What They Gain, What We Lose

Book review of
The People’s Pension: The Struggle to Defend Social Security Since Reagan
By Eric Laursen, published in 2012 on AK Press.

Review by Michelle O’Brien

This is a longer version of a review that appeared in The Indypendent this last Wednesday, July 24 2012. In it, O’Brien praises Laursen’s thorough historical account of the attack on Social Security, and points towards an analysis of the underlying economic rationale of austerity.

Posted with the permission of the author, and The Indypendent.

In the tumultuous political battles of the Great Depression, socialists and radicals faced the severe economic crisis and declared the system unworkable and in basic conflict with human needs. Pushed by massive social movements and disruptive strikes, U.S. business and government elites were forced to implement a series of major programs to ease the brutality of life under capitalism. As one such program, Social Security offered an alternative vision of reformed capitalism: all workers deserved to retire in relative comfort, all workers deserved to be paid past the years they could work. The program linked benefits to the wage of workers and the years they worked. This design both reproduced inequality between workers and created a widespread sense of entitlement to benefits that would bolster the program public support in decades ahead.

Eric Laursen’s The People’s Pension begins nearly half a century later, with the emergence and growth of a coordinated movement to attack Social Security. Since the election of Ronald Reagan in 1980, conservative politicians, think tanks and foundations have waged a steady battle to discredit and undermine the program. They have aggressively pushed proposals to cut, privatize or dramatically transform Social Security. A broad social movement emerged to defend Social Security, led by labor unions and associations of senior citizens. With the program’s broad popularity among the American public, this social movement has managed to stop the massive overhauls of the program pushed by Republicans and right-wing Democrats.

The People’s Pension covers in minute detail the specific politicians, lobbyists, and groups that organized against Social Security. Laursen describes the content, development and, usually, defeat of each regressive reform proposal over three decades. The book is massive: 818 pages, over two inches thick, and exhaustively detailed in his narrative. Despite the book’s subtitle—“the struggle to defend Social Security since Reagan”—the book gives significantly more weight to the debates and actions of politicians than the organizations and social forces shaping the debate, and far more attention to conservative opponents to the program than its liberal defenders. The book offers exhaustive coverage of rightwing lobbyists and politicians, but much less about what was happening outside of Washington, or even why it was happening. While largely reportorial, Laursen includes analytical insights throughout. These I analyze and critique more below.

Written by an independent journalist and distributed by an anarchist publisher, the research and work of The People’s Pension is remarkable. Laursen’s thousands of hours compiling this extensive history and organizing it into a coherent, readable narrative is a gift to activists and scholars alike. For academic researchers on the politics of welfare states or grassroots movement organizers, Laursen offers a substantial window into how our rightwing enemies organize to roll back social programs, undermine the standard of living of the working class, and expand corporate political power.

Laursen consistently and thoroughly demonstrates that Social Security, despite conservative rhetoric, is not broken, not about to go bankrupt, and not necessarily in need of a massive overhaul. Right-wing critics insist privatization will reap major benefits, or that the program is need of immediate cuts. Neither assertions is necessarily true; these arguments are consistently based on misleading information, exaggeration and selective framing. Social Security is a remarkably well-functioning program that has rightfully won the appreciation of the American public. Laursen writes:

Social Security had by 1980 evolved into the most successful antipoverty program in U.S. history . . . Its constituency made up 96% of the working population. Elderly women and people of color were now among the groups relying most on Social Security. Without Social Security benefits, the poverty rate among the African-American elderly, by 1997, would have been 59.9% instead of 29.1%, while 52.6% of women would have been poor instead of 14.7% (P. 20)

Laursen is particularly astute in his extensive analysis of the hype around generational rivalry. Conservative opponents of Social Security have often framed their attacks on the program in a language emphasizing competition between generations. “Greedy geezers”, in these narratives, are stealing the wealth of today’s workers. Young workers now, these conservative commentators insist, will face the program becoming bankrupt long before receiving benefits. Factually inaccurate—modest tax increases could keep the program functioning—this rhetoric emphasizes generational divides to promote fear and reactionary politics. Critics use generational rivalry arguments of “Generational accounting”, fake membership organizations of “Generation Xers”, and language labeling Social Security as a “ponzi scheme” or “pyramid scheme” to discredit the program among young professionals and drive a generational wedge in American politics.

The widespread prevalence of media rhetoric on generational divides in American culture goes largely unnoticed on the left. Laursen’s astute critique of hyped generational rivalries as a deliberate, right-wing political strategy to undermine Social Security points the way towards a strategic left politics of cross-generational solidarity. Social Security, Laursen convincingly argues, should be heralded as a system of solidarity and care between generations. The recently launched national campaign “Caring Across Generations” bears exactly this crucial insight. In line with generations of Marxist-Feminists looking to expand and transform our notion of caring labor and through struggles by social workers, social service and medical care providers and recipients, this vision of cross-generational caring as a basis of organizing for policy victories can provide a substantive advance for the left.

In his closing chapter, Laursen takes an admirable stab at presenting the relevance of anarchist concepts of mutual aid and popular direct democracy for bolstering the movements to save Social Security and public benefits. Drawing on the thinking of French radical philosopher Michel Foucault, Laursen writes on how state bureaucracies distance people from identifying with and defending social benefits. Social security is a “huge centralized machine” (Foucualt, quoted in Laursen, p. 712), frozen through “a sort of sterilization” that keeps

Them from evolving to serve the new needs of their participants, many of whom would be encourage to hunker down and protect what they had rather than advocating to enhance and extend it to other, less advantaged groups (p. 712).

Social Security, in Laursen’s analysis, suffers from its control by technocratic bureaucrats, who compound a “decisional distance” (p. 711) between the program’s recipients and its administrators.

Extending this critique, Laursen calls for a radical democratization of Social Security. Labor unions, community organizations, credit unions, workplace affinity groups or collectives, people would collaboratively and democratically decide how to invest the public pension funds of Social Security for the collective good, including to “develop sustainable agricultural and industrial economies on a regional, local or even neighborhood level, the proceeds going to support health care, housing, and a guaranteed adequate income for the elderly” (p. 718). This would create a renewed “sense of ownership” for workers and the public, leading to a robust defense of the program.

This vision of a democratic, decentralized, anti-bureaucratic socialism is one few reasonable radicals could object to. Laursen shows that anarchist theory and politics has something to offer to welfare state debates and movements in defense of public benefits. Anarchist theory and movements rarely appear in left debates on welfare politics—not least because of the obvious centrality of the government as the provider of public benefits like Social Security—yet Laursen makes an admirable contribution to the debate through an Anarchist lens.

It is less clear, however, that Laursen’s charge of bureaucratic “decisional-distance” is the root of the problem. If bureaucratic isolation is not the core issue facing Social Security, radical administrative democratization might defend the program against the right-wing assault. The mountain of evidence in The People’s Pension is not pointed towards the dangers of bureaucratic isolation. The attack on Social Security was a deliberate strategy developed and pursued by wealthy donors and powerful conservative political strategists. These conservative foundations and think tanks have consistently kept Social Security “reform” in the media limelight and on the agendas of national politicians, including every president since Carter, even as their proposals have often been roundly defeated. Opposition to Social Security was neither a grassroots groundswell, nor a top-down bureaucratic maneuver. He shows instead, through the book’s extensive empirical material, that the campaign against Social Security was coordinated and pushed by a network of corporate-funded right-wing think tanks and foundations. Influencing public opinion was one step of a multi-dimensional campaign.

Laursen’s empirical account testifies to the enormous pressure from the capitalist elite to dismantle and privatize Social Security. Shifting decision-making power away from bureaucrats might undermine corporate control, or it might bolster it. Evidence from other instances of decentralization suggest that capitalist elites could assert and expand control through the process. The growth of corporate-linked charter schools is one of myriad examples of private corporate industries and bureaucratic decentralization going hand-in-hand. Decentralization of Social Security could inadvertently hand over control to corporate elites.

It is crucial to understand, then, why have conservatives put so much work into attacking such a popular program? Laursen attributes these attacks to a combination of self-interest and ideology, but is consistently vague about what business elites really have to gain from undermining social security. He alludes to a couple of important explanations, including fear of future taxes and the potential windfall of investment fees for the financial services industry if Social Security is privatized, but the book fails to show the material stakes businesses and the wealthy have in attacking social security. The attack came first not from financial services firms, but from a broader network of business interests.

I argue that understanding the reasons Social Security has come under such a prolonged attack—what, exactly, business elites have to gain from undermining the program—is crucial to evaluate the strategies to defend or expand the program. Laursen’s occasional off-handed (and thoroughly off-topic) attacks on Communists and Marxist-Leninists here cripple his analysis, because it is precisely from current Marxian analysis we can find the tools to explain what business elites have to gain in attacking Social Security.

Laursen starts us off well with a distinction between those seeking to cut Social Security—called “the Pain Caucus” or “deficit hawks”—and those pushing privatization. The book extensively covers both efforts. Sometimes these two efforts overlap in the people involved, but are distinct strategies and goals.

Those pushing for cuts to Social Security share their efforts with a broader politics of austerity. “Austerity” is an umbrella term for efforts by business and government elites to get out of economic crisis by making working people pay. Employers push for austerity through driving down wages, attacking labor unions, undermining worker protections, and reorganizing production to reduce workers needed, all to increase the profits they get from their employee’s work. In the public sector, austerity also means attacking the social wage—those programs that help working people and poor people survive even when their wages are low, like education, social services, or welfare benefits. By pushing down both work wages and the social wage, business elites lower the standard of living of working people and the poor, and raise the total share of wealth going towards profits.

In an economic crisis, like in the mid-1970s and today, business elites as a whole aggressively pursue austerity to get back to earning high profits. Anwar Shaikh, in his article “The First Great Depression of the 21st Century”, shows how profit rates would have continued to fall after the mid-1970s economic recession had the burden of economic crisis not come out of preventing wages from rising as high as inflation. Shaikh argues the underlying causes of the mid-1970s economic crisis never actually went away, but became a permanent and prolonged condition. What was an emergency measure in nearly forty years ago has evolved into an ongoing and deepening policy of social austerity. “Why Austerity Makes Sense for Capitalism,” Charlie Post builds on Shaikh’s argument to demonstrate how austerity is a rational, logical and crucial strategy for capitalists to address the current economic crisis. Austerity—and although neither Shaikh nor Post elaborate on this, we can assuredly add attacks on the social wage—forces poor and working people to carry the brunt of economic crisis.

The efforts to reduce Social Security benefits come directly out of a coordinated effort by the business elites in the 1970s to lower the social wage. In Kim Moody’s book An Injury to All, he documents the growth of a coordinated, class-based business assault on labor unions, welfare, and public benefits. In organizations like the Business Rountable (and later through the conservative foundations and think-tanks Laursen documents), corporate elites intensified a deliberate political and economic campaign to make poor and working people pay, and to shift political power into corporate hands. In this context, the remarkable thing about Social Security is how well it has persevered the last forty years of the business offensive.

Efforts to privatize Social Security have a different logic. In privatization schemes, the total amount available to retirees might be higher, or it might be lower, depending on how the stock market does. Privatization, rather than being a means of decreasing the social wage, would increase the total amount of capital available on the stock market. Currently, any surplus in Social Security goes towards buying government Treasury Bonds. In privatization schemes, this money would be invested in individual accounts through a combination of bonds and stocks. Suddenly having 150 million new small stockholders would be a huge windfall for all business elites. Privatization of Social Security would both 1) increase the amount of capital available to corporations, and 2) increase the value of stocks currently in the hands of investors. Privatization might mean lower payroll taxes for employers, as was the case when privatization was pushed through in Chile. For major Wall Street investors, it can be tremendously profitable to increase the ratio between naive investors and savvy investors. Investors who don’t closely follow the market or have access to the latest information—like workers holding newly privatized Social Security accounts—are more likely to be stuck with big losses when the market dips. The more such naive investors on the stock market, the easier it is for smart investors to avoid getting stuck with market losses.

In “Turning Labor into Capital,” Mike McCarthy documents the grim history throughout the 20th century of labor unions, under government and corporate pressure, ceding control of the investment of their pension funds. Radicals have occasionally pointed out the absurdity of labor union pension funds investing in those very corporations that are attacking their own workforce with layoffs and union-busting. Union pension funds are a massive body of capital, and could potentially be used to revitalize green industries, much like Laursen suggests with Social Security. This is far from the case. The efforts to privatize Social Security continue and expand a political campaign successfully won at the expense of union power. Union funds are overwhelmingly legally bound to invest where there is the highest return, and especially the major U.S. Corporations that have led the attack on labor–exactly mirroring the profit-centered logic of all capitalist investors.

Both austerity cuts to Social Security and privatization have a rational economic logic for business elites. These attacks on the program are a direct result of the organized offensive launched by business elites in the 1970s continuing to today, to get out of financial crisis through transforming government policy. This has major implications for the strategies we use to defend and expand Social Security. Laursen’s vision of a democratic, socialist management of capital is admirable and worth fighting for. That fight must undermine the power, not primarily of bureaucrats, but the corporate elites driving this assault on Social Security. Depending on the moment and our political strategies, the Social Security Administration might or might not be allies in that fight. With enough political pressure, the SSA could recognize their jobs depend on maintaining and expanding the program.

Undermining corporate power, as the Occupy movement recently discovered, is far from easy. Laursen would no doubt agree with many of my prescriptions. We must rebuild the labor movement through direct organizing, democratize currently existing unions through rank and file organizations of workers themselves, and link and build the array of community organizing efforts across the U.S. We must forge mass, militant movements that directly challenge and disrupt the accumulation of profit and wealth, and redistribute the social surplus. In the midst of this prolonged economic crisis, we must aggressively pursue economic and political goals that make the banks and corporate investors pay the costs of economic recovery. We must build and expand the power of poor people and labor at the expense of corporate power. The struggle for political democracy is inseparable from the struggle to wrest economic power away from business elites.

References

McCarthy, Michael. (2012). “Turning Labor into Capital: The Politics of Union Pension Fund Investment in America 1945-1985.” Unpublished manuscript.

Moody, Kim. (1988). An Injury to All: The Decline of American Unionism. Verso: New York, NY.

Post, Charlie. (2012). “Why Austerity Makes Sense for Capitalism,” lecture at the Solidarity Midwest Regional Crisis School. Available online at http://www.solidarity-us.org/site/node/3568.

Shaikh, Anwar. (2010). “The First Great Depression of the 21st Century.” Socialist Register 2011. Monthly Review Press, New York: NY.

Special thanks to Mike McCarthy, Charlie Post, Jessica Schirmer and John Clegg for their advice and feedback on my argument.

 

About Michelle O’Brien

Michelle O’Brien is a graduate student in the Department of Sociology at New York University, studying the politics of welfare. She is a longtime organizer in HIV/AIDS and tenant struggles, and today is active with the New York City Radical Social Work Group.


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