“The really fascinating battles in intellectual history tend to occur when some group or movement goes on the offensive and asserts that Something Big really doesn’t actually exist.”

So says Philip Morowski in his book ‘Never Let a Serious Crisis Go To Waste: How Neoliberalism Survived the Financial Meltdown’. As Mirowski argues, neoliberalism is a particularly fascinating case in point. Just as Thatcher asserted there was ‘no such thing as society’, it’s common to find economics commentators asserting that there is ‘no such thing as neoliberalism’ – that it’s simply a meaningless insult bandied about by the left, devoid of analytical content.

But on the list of ‘ten tell-tale signs you’re a neoliberal’, insisting that Neoliberalism Is Not A Thing must surely be number one. The latest commentator to add his voice to the chorus is Sky Economics Editor Ed Conway. On the Sky blog, he gives four reasons why Neoliberalism Is Not A Thing. Let’s look at each of them in turn:

1. It’s only used by its detractors, not by its supporters

This one is pretty easy to deal with, because it’s flat-out not true. As Mirowski documents, “the people associated with the doctrine did call themselves ‘neo-liberals’ for a brief period lasting from the 1930s to the early 1950s, but then they abruptly stopped the practice” – deciding it would serve their political project better if they claimed to be the heirs of Adam Smith than if they consciously distanced themselves from classical liberalism. Here’s just one example, from Milton Friedman in 1951:

“a new ideology… must give high priority to real and efficient limitation of the state’s ability to, in detail, intervene in the activities of the individual. At the same time, it is absolutely clear that there are positive functions allotted to the state. The doctrine that, one and off, has been called neoliberalism and that has developed, more or less simultaneously in many parts of the world… is precisely such a doctrine… But instead of the 19^th century understanding that laissez-faire is the means to achieve this goal, neoliberalism proposes that competition will lead the way”.

You might notice that as well as the word ‘neoliberalism’, this also includes the word ‘ideology’. Remember that one for later.

It’s true that the word ‘neoliberalism’ did go underground for a long time, with its proponents preferring to position their politics simply as sound economics than to admit it was a radical ideological programme. But that didn’t stop them from knowing what they stood for, or from acting collectively – through a well-funded network of think tanks and research institutes – to spread those ideas.

It’s worth noting that one of those think tanks, the Adam Smith Institute, has in the last couple of years consciously reclaimed the mantle. Affiliated intellectuals like Madsen Pirie and Sam Bowman have explicitly sought to define and defend neoliberalism. It’s no accident that this happened around the time that neoliberalism began to be seriously challenged in the UK, with the rise of Corbyn and the shock of the Brexit vote, after a post-crisis period where the status quo seemed untouchable.

2. Nobody can agree on what it means

Well, this one at least is half-true. Like literally every concept that has ever mattered, the concept of ‘neoliberalism’ is messy, it’s deeply contested, it has evolved over time and it differs in theory and practice. From the start, there has been debate within the neoliberal movement itself about how it should define itself and what its programme should be. And, yes, it’s often used lazily on the left as a generic term for anything vaguely establishment. None of this means that it is Not A Thing. This is something sociologists and historians instinctively understand, but which many economists seem to have trouble with.

Having said this, it is possible to define some generally accepted core features of neoliberalism. Essentially, it privileges markets as the best way to organise the economy and society, but unlike classical liberalism, it sees a strong role for the state in creating and maintaining these markets. Outside of this role, the state should do as little as possible, and above all it must not interfere with the ‘natural’ operation of the market. But it has always been part of the neoliberal project to take over the state and transform it for its own ends, rather than to dismantle or disable it.

Of course, there’s clearly a tension between neoliberals’ professed ideals of freedom and their need for a strong state to push through policies that often don’t have democratic consent. We see this in the actions of the Bretton Woods institutions in the era of ‘structural adjustment’, or the Troika’s behaviour towards Greece during the Eurozone crisis. We see it most starkly in Pinochet’s Chile, the original neoliberal experiment. This perhaps helps to explain the fact that neoliberalism is sometimes equated with libertarianism and the ‘small state’, while others reject this characterisation. I’ll say it again: none of this means that neoliberalism doesn’t exist.

3. Neoliberalism is just good economics

Neoliberalism may not exist, says Conway, but what do exist are “conventional economic models – the ones established by Adam Smith all those centuries ago”, and the principles they entail. That they may have been “overzealously implemented and sometimes misapplied” since the end of the Cold War is “unfortunate”, but “hardly equals an ideology”. I’m sure he’ll hate me for saying this, but Ed – this is the oldest neoliberal trick in the book.

The way Conway defines these principles (fiscal conservatism, property rights and leaving businesses to make their own decisions) is hardly a model of analytical rigour, but we’ll let that slide. Instead, let’s note that the entire reason neoliberal ideology developed was that the older classical “economic models” manifestly failed during the Great Depression of the 1930s, leading them to be replaced by Keynesian demand-management models as the dominant framework for understanding the economy.

Neoliberals had to update these models in order to restore their credibility: this is why they poured so much effort into the development of neoclassical economics and the capture of academic economics by the Chicago School. One of the great achievements of neoliberalism has been to induce such a level of collective amnesia that it’s now once again possible to claim that these tenets are simply “fundamental economic rules” handed down directly from Adam Smith on tablets of stone, unchallenged and unchallengeable in the history of economic thought.

In any case, even some people that ascribe to neoclassical economics – like Joseph Stiglitz – are well enough able to distinguish this intellectual framework from the political application of it by neoliberals. It is perfectly possible to agree with the former but not the latter.

4. Yes, ‘neoliberal’ policies have been implemented in recent decades, but this has been largely a matter of accident rather than design

Privatisation, bank deregulation, the dismantling of capital and currency controls: according to Conway, these are all developments that came about by happenstance. “Anyone who has studied economic history” will tell you they are “hardly the result of a guiding ideology.” This will no doubt be news to the large number of eminent economic historians who have documented the shift from Keynesianism to neoliberalism, from Mirowski and Daniel Stedman-Jones to Robert Skidelsky and Robert Van Horn (for a good reading list, see this bibliographic review by Will Davies.)

It would also be news to Margaret Thatcher, the woman who reportedly slammed down Hayek’s ‘Constitution of Liberty’ on the table at one of her first cabinet meetings and declared “Gentlemen, this is our programme”; and who famously said “Economics is the method; the object is to change the soul”. And it would be news to those around her who strategized for a Conservative government with carefully laid-out battleplans for dismantling the key institutions of the post-war settlement, such as the Ridley Report on privatising state-run entities.

What Conway appears to be denying here is the whole idea that policymaking takes place within a shared set of assumptions (or paradigm), that dominant paradigms tend to shift over time, and that these shifts are usually accompanied by political crises and resulting transfers of political power – making them at least partly a matter of ideology rather than simply facts.

Whether it’s even meaningful to claim that ideology-free facts exist on matters so inherently political as how to run the economy is a whole debate in the sociology of knowledge which we don’t have time to go into here, and which Ed Conway doesn’t seem to have much awareness of.

But he shows his hand when he says that utilities were privatised because “governments realised they were mostly a bit rubbish at running them”. This is a strong – and highly contentious – political claim disguised as a statement of fact – again, a classic neoliberal gambit. It’s a particularly bizarre one for an economist to make at a time when 70% of UK rail routes are owned by foreign states who won the franchises through competitive tender. Just this week, we learned that the East Coast main line is to be temporarily renationalised because Virgin and Stagecoach turned out to be, erm, a bit rubbish at running it.

***

It may be a terrible cliché, but the old adage “First they ignore you, then they laugh at you, then they fight you, then you win” seems appropriate here. Neoliberalism successfully hid in plain sight for decades, with highly ideological agendas being implemented amidst claims we lived in a post-ideological world. Now that it is coming under ideological challenge, it is all of a sudden stood naked in the middle of the room, having to explain why it’s there (to borrow a phrase from a very brilliant colleague).

There are a number of strategies neoliberals can adopt in response to this. The Adam Smith Institute response is to go on the offensive and defend it. The Theresa May response is to pay lip service to the need for systemic change whilst quietly continuing with the same old policies. Those, like Ed Conway, who persist in claiming neoliberalism doesn’t even exist, may soon find themselves left behind by history.

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The Universities Superannuation Scheme (USS) strikes are over – for now – after staff voted to accept a new offer from Universities UK. UUK has professed its commitment to maintaining a defined benefit (DB) scheme, and has agreed to reopen talks on the controversial scheme valuation. This is a victory for striking staff, and marks a significant shift from its belligerent insistence that DB was unaffordable. But the story is far from over: this is just a staging post on the way to finding a solution that meets the strikers’ concerns. As many have pointed out, it’s crucial that university staff don’t demobilise and that their supporters keep a watchful eye on proceedings.

As I’ve argued before, the USS strikes have shone a light on failings in our pension system which stretch far beyond our universities. I’m not going to rehearse these here (if you’re new to the world of pensions, it might be worth reading my previous piece for openDemocracy as a quick primer on how the system works at the moment). TL;DR: our pensions are highly financialised, highly privatised and highly marketized. The shunting of risk onto individuals which UCU members were fighting is already a reality for most of us. Unsurprisingly, this system is currently delivering pretty great outcomes for the City of London and pretty terrible outcomes for almost everyone else.

But this isn’t another piece about the problems with our pension system. This is about finding solutions. Whether we’re focussed on getting a good deal for USS members, on turning this dispute into the catalyst to demand bigger change, or on policy thinking for a radical government – it’s urgent that we start developing serious alternatives to business-as-usual. From public banking to municipal energy companies to community wealth building, there’s an exciting resurgence of new thinking on the economy which offers real alternatives to neoliberalism. But so far, pensions have been largely exempt from this. That needs to change, and fast.

I don’t pretend to have all the answers – there’s a dearth of creative thinking on this subject that will take time to fill, and I’d love to hear from people who are keen to work on it. But here’s a starter for ten, bringing together some of the best ideas I’ve come across – be they models we know work in other countries, or more radical ideas which fundamentally undercut the assumptions of today’s private pension systems, both here and abroad.

1. Stronger universal entitlements

The UK’s state pension is one of the least generous in the developed world – on some measures, the lowest in the OECD – yet is still the most important source of income for many households, especially those who can’t rely on a generous private pension. Historically, we’ve relied on employers acting out of their enlightened self-interest to provide employees with good pensions to plug this gap. This worked OK for a while, but in recent decades a toxic combination of growing workplace precarity and the explosion of financialisation has ripped the guts out of our workplace pension system. Auto-enrolment was designed to fix this mess, but has largely tried to do so with the same thinking that created it. We arguably need a more fundamental rethink, adjusting the balance between private saving and universal entitlements to something closer to that in, say, France and Germany.

Of course, raising the state pension is hugely expensive, particularly as the population ages. Strengthening universal entitlements through the existing state pension system would require significant tax raises. In this context it’s worth noting that tax relief on private pensions – which costs about £25bn a year – is widely acknowledged to be regressive, since it disproportionately benefits those who can afford to save a lot. Reforming pensions tax relief should definitely be on the table as part of a progressive fiscal policy – though it’s unlikely to be sufficient on its own.

Some argue that we need a more fundamental rethink of our approach to welfare. Pension systems are all about using the wealth generated by working people to support those who can no longer afford to work. But advocates of Universal Basic Income are questioning that logic at a deeper level, suggesting that it may not hold up in an age of increasing automation. UBI could in theory subsume the state pension – though it’s unclear whether it could be affordable at a level that would significantly improve on the current state of affairs (most models of UBI still have to be funded out of tax revenues).

But are there other ways we could fund universal entitlements (whether for pensioners or for everybody)? One promising idea is to create Social Wealth Funds, ideally capitalised using revenue generated by common resources – such as public land, the extraction of natural resources, or even intellectual property rights for advances which depend on publicly funded research. The Norwegian Oil Fund offers a precedent for using this approach to fund pensions (and also happens to be a global leader on socially responsible investment), while the Alaska Permanent Fund offers a precedent for a universal ‘citizen’s dividend’ (albeit at a much lower level).

2. Democratic, not-for-profit workplace pension provision

Of course, the USS dispute is about workplace pensions – and indicates a wider trend of employers increasingly wanting to offload their responsibility for pensions as deferred pay, and transition to ‘defined contribution’ (DC) arrangements which push risk onto the individual. For most of us, this is already a reality. Demanding a revival of genuine pension arrangements, which pool risk and share it more fairly, has to be a priority. There’s been a lot of interest lately in the Dutch model of ‘collective defined contribution’, a sort of half-way house between DB and DC. But I’d sound two notes of caution about this.

Firstly, without significant pressure from pension savers and social movements, this model is more likely to be used as a way to ‘level down’ existing DB provision than to ‘level up’ DC. As a way of creating counter-pressure on this, movements could demand that the government-backed NEST scheme be converted from DC to CDC, as Craig Berry has suggested. Secondly, CDC works in the context of a whole host of other features of the Dutch system – features it shares with other pension systems such as the Danish and Australian ones. Introduced as part of a wider package of reforms, it could help transform the UK landscape. Bolted on to our existing privatised and marketized model, it could simply serve to accelerate the erosion of what’s left of DB and create new opportunities for City capture.

So what are these features of other systems that the UK lacks? In essence, they involve a bigger role for large-scale, democratically owned and run, not-for-profit pension schemes which are directly accountable to their members – and a smaller role for shareholder-owned commercial insurance companies, which are fast becoming the norm in the UK. These schemes are generally organised at a sectoral level, and are tightly bound up with sectoral collective bargaining arrangements – for instance, trade unions play a key role in organising member voice within pension schemes. Emulating this model in the UK would therefore ideally need to be part of a wider shift in the economy and industrial relations, as many on the left are already advocating.

There’s good evidence that these models reduce opportunities for rent extraction by financial intermediaries and produce better outcomes for savers and society. In Australia, all workplace pensions must be run by a board of trustees, although not all must be non-profit. The Australian system as a whole appears to deliver better outcomes than the UK system, and within this, non-profit schemes (which combine a different business model with more equal representation for savers on their boards) appear to deliver better returns to savers than for-profit ones. The Dutch system produces vastly superior pension outcomes to the UK – a fact often attributed to the CDC model, but which can also plausibly be put down to its more democratic ownership and governance arrangements.

NEST is comparable to these schemes (although it is DC) – but its role in the new system of automatic enrolment was pared back from the original plans after insurance industry lobbying. Instead, many of our pensions will be nothing more than a contract between us and an insurance company. In the same way that we hand over our data to Facebook by ticking ‘I agree’, we become parties to contracts with our pension providers that we generally have no say over and no clue of the implications. Worse, unlike a trust-based pension scheme, the insurer has no strict legal duty to put our interests first (known as ‘fiduciary duties’) – indeed, it has a clearly conflicting legal duty to prioritise returns to its shareholders. This fiction of contractual consent, which enables abuse of power in broken markets, needs to be challenged in pensions just as much as it does in tech.

A recent Law Commission report concluded that “there are serious problems with the law relating to contract-based pensions, particularly in an auto-enrolment context” yet very little has been done. This is perhaps unsurprising: imposing strict fiduciary duties on insurance companies would completely trash their business models, probably requiring them to split their asset management arms from their pension provision, and perhaps even rendering the shareholder-owned model unsustainable. It would also be inconsistent with the idea of a contractual relationship between insurer and saver – even though this is little more than a legal fiction.

Yet this is precisely why the imposition of such duties is such a good, even necessary, idea. Contract-based pensions as currently designed are a dangerous racket that should have no place in a progressive pension system. If it is not possible to impose a more muscular legal and regulatory regime to protect savers, then they should be barred from providing auto-enrolment pension schemes altogether. In the UK context, this may sound radical – but as we’ve already seen, other countries have no qualms about specifying what kinds of institution are and are not fit to look after our pensions. By transitioning our workplace pension system to the kinds of democratic, not-for-profit model proven to work elsewhere, we would be leaving behind a disastrous neoliberal experiment and entering the mainstream.

Of course, as the USS debacle shows, these trust-based models are not a panacea. This recent analysis of the make-up of the USS board illustrates a wider problem: the people running our pensions tend to be selected for their investment expertise and are therefore deeply intertwined with the City establishment. They’re also barely accountable to the members they exist to serve. By contrast, evidence suggests that Dutch pension schemes have a culture of driving a harder bargain with asset managers – perhaps because trustee boards tend to be more representative of members’ interests and less dominated by City ‘experts’. Active steps therefore need to be taken to reverse the capture of our pension institutions by the City. Enhanced member representation and participation rights, as in the Danish system (along with better training), and an overhaul of senior personnel at the regulators, could be a good start.

It’s worth noting that this entire agenda will require huge amounts of political will and political capital, since the insurance and asset management industries will vigorously resist it. The current system is worth billions to them, and shifting from a marketized to a democratised workplace pension set-up would seriously hit both their power and their profits. They have kaiboshed much, much milder reforms in the past, and are very used to getting their way even at the cost of massive detriment to savers. Add to this the complexity of the pensions system, and the opportunities for regulatory capture this produces, and it’s clear that a radical incoming government will need a fully worked-through policy agenda on Day One – and a strong, well-informed movement behind it – if it’s to genuinely reset our pension system. 

3. New ways of investing: looking under the bonnet

All the models we’ve discussed so far (apart from state pensions funded directly from taxation) still depend on the global financial markets to produce returns. In DB pension funds, the aim is to keep assets and liabilities balanced as money comes in through returns on accrued contributions and goes out through pension payments. In DC, the aim is simply to maximise the returns on the individual saver’s pot, which is then converted into an annuity (a financial product giving an annual income) at retirement. In Social Wealth Funds, the aim is to fund citizen entitlements out of the investment returns without eating into the principle (the underlying cash pile). Though the details differ, in all three cases, the returns are being generated through investing in tradeable financial assets such as equities and bonds. In this sense, all of these models are dependent on the financial markets – and thus on the decisions of investment managers.

Pensions policymakers tend to avoid looking ‘under the bonnet’ at the engine that actually generates the returns we rely on. If they did, it probably wouldn’t pass its MOT. Capital markets remain hopelessly short-termist and are a formidable machine for producing instability and inequality. We’re still much less good at managing the risks they produce than the City would like us to think. And, whether for economic or ecological reasons, there are genuine questions over whether they can keep delivering the levels of growth seen in the past. It’s therefore worth asking whether there are better ways of investing our common capital that are more democratic and less market-based.

The least radical (though not necessarily the easiest) approach would be to regulate capital markets for more long-term and sustainable investment. Suggestions I’ve seen include minimum holding periods for shares; financial transaction taxes to discourage speculative trading or ‘churning’ of portfolios; and banning or restricting ‘financial WMDs’, like certain kinds of derivatives. These approaches would be market-wide, but we could also rethink the regulations that apply specifically for pension funds, for instance by introducing caps on the level of portfolio churning, requirements to take climate change into account, or restricting particular ‘toxic’ investments, such as fossil fuels.

More fundamentally, we could seek new ways for pension funds to invest directly in socially useful activity. Pension funds could become sources of direct investment in public infrastructure, such as social housing or renewable energy generation, that delivers a stable long-term return. IFM, an investment manager owned by Australia’s not-for-profit pension funds, has pioneered ‘unlisted’ investments in infrastructure. In the US, the Capital Institute has proposed Evergreen Direct Investment, a model based on legal partnerships between individual companies and investors that sidestep the equity markets. In the UK, local authority pension funds in places like Strathclyde and Manchester have pioneered investments in local social housing and small businesses.

One proposal for scaling up this kind of activity is through state-sponsored national and local ‘economic renewal funds’, with pensions tax relief made conditional on pension funds contributing a certain minimum allocation to these funds. Another approach would be for pension funds to buy bonds which help capitalise a National Investment Bank (like the recently announced Scottish National Investment Bank), which would then lend in the pursuit of social and environmental missions. These approaches have the advantage of making it easier to preserve public ownership of public infrastructure – a risk when it comes to encouraging private pension funds to invest in infrastructure on their own behalfs, rather than via public or quasi-public institutions.

Towards a democratic future for pensions

There’s a huge amount of work still to be done, but I hope this sketch shows that there are real alternatives to our broken pension system. In fleshing these out into an agenda for change, we need to continually ask the basic questions about how we want our pension system to work. Where should the money come from to provide us with an income in old age? What kind of institutions do we want looking after this money, and who should they be accountable to? What is the economic model by which this money gets translated into a pension payout? And how do these payouts get shared out so as to fairly share the risks of old age?

Pensions can be hard to man the barricades for, but the USS strikes have shown it can be done. And it must be done. Our pension system touches on so many things that are central to the transformation we need in our economy and society. It’s about the future of welfare, how we provide for each other and how we pool risks and resources. It’s about our common capital, and whether we can imagine ways of owning, managing and investing it which don’t depend on markets and give us all an equal voice. It’s about taking on a financial elite which has its tentacles in far too many of our basic needs. If we want a democratic economy, we need to be fighting for more democratic pensions.

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This week, university staff have been on strike against devastating changes to their pensions, braving the freezing weather to stand on picket lines waving placards with brilliantly dweeby slogans (personal faves: “Geertz ya dirty hands off our pensions” and “The provost is an ontological turn off”). Universities UK have finally agreed to talks with the union, UCU, about the future of the Universities Superannuation Scheme (USS), but with staff wary of falling into the same trap as junior doctors, the strikes are set to continue for the next two weeks.

As a current postgraduate student, I’m supporting my striking lecturers all the way. But I also think it’s crucial that we use these strikes as a wakeup call. What’s being proposed for USS members is no worse than what faces millions of us when we retire – and probably better than many of us. The difference is that, like the frog slowly boiling in a pot of water, we don’t realise it. Unlike USS members, we probably never had a guaranteed pension to lose in the first place. Unlike USS members, we haven’t had the sudden shock of being told it’s going to be taken away to galvanise us into action. But there’s a quiet crisis brewing in the UK pensions system – one that will affect us all unless we stand up and demand change.

To understand this better, let’s look at three of the key things striking university staff are angry about, and explore how they play out across the rest of the pensions system.

1. Members’ pensions will be at the mercy of the capital markets

At the heart of the dispute about USS is a proposal by management to turn it from a ‘defined benefit’ (DB) scheme, where the level of members’ pensions is guaranteed (i.e. the benefits the plan pays out are fixed), to a ‘defined contribution’ (DC) scheme, where your pension depends entirely on how your individual investment portfolio performs (i.e. the contributions into the scheme are fixed, but the benefits it pays out are not). There are two key things to understand here.

Thing One: You probably have a DC pension

The first is that DC pensions are the norm across the UK: there are very few DB schemes left in existence, and many of those that do exist are struggling with massive deficits, or are already closed to new members. For most workers outside the public sector and formerly nationalised industries, a guaranteed pension is a thing of the past.

Of course, the whole point of a pension is to provide a secure income in retirement. In a very real sense, a DC pension is not a pension at all: it’s just an investment plan, a tax efficient way for individuals to save towards their retirement. No risk sharing, no social insurance: just you and the financial markets. DC pensions fly in the face of the whole notion that it’s fairer and more efficient to pool our risks and resources than to leave each other to sink or swim. But this is the model that now dominates in the UK.

The rationale of DC is based on a classic neoliberal story about individual choice: individuals take responsibility for their own retirement savings, individuals choose who they want to manage their money, individuals decide how much risk they want to take on. This is also how the proposed DC scheme has been sold to USS members. But the reality is very different. Like railways and other public utilities, this is one area of life where reality simply refuses to conform to the free market utopia of neoliberal theory.

The reality is that, right now, most people in permanent jobs are being ‘automatically enrolled’ into pension schemes chosen by their employer – most likely schemes of baffling complexity designed by an army of investment consultants and asset managers, which neither they nor their employers really understand. They will not make an active choice about how much to save. They will not make an active choice about who to entrust with their money. They will not make an active choice about where to invest or how much risk to take. Most of us don’t have the time or expertise to be making those kind of decisions anyway. And yet the whole system is based on the fiction that we are making those decisions – that the consumer is king, when really the saver is being shafted (more on that later).

To give him his dues, Lib Dem Pensions Minister Steve Webb understood what a disaster in the making this situation could be. He tried to change the law to make it possible to run ‘collective defined contribution’ schemes – a sort of half-way house between DB and DC, with flexible ‘targets’ instead of hard guarantees. The Royal Mail and its union have recently agreed to try this approach, and UCU have suggested it as a possible way forward for USS. These schemes are the bedrock of the Dutch pension system – often held up as a model the UK could learn from – but are not accommodated by UK rules, which are designed only for DB and DC. But Webb’s Tory successor Ros Altmann scrapped the plans, saying it was ‘not the time’ to ask the pensions industry to absorb more regulatory changes.

Yes, you read that right: the government introduced laws requiring millions of us to be automatically signed up to pensions we didn’t choose, creating a multi-billion dollar new market for the industry. It failed to do any serious thinking about how to make sure those pensions represented good value for savers or society. And when proposals came forward to fix the mess, they rejected them on the basis that the industry couldn’t cope with the extra changes. This is entirely symptomatic of an approach to pensions regulation that has consistently put the interests of powerful City firms ahead of the needs of ordinary savers. The Tories are now saying that CDC could be back on the agenda, but there are no concrete commitments, and they may well cave to the industry again without popular pressure.

Thing Two: Your pension is definitely at the mercy of the capital markets

The second thing to understand about all this is that, in a sense, even traditional DB schemes are already at the mercy of capital markets. Both DB and DC schemes function on the basis that members’ contributions are invested in financial markets and pensions are paid out based on the returns. The only difference is who bears the risk if returns don’t match up to the pensions people want and expect. In both cases, the financial markets are the goose that lays the golden eggs, and when the goose stops laying, the scheme can hit the buffers.

Since the financial crisis, the recession and prolonged period of exceptionally low interest rates have caused problems for many pension schemes, making it hard for them to get the high returns their projections depend on. This either causes deficits to yawn open, or prompts funds to look further afield for more risky and exotic investments to push up yields (such as developing country corporate bonds, flirtations with expensive private equity, and other ‘alternative’ investments). At a system level, this could be inflating speculative asset price bubbles and storing up future financial crises.

Of course, investing pension contributions to produce a return isn’t a bad thing in itself. Pension funds have huge potential for social good, to act as vehicles which mobilise the capital of millions of small savers and invest it in the things society needs, from housing and renewable energy to small businesses. But, as the landmark Kay Review concluded in 2012, today’s pension funds are increasingly not acting as long-term, productive investors in the real economy, but as more or less speculative participants in global financial markets – employing armies of asset managers who try and ‘beat the market’ by buying low and selling high, across thousands upon thousands of different stocks, bonds and other financial assets.

DB, DC or CDC, our pension funds are not only at the mercy of financialised capitalism – they are key players in financialised capitalism, fuelling rather than counteracting its cycles of boom and bust. Regardless of the type of pension we have, we all need to be worrying more about how our money is being invested on our behalf. This is the engine on which our retirement savings depend, and it’s long overdue an MOT.

2. Unaccountable middlemen are getting rich while members’ benefits are cut

This brings us to the second way in which the anger of USS members shines a light on the bigger problems with our pension system. One of the targets of UCU members’ ire in recent weeks has been the pay packets of USS’ executive committee (reportedly paid an average of £488,000 each), and in particular of its Chief Executive Bill Galvin, previously head of the Pensions Regulator.

When it comes to rent extraction in the pensions system, this isn’t even half the story. Most of us will be separated from our money not just by the management of our pension fund itself, but more crucially by an elaborate chain of asset managers, fund-of-fund managers and investment consultants, all of whom take a cut out of our savings. In fact, USS is an interesting exception to the rule, in that it recently ‘in-sourced’ its asset management (although whether this team is doing a good job or delivering value for money for its members is still contested).

Because they tend to be paid based on funds’ relative performance against other funds, rather than their absolute performance, the fees extracted by this City circus have continued to grow even as our pensions do worse. From 2002-2007, pension funds’ payments to intermediaries rose by an estimated 50%, while real returns to savers actually declined. This also incentivises the merry-go-round of financial trading which adds no value to the economy – as fund managers ‘churn’ portfolios at ever greater speeds, extracting hidden transaction fees every time.

Often this happens without the full awareness of the pension fund itself, let alone the members who ultimately pay the price. It’s only now, after years of tireless campaigning by organisations like ShareAction, that we’re finally going to get the right to know where our money is invested and to see the full picture on fees and charges being extracted. That’s right – in this brave new world of competition and choice, we don’t yet have access to basic information about what we’re ‘choosing’. And even when we do get this right, how many of us will have the power or expertise to do anything with that information?

Economists like John Kay and Paul Woolley, and pensions experts like David Pitt-Watson, have long been sounding the alarm about the level of rent City middlemen are siphoning out of the pensions system – yet politicians have seemed paralysed to do anything about it, in thrall to the powerful interests of the City. If anything, the system as a whole is becoming less rather than more accountable to pension savers.

USS is an example of a trust-based scheme, overseen by a board of trustees which includes member representatives. At least in theory, these trustee boards exist to protect members’ interests, and have strict legal duties to do so. But, like DB schemes, trust-based pensions are a declining part of the picture. Under auto-enrolment, more and more people are being enrolled into what’s known as ‘contract-based’ schemes – as the name suggests, essentially just a contract between you and an insurance company – which are even further away from the ideal of collective provision which should characterise a true pension.

I myself have three of these ‘pensions’, accrued during stints with different employers (incidentally, a proposal to have pensions follow you from job to job to prevent this kind of situation – another Steve Webb initiative – was kaiboshed by the Tories after industry lobbying.) I can barely manage to make sure they all have my current postal address: the idea that I’m in any meaningful sense keeping an eye on what they do for me is a farce. And I worked on pensions policy for four years: if I’m not the ‘informed consumer’ of economic theory, then who is?

Unlike trust-based schemes, insurance companies do not have an overriding legal duty to protect the interests of savers, and savers do not have to be represented in their governance. Again, this problem has been pointed out for many years, but so far all that has been done about it is the introduction of toothless ‘independent governance committees’. The saga of RBS’ Global Restructuring Group, which destroyed small businesses it was supposed to be helping, shows us all too clearly what happens when vulnerable borrowers and savers are thrown to the wolves of Wall Street and the Square Mile with nobody to look out for their interests. Yet that’s exactly what is being done with our pensions.

3. Members stand to lose up to 50% of their pensions

Of course, what all this ultimately comes down to is that USS members now stand to get a significantly lower pension than they did before the proposed changes. And again, this is indicative of a wider trend.

All the problems discussed above – excessive rent seeking, speculative churning of portfolios, long chains of middle men – have been chipping away the value of UK pensions for decades now. Because of the effect of compounding, fees that eat 1% out of your pension annually can erode it by up to 30% by the time you retire. It’s hardly surprising that UK net retirement income ‘replacement rates’ (your take-home pension as a proportion of your final salary before retirement) are the lowest in the OECD, with only Mexico coming close to being as bad.

Until recently, policymakers’ only response to the looming crisis of pensioner poverty has been to ‘nudge’ people into saving more. As with broken energy and banking markets, it’s easier to point the finger at citizens and tell them to be ‘better’ consumers than it is to take on vested interests. In practice, all this means is that millions of us are now automatically opted into a broken and destructive system – handing even more power to those who run and benefit from that system.

But it should now be crystal clear that we’re not going to retire poor just because we’re insufficiently thrifty. Instead, stagnant wages mean we’re paid too little to save enough, and too much of what we do save gets sucked into the black hole of speculative rentier capitalism. David Pitt-Watson has argued that cracking down on rent extraction and embracing CDC could boost UK pensions by as much as 33%, “perhaps ending the pensions crisis at a stroke”. Whether you believe this or not, it’s clear that something has to give.

Our pensions system simply isn’t working – not for savers and certainly not for society. In fact, it increasingly seems like the only people it’s working for are the City firms who manage it. Policymakers who don’t really understand capital markets have seen them as a magical black box that can resolve deep-seated problems with our economy – like an increasingly precarious and poorly paid working population having to support a growing population of retired people. They’re banking on the City’s ability to transform the lead of inadequate wages and savings into the gold of a decent pension. If this sounds familiar, that’s probably because it is: a similar mindset underpinned the mortgage bubble that led to the financial crisis. This folly is slowly but surely brewing up a crisis of old-age poverty and financial instability – one that could reach epic proportions unless something is done about it.

What that something should be is beyond the scope of this article – and will probably require deeper and more imaginative thinking than has been done on this subject to date. But in broad terms, we need to see the same shift in the parameters of debate that Labour has achieved in relation to public ownership of things like energy and the railways. Instead of taking our broken, rent-extracting privatised system as a given and seeking to apply sticking plasters, we should be exploring democratic and not-for-profit models which put power back in the hands of the people. Instead of assuming there is no alternative to the UK system, we should be learning from other countries who do it better. And instead of kowtowing to the demands of the City elites who run our pension system, we should be ready to pass regulations that force them to do right by savers.

It’s to be hoped that Universities UK are coming back to the negotiating table in good faith and that an end to the USS dispute is in sight. But if we want a decent retirement for everyone, we need these strikes to be just the beginning.

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In the wake of the horrifying Grenfell Tower disaster, people are starting to ask questions about why reports on housing safety were sat on and ignored. And the finger is being pointed towards the government’s ‘war on red tape’ – more specifically, towards a little-known policy called ‘one-in, three-out regulation’.

As anyone who’s ever worked with us can attest, my partner-in-crime Stephen Devlin and I have been banging on about this for literally years. We wrote about it in this report for the New Economics Foundation, and I also blogged about it with tedious regularity over at my old site. But it’s only since Brexit that civil society has really started to sit up and take notice of the war on our protections – particularly with the advent of the ‘Great Repeal Bill’, through which the government hopes to strip out many of those protections which derive from EU law.

So here’s a quick primer on what people are talking about when they talk about things like ‘one in, three out’. The architecture the government has put in place has three main pillars, each of which are systematically designed to prevent new laws being passed and to privilege the interests of big business over ordinary people:

• ‘One in, three out’ (OITO). This means that no government department can introduce a new law that imposes a cost to business unless it can find another law to repeal that cuts costs to business by at least three times that amount. With the policy having been steadily ratcheting up for 7 years now, this basically means that new laws are nigh on impossible to introduce, because there is precious little left to cut.
• Impact assessments. This is the way civil servants have to assess proposed new laws to comply with OITO. All potential impacts have to have a price put on them, which immediately undervalues things that are hard to put a price on – like the benefits of clean air or safe homes. But it doesn’t matter anyway, because as far as OITO is concerned, the only number that matters is the cost to business: the benefits to society are literally irrelevant.
• The Regulatory Policy Committee. This is a quango with the power to give the green or red light to impact assessments, effectively vetoing new laws if they don’t think the OITO figures are good enough. It might sound like a bunch of technocrats, but it’s actually stuffed with corporate lobbyists. Stephen and I found that from 2013-2015 they met almost exclusively with other lobbyists, and boasted about being an “effective brake” on government’s ability to pass laws. Yes, we are putting the foxes in charge of the henhouse.

The key thing to understand about this regime is that it applies to any law that costs businesses money. That includes the cost of paying the minimum wage, the cost of building diesel engines that don’t emit poisonous fumes – and, yes, the cost of making our homes safe to live in. I’ve seen well-meaning people responding to social media posts about ‘red tape’ in the wake of the Grenfell disaster by saying “Oh, but when I hear red tape talked about it’s normally in the context of small businesses and the amount of forms they have to fill in, which is a real issue.” Yes – that’s what you hear talked about. But under cover of that narrative, what the government is actually doing is not just reducing administrative burdens, but cutting back all the laws that keep us safe.

The appalling fate of the Grenfell residents has laid bare the human consequences of this inhuman policy. And they are not the first casualties in this war on protections. Scientists have found that handing control of plans to cut salt and sugar in food to the likes of McDonalds and Mars may have contributed to 6,000 deaths a year. The government raised the speed limit for lorries on single carriageways in order to cut costs for haulage companies, despite acknowledging it would likely cause a 14% increase in accidents.

So make no mistake – this isn’t about form filling. This is about whose side you’re on – the side of big businesses with an interest in cutting corners, or the side of those who need protecting from exploitation and harm. Whether it’s our homes, our food, or the air we breathe, we need to scrap this poisonous regime if we want to be safe in this country.

After Grenfell, there are clearly a lot of battles that need to be fought to keep others safe and make sure that this kind of disaster can never happen again. More generally, the spotlight is turning onto the human cost of our dysfunctional housing market, and it must be kept firmly on it until we start to turn houses back into homes, rather than simply financial assets to be speculated with.

But there’s a wider war here that we mustn’t lose sight of. We have a real chance to rehabilitate the concept of laws and protections, and defeat the government’s pernicious deregulatory agenda. This stuff can be hard to mobilise around because it feels abstract and unimportant. But I just can’t get the horrific images from Grenfell Tower out of my mind – and they are reminding me in every single moment that this policy is neither abstract nor unimportant. It kills, and it will continue to do so unless we get it scrapped.

The three pillars described above are now all enshrined in law, in the Small Business, Enterprise and Employment Act 2015. If we want to start unpicking this murderous regime, we need to get those clauses repealed. I suspect the biggest challenge here is to get it on the parliamentary agenda as soon as possible – and then pressure Tory backbenchers to rebel. With the government’s position so weak, and the political climate turning in favour of stronger protections, I wouldn’t fancy their chances.

This piece first appeared on Christine’s blog.

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When it comes to Brexit, Labour is caught between a rock and a hard place. With both the party and its electoral base divided, and passions running high on both sides, it simply can’t match the clarity of Theresa May’s pitch for a mandate to push through a hard Brexit. So it alternates between trying to triangulate this impossible position, and trying to refocus debate onto the domestic agenda. And whatever it does, May and the Tory press accuse it of being stuffed with ‘saboteurs’ out to ‘wreck Brexit’, and of wanting to let in too many foreigners.

But this reflects something much deeper than a split in the Labour party. It reflects a more general failure on the left to work out where we stand in relation to the backlash against globalisation. On what is fast becoming one of the biggest political issues of our time, we are both deeply divided and desperately in need of new ideas. If open versus closed has joined left versus right as one of the major axes of our politics, there is no agreement about where the UK left should sit on this spectrum – and no very clear sense of what either the ‘left-open’ or the ‘left-closed’ quadrants of this new political landscape actually look like.

Of course, the right is divided too – but since the Brexit vote they have shown a remarkable ability to paper over these divisions, when many expected the Tory party to implode. More to the point, at least it’s reasonably clear what the two sides stand for – put crudely, this is about nationalism versus neoliberalism. And what we’re actually about to get with May’s hard Brexit is a chilling combination of both: closing our borders to people, but throwing them wide open to global capital.

If open versus closed has joined left versus right as one of the major axes of our politics, there is no agreement about where the UK left should sit on this spectrum.

By contrast, the left debate feels much more fragmented, and too often gets caught between a sterile status-quo liberalism and a toxic anti-immigrant politics. On the one side, we have liberal internationalists committed to maintaining free movement of people but with no serious critique of free movement of capital. Indeed, it’s often treated as part of a homogenous package of liberal values to be defended from the rise of nationalist protectionism: if you’re anti-Trump, you must be pro-free trade. On the other side, we have ‘progressive protectionists’ and Blue Labour communitarians who, in different ways, link their critiques of globalisation to an anti-immigrant politics that many find deeply excluding and dangerous.

It’s difficult to have any kind of conversation that starts from these positions and doesn’t end with people yelling ‘racist!’ and ‘neoliberal!’ at each other. Yet they both misjudge the moment we’re living through. The first fails to take seriously the profound failure of neoliberal economic orthodoxy and its role in the disaffection and dispossession that has helped to drive the Trump and Brexit votes. The second fails to take seriously the clear and present dangers of the racist scapegoating that has accompanied the rise of the far right, and the historic importance of actively resisting it. A left political project capable of rising to the challenges we face must respond to both of these things. But at the moment, the debate is so toxic that we can’t even begin to have the conversations necessary to constructing such a project.

There could hardly be a better illustration of this than the recent ugly spat between academics Wolfgang Streeck and Adam Tooze on the letters page of The London Review of Books. Streeck, a German sociologist, contends that “a little less globalisation is quite alright if it gets us a little more democracy”, while Tooze argues that for the German left to take a “protectionist, anti-EU line… would be hugely counterproductive.” It’s remarkable how rapidly this descends into petty name-calling, with Streeck dismissing Tooze’s arguments as the “faux cosmopolitanism” of a “soul-searching urban-academic middle class”, and Tooze accusing Streeck of behaviour “characteristic of anti-Semites and other conspiracy theorists”.

Needless to say, this kind of bombastic clash of white male egos doesn’t really move us forward. If we are serious about forging a left response to the rise of the far right, we need to get beyond such trench warfare and learn to exchange ideas in good faith and a spirit of humility. And if we’re serious about building long-term progressive alliances, we need to find some common ground on these issues – or they could end up tearing such alliances apart.

If we’re going to do this, perhaps we need to abandon the open/closed dichotomy altogether, and instead ask the more practical question: towards what do we actually want to be open or closed? After all, when you dig beneath the nationalist rhetoric, it’s not as though the new right fits neatly into this binary. May’s government seems perfectly comfortable combining an aggressive ‘closed to people’ agenda with an equally aggressive ‘open to capital’ agenda. Her January speech setting out her Brexit negotiating priorities proclaimed that Britain was to be “one of the firmest advocates for free trade anywhere in the world.” She also notoriously threatened that if a deal couldn’t be reached, Britain would be free to transform itself into the tax haven of Europe.

And though Trump’s trade policy is more protectionist, it is equally unlikely to seriously challenge the interests of footloose global capital. Indeed, as Nick Dearden argues in his important piece for openDemocracy, a new US-UK trade deal could accelerate the neoliberal race to the bottom on social and environmental protections. The much-trumpeted control of our laws supposedly won back from Brussels is likely to be swiftly negotiated away again, through clauses giving transnational corporations a veto over new regulation that could affect their profits.

So what would it look like to start building a progressive alternative that turned this politics on its head – open to people but closed to big money? That is the question we urgently need to be asking ourselves. I don’t pretend to have all the answers, but as a start, here are three pillars that such a politics could be built on.

1. Forging a democratic trade policy – and a movement to fight for it

Trade policy is perhaps the area where both new economic thinking and a rebuilding of the left’s capacity to mobilise is most urgently needed. From its place at the heart of the anti-globalisation movements of the ‘90s, trade has dropped off the radar of many progressive forces – the heroic efforts of anti-TTIP campaigners notwithstanding. With a wave of new trade deals on the horizon that could shape our economy for decades to come, we urgently need to rebuild a mass movement on trade that knows what it wants.

If the details of this still need to be worked out, the TTIP movement gives us a clue as to what the guiding principle should be: protecting democracy, local, national and international. This goes for both the process and the substance of trade deals. We must resist deals negotiated behind closed doors which create new ways for corporate vested interests to subvert democratic processes – whether through ‘secret courts’ or veto powers over new laws – and which rig trade rules in favour of the wealthy. Instead, we should demand that trade negotiations be transparent and accountable to citizens.

We must resist deals negotiated behind closed doors, which create new ways for corporate vested interests to subvert democratic processes.

Likewise, free-trade dogma should no longer be able to override the efforts of local policymakers to support and shape their local economies in pursuit of social and environmental objectives. Particularly in a context where city and regional authorities are one of the key remaining sites of progressive power, they need to be able to use the tools at their disposal to build democratic ownership and create local jobs. For instance, Ontario’s Green Energy Act made renewable subsidies conditional on companies meeting ‘buy-local’ requirements, to ensure that public money was used to support local jobs. Having been held up as an example by energy democracy activists the world over, this was ruled unlawful by the WTO. A similar fate has befallen buy-local policies included in India’s solar energy programme.

This is especially crucial to building a progressive response to the politics of Trump and Brexit. Neoliberal free-trade orthodoxy is premised on the idea that if all economic activity is sent to wherever it can be done most ‘efficiently’, everyone will be materially better off. The loss of local jobs and industries in that process is simply collateral damage. It doesn’t matter if we destroy a job in a steel mill in Sheffield, because we’ll create a better one in a bank in London. In the last year, this inhuman economic calculus has crashed head-first into the realities of life in deindustrialised communities, and the ballooning inequalities it has helped to create.

We cannot afford to allow the right to pose as the defenders of these left-behind communities whilst doing nothing to address these problems.

Of course, from a human perspective, this is nonsense. The fact that the steel mill was the backbone of the local community, a source of identity, and the heart of the local economy are worth something. The fact that most local people are never going to get a job in a bank in London, and that from their point of view the steel mill has been replaced by precisely nothing – or, at best, by an insecure job in a call centre – matters irrespective of whether the bank adds more to GDP. We cannot afford to allow the right to pose as the defenders of these left-behind communities whilst doing nothing to address these problems. And by insisting on our right to democratically rebuild and shape our local economies, we can do justice to the importance of community and identity without being drawn into anti-immigrant politics.

2. Taming global finance – at home and abroad

The impetus for financial reform, never very strong to begin with, now seems to have been buried entirely beneath the rubble of the last year’s political earthquakes. Trump may have cloaked himself in the rhetoric of banker bashing, but his actions in office speak otherwise. As one anonymous Goldman Sachs executive reportedly said, “If I’d known how good Trump was going to be for Wall Street, I’d have campaigned for him.”

This leaves the space wide open for a progressive agenda to truly tame finance. With private debt rising and post-crisis reforms unravelling, the next financial crisis could be just around the corner – and we need to be ready with a response. And, as Nicholas Shaxson has persuasively argued, there’s no point us being morally outraged by the tax avoidance of the global elite unless we’re seriously willing to take on the financial system that enables and encourages it.

Trump leaves the space wide open for a progressive agenda to truly tame finance.

The question is whether and how new forums for the global governance of finance can be built. If the UK is no longer going to be bound by EU law, we need to come up with new ways to control global mega-banks and their weapons of financial mass destruction. Measures like financial transaction taxes and higher capital buffers all work best at an international level. And perhaps we need to resurrect the idea of capital controls – to stem the tidal waves of hot money fuelling bubbles and crises that wreck lives, from Iceland, Ireland and Greece to Thailand, Mexico and Argentina. Paradoxically, this is one area where ‘less globalisation’ actually requires more global co-operation. Prospects for this may look gloomy in the current climate – but we must do all we can to avoid it becoming unthinkable.

Having said this, this agenda doesn’t begin and end with regulation. The history of EU financial reform shows us that, captured and compromised as reform began, it is now being methodically unravelled by bank lobbyists while the political circus moves on. If we leave our banking behemoths intact and rely on international law to constrain them, we’ll always be facing an uphill struggle. We need to change the structure of the system itself – to break up the power of mega banks and build democratic alternatives in their place.

Perhaps surprisingly, I actually think this is a counsel of optimism – because it means that the project of fixing finance can begin at home, and indeed can be started even without progressive governments in power nationally. A good example is the work of the Democracy Collaborative and the Public Banking Institute in the US to build a new generation of public banks at the state level. In the UK, a good place to start would be with RBS – by calling loudly for the bank we already own to be turned into a network of local public banks, mandated to lend to their local communities rather than to speculate on international markets and bankrupt small businesses.

3. Giving no quarter to anti-immigrant politics

We can’t win by aping the clothing of the right and promising to curtail immigration. Even if we could, it would be morally unjustifiable to do so in a climate of increasingly open and virulent racism and xenophobia. The scapegoating of outsiders to distract from an unjust economic system is as old as the hills, and the left should have no truck with it. We must not play into the narrative that immigration is somehow to blame for the stagnation of wages and the loss of jobs in ‘left behind’ communities, when all the evidence suggests this is not the case.

The Tories’ attempt to deflect blame for the consequences of austerity onto immigrants is open and blatant. In her January Brexit speech, Theresa May claimed that the “sheer volume” of immigration in recent years “has put pressure on public services, like schools, stretched our infrastructure, especially housing, and put a downward pressure on wages for working class people”.

The scapegoating of outsiders to distract from an unjust economic system is as old as the hills, and the left should have no truck with it.

But it’s not immigration that is driving down wages for working people in the UK. It is the smashing of trade unions, the power of footloose capital and the ease with which it can offshore jobs to cheaper jurisdictions. Research by the LSE has found that “the big falls in wages after 2008 are due to the global financial crisis and a weak economic recovery, not to immigration.” And the housing crisis has much more to do with a bloated, bubble-blowing financial system than with too many people coming into the country.

These are dangerous times, and unless we can offer a vision for a better future that doesn’t rely on promising to keep out foreigners, we are heading for truly terrifying waters. This doesn’t only mean defending free movement of people. It means keeping the dangers of xenophobia and racism at the forefront of our minds in all of our thinking. It would be a historic mistake to try and offer an anti-elitist economic agenda while triangulating or fudging on immigration.

Recently a fellow finance activist showed me a propaganda poster from Nazi Germany bearing the slogan “Smash the enemy, international high finance”. It was a forcible reminder that hating economic elites and hating a racialised ‘other’ are very far from being mutually exclusive. If we want to develop a radical democratic left platform – and I think we must – we would do well to remember that any narrative about democracy involves an implicit ‘us’, and any narrative about elites involves an implicit ‘them’. It’s incumbent on us to be very careful indeed about who is included in that.

Of course, none of this solves the immediate problem of where the left should stand on Brexit, or what its rhetorical stance should be in a moment of increasingly febrile nationalism. These questions are fraught with difficulties of their own. But if we try to resolve them without first having serious conversations about the platform we want to stand on, we shouldn’t be surprised if we tie ourselves in knots.

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