What is a commodity?

[Dennis R Redmond]

On Thu, 31 Jul 1997, H. Curtiss Leung wrote:

>         One comment/question regarding pension funds: they may be deferred
> wages to the worker, but once invested in markets, don't they function in
> the same way as rentier capital, i.e., pension fund managers want the same 
> investment performance as well-heeled speculators do, and condone
> or even encourage the same corporate behavior -- layoffs, cutbacks, 
> et cetera?  This leads to an economic antagonism between the older
> segment of the population, who now identify with rentier interests,
> and the younger, who see their economic opportunities cut off by
> market-driven corporate behavior.  Wouldn't this antagonism persist
> even given worker-controlled companies and government-directed pension 
> investments?

Very true. In Sweden, the Left tried to use pension funds to buy out
corporate shares and de factor "socialize" various multis -- which didn't
work, because of course there's no buyer without a seller, and for all
their talk of the free market, capitalists will not voluntarily give up
their monopoly over real collective ownership. They'd have been
better off just nationalizing the properties and telling the Wallenbergs
(Sweden's version of the Rockefellers/Morgans) what the Wallenbergs
are always telling their workforces: that progress always demands
sacrifices. Probably the Left should make it a long-term goal
to de-speculatize what are basically workers' savings, i.e. the money
ought to be channeled into Government bonds and other long-term
instruments rather than short-term speculation.

There is a precedent for this. Countries which have grown quickly in late
capitalism have done exactly that: in Japan, pensions are mostly invested
in Government bonds and long-term securities. In Singapore, 
a very crafty, ruthless and authoritarian state practiced "socialism with
a small 's'" by using pensions to buy American T-bills and similar
"good-as-gold" instruments, i.e. as collateral to finance a very
intelligent and forward-looking industrial policy. In Switzerland, France
and Germany, the pension system is a pay-as-you-go, which means Government 
debt finances the whole thing (nominally free-market Switzerland also has
a great deal of internal redistribution: the rich pay into a national
scheme and get less than the poor). Net result: Europe/Japan have adequate
savings to institute rip-roaring deficit finance packages. Germany is
running deficits of 3.5% GDP, Japan of 4.5% GDP -- numbers which would
give Bob Rubin a heart attack, but which explain why German/Japanese per
capita GDP is now 10-20% higher than America's. Late capitalism needs
state debt like mercantilism needed gold.

Only in pathetic, broken-down, decaying Britain and America are pensions
practically wards of speculative finance capital. Somewhere around 26% of
all equities are owned by pension funds, according to the Federal
Reserve's flow of funds report, and of course much of the money flowing
into mutual funds is intended to be a nest egg as well. Needless to say, 
when Bubbleland a.k.a. Wall Street finally takes that long-deserved bath,
guess who's going to end up with the soap scum? 
 
As far as Kenneth's critique of having the state administer pensions:
you're correct, technocrats aren't necessarily better than rentiers when
it comes to disposing of the social surplus. And socializing pension
funds doesn't automatically mean that the surplus will be
invested in real social needs rather than toxic strip-malls. Still,
pension fund assets run into the several trillion dollars worldwide, and
with the aging of the First World population, we ought be thinking
through these issues and mapping out strategies for the decades to come.

-- Dennis