sometimes it does not work and consequently huge quantities of resources are simply wasted and destroyed that otherwise could have gone towards something useful that was actually required. The recent example that I gave above was the billions of dollars worth of fibre optic cable and electronic switching gear overproduced at the beginning of the century. If you do not beleive that advertising gets people to buy things they otherwise would not have done watch the programme "The Corporation" next time its on Channel 4 or More 4, where even the insiders within large corporations, advertising firms, and Public relations companies show just how its done. But the more imnportant point is that in a rational economic system the huge waste of resources in advertising would not be needed inthe first place.

"If people preferred they could choose to save the money for their retirement instead."

But think about the consequences of this under capitalism. If people spend less money and save it instead a number of things can happen. Firstly, the reduction in spending creates a reduction in aggregate demand in the economy. In the short run a fall in demand creates a fall in price, and consequent fall in profits. Firms respond by cutting back production, and also cut back investment because their is no point putting money into new investment if demand for your goods is falling. The result is a curtailment of economic activity, falling wages, and profits, and less goods and services being produced. However, more money as paper sits in people's bank accounts arising from the increased saving (though this might not even happen because they might need the savings to make up for the fall in their income arising from being made redundant put on short time etc. arising from the slowdown in economic activity arising from their icnreased saving. However, assume the best case scenario for your argument and this didn't happen. In 40 years time these people then take this money out of the bank to spend having retired. All of this saving now becomes spending on consumption. However, the people doing the spending are now no longer producing. The result is that there is an increase in demand alongside a reduction in supply. The increased volume of money chasing a smaller or even the same amount of goods produced has the consequence of raising prices such that everyone workers and retired alike are worse off.

Secondly, the saving might have been used by firms for investment in which case the fall in consumption might be matched by an increase in investment such that no fall in aggregate demand occurs. For the reasons I have given above this seems unlikely because as Keynes pointed out its unlikely that if you are a capitalist you will be persuaded to risk money in investment when you have unsold goods, and demand for your products is declining, which it would be if people reduced consumption in order to save. But there are areas where investment might occur under such circumstances. For example, investment might occur in the production of things like fighter planes, battleships, Cruise missiles. This would certainly ensure that no fall in aggregate demand occurred, and that incomes did not fall as a consequence. However, what this investment does not do is what is required - it does not raise productivity in the production of wage goods, in the production of those items of consumption that workers employed and retired will spend their money on. Consequently, you are still left with the result outlined above. When these workers that have saved all of this money retire that money that was held in money form in saving will now come on to the market as monetary demand, but the reduction in supply resulting from their retirement will not be offset by the necessary increase in productivity because the investment went into producing fighters and battleships. Again the result is that this icnreased monetary demand will confront reduced supply and prices will rise leaving everyone worse off yet again.

Only, in the third case where that saving goes into investment in the production of wage goods in order to bring about an increase in productivity will those savings be able to confront supply without raising prices. But the only guarantee that that would happen would be if society decided to use its savings in that way. That is what a rational socialist economic system would do, because it would not leave that decision to chance.

"A 'rational socialist economic system' does not exist. Having a central committee decide what should be produced to make the people happy has been found not to work. If you want to ensure that the needs of the vast majority are met the capitalist system of using market forces to determine production is the best way. You may believe that everyone wants to drive a Lada but I don't."

Quite true a rational socialist economic system does not exist and never has. Its quite possible it never will I don't have a crystal ball. But that is no argument. It was equally true that no powered aircraft had ever flown despite man trying for centuries to do so until one did, and now we take it for granted. Where the people who believed it was impossible were the ones who appeared the realists and were able to mock those that tried, now it is the other way round. 100 years after a rational socialist economy was established we would have a similar attitude to those that said it was impossible.

The rest of your article ir rather irrelevant to the discussion because it is not about a rational socialist economy. The idea of a central committee deciding what people want has nothing to do with socialism, or a rational socialist economy. Indeed, planning by some central committee is more associated with the way capitalism now works than with socialism. It is the central committees of large multinational corporations that decide what, how and where things should be produced. It is their associates in capitalist governnments and other capitalist institutions such as Central Banks that decide things such as interest rates etc. to try to influence how much or how little we all should spend or save, and on what.

A socialist economy merely requires that workers own the main means of production and on the basis of co-operation increasingly organise production to meet their needs. In the first instance they will undoubtedly continue to use the market to achieve that, but will use the techniques used by large corporations such as Market Research and business planning to try to match production to consumers needs. By each enterprise co-operating with every otehr enterprise they will avoid duplication, improve market knowledge, share technology and innovation to rapidly increase production and reduce the chances of misallocation of resources that occurs under capitalism.

"Most production is for the majority. You have given a few extreme examples of spending by very wealthy people. Most of these wealthy people have earnt their money - they have produced goods or services for which the masses are happy to pay."

This statement is so patently untrue on so many levels that I am amazed anyone could make it. Most production is for the majority. Actually no it isn't. The majority of production goes to repalce existing capital, and enhance it, along with production for military spending. Production to meet the consumption needs of capitalists is no doubt less than that, certainly in volume terms, but in terms of value is still extremely large.

I would challenge you to give evidence of just one of these wealthy people that have earned their wealth. The vast majority of wealth is inherited wealth. A recent article in the Economist showed that the concentration of wealth within the top 10 per cent has not only become more concentrated than ever but social mobility i.e. the number of people falling out of this top echelon, and the number of people moving into it is falling too. Most of these people's main contribution to existence is sitting on a yacht drinking champagne and snorting coke. Occasionally, they will attend a board meeting or two in order to get a report from the people who are actually in charge of the company, but who also rely on the reports they receive from the lower tier managers who actually run the company. But the actual value produced, the wealth accumulated by the owners and top executives is created not by them, but by the workers that produce the goods.

As for the last phrase are you actually telling us that Bill Gates himself makes every copy of Windows, and Office, that he himself puts them all in to boxes, and nips off down to the post office to post them off????? Funny, I thought it was thousands of workers that did that.

Arthur Bough

Wealth and Social Mobility

The links below are to sourcs showing the concentration of wealth, and just how little social mobility there is, and how it is declining particularly in the US, and UK.

Facts About US Wealth

Sutton Trust

Economist

It should be noted that the last two references understate the case. The references in these two links are to mobility measured by income not wealth. It is clearly possible to move into a high income bracket, and yet still not come anywhere near the top percentile or even quintile of wealth.

The statistics for wealth also understate the case. Much of the wealth for the majority of people is made up of the value of their house. Whilst this is undoubtedly wealth it is not productive wealth, it does not provide the basis of income via profit. Additionaly, it is the ownership of productive wealth in the shape of factories, machines etc., or at least shares in these things via stock ownership that brings about power and control, influence over decision making of what, where and how to produce, and of course as the Economist article makes clear power and influence in the political sphere too.

Arthur Bough

Interpreting The Statistics

What do the figures in the links I have provided show. The data in relation to wealth is for the US rather than Britain, but the figures for Britain are not very different. The figures show that the top 10% own 71% of all wealth. Conversely, the bottom 90% own 29% of all wealth. Put another way the people in the top 10% own on average 22 times as much as people in the bottom 90%. But this does not give the true extent of the concentration of wealth. The top 1% own 38% of all wealth – close to half – and more than the bottom 90% - 29%. In other words people in the top 1% own 118 times as much as 90% of the population, and compared with people in the bottom 40% of the population the difference is amazing. The bottom 40% - nearly half of the population – own just 0.2% of wealth. That means that the top 1% own on average 7,600 times what someone in the bottom 40 % of the population owns. Given that most of this wealth is in the form of ownership of the means of production the control and power that this gives people in the top 1% can be judged. And even within this top 1% the figures are skewed towards the top end. As the figures show Bill Gates alone owned as much as the bottom 40% of the population. To put that into context assuming a population of 250 million then Bill Gates accounts for .000000004% of the population. In proportion he owns the same amount as the combined wealth of 100 million people.

Lets just think what that means. If Bill Gates decided to spend all that money. He alone could command as much of the United States output as the bottom 100million people of the population, or put another ay 100 million times what the average person owns. Whatever the average person in the US States decided to buy Bill Gates alone could buy 100 million of them as easily. A look at the similar wealth of the other people on the list given gives some idea of how a handful of people can command more of the output of the US as the rest of the population put together. Yet according to the ideologists of capitalism it can only work as an efficient economic system if no single individual or small group can influence demand or supply acting alone.

The situation does not look much better if you simply look at income rather than wealth. According to the Economist the top 1% of income earners accounted for 20% of all income earned. In other words if this top 1% spent all their income, which, given they probably have considerable wealth too, they probably could, then they would be able to command 20% of everything produced. Again to put that in context the income of this top 1% is nearly 25 times the average income of every one else, and as the article states is equal to 189 times that of the bottom fifth. And again as with wealth even within this top 1% the figures are skewed towards the top. As the article points out the pay of the 100 top Chief Executives is more than 1,000 times that of the average worker.

The attempt to get ordinary workers to work more hours, and to work themselves into an early grave before they can enjoy the pension they have paid into all their life needs to be taken in the context of this grotesque distribution of income and wealth. There is absolutely no problem paying for a larger number of pensioners living longer in retirement on better pensions. All that is required is to change the allocation of resources away from that top 1%, to meet the needs of the bottom 90%.

Sources:

The Economist

Sutton Trust

Wealth in the US

Arthur Bough