>We had a bit of a discussion of the first gain from surpluses on PEN-L
>(ending payments to rich bondholders) but the second paragraph does
>highlight an issue that gives the rightwing hives- namely that storing up
>surpluses to pay for future social security payouts will create a major
>crisis on where to invest those surpluses. If the government holds little
>or no public debt, those surpluses will no longer be able to be in federal
>bonds.
>
>If the Left was truly strategic and had the political strength, we would
>fight to have those surpluses invested in large chunks of the private
>economy. In its initial phase, this would create a strong public voice on
>corporate boards across the stock market and as the surpluses mount, could
>amount to government takeover of certain firms - especially if combined with
>more liberal union pension fund purchases that could create models of shared
>governance between public authorities and worker representatives.
So why did this fail so badly in Sweden, a country with a political culture a lot more friendly to financially mediated socialization than the U.S.? The wage-earner funds started as a scheme to socialize corporate Sweden through stock purchases, and ended up as conventional pension funds.
Sorry to quote myself, but this comes from chapter 7 of Wall Street:
>This is why you won't find anything in this chapter on the
>"progressive use" of pension funds. Peter Drucker's fears of
>"pension fund socialism" of the 1970s have realized themselves in
>the portfolio manager capitalism of the 1990s - which is no
>surprise, since it's quite natural that capital should appropriate
>the pooled savings of workers for "management." The whole idea of
>creating huge pools of financial capital should be the focus of
>attack, not the uses to which these pools are put. Instead of
>funding infrastructure development through creative
>pension-fund-backed financial instruments, finance it with a wealth
>tax instead.
>
>The lesson of the Swedish wage-earner funds should be chastening to
>pension-fund reformers (Pontusson 1984; 1987; 1992). The funds were
>originally conceived by social democratic economists as a scheme for
>socializing ownership of corporations. In the original mid-1970s
>proposal, firms would have been required to issue new shares, in
>amounts equal to 20% of their annual profits, to funds representing
>wage-earners as a collective. In the space of a decade or two, these
>funds would acquire dominant, and eventually controlling, interests
>in corporate Sweden. This idea scandalized business, which launched
>a great campaign to discredit it - a task that was greatly
>simplified by the fact that the funds never attracted broad popular
>support. The Social Democrats and the unions watered the plan down,
>and a weak version was adopted in the early 1980s. The funds quickly
>began behaving like ordinary pension funds; their managers, in a
>vain attempt at legitimation, began trading stocks in an effort to
>beat the market averages. Eventually, late in the decade, the
>wage-earner funds were euthanized.
>
>Why did they fail? For at least two reasons. First, business
>correctly saw the initial version as a challenge to capitalist
>ownership, a reminder that finance is central to the constitution of
>a corporate ruling class. And second, they never attracted popular
>support - essential to any serious challenge to a corporate ruling
>class - because they were so abstract. As Pontusson (1992, p. 237)
>put it, "when collective shareholding funds are reduced to deciding
>whether to buy shares in Volvo or Saab," it's hard to muster popular
>enthusiasm. More direct interventions are required - active public
>industrial policy and greater worker control at the firm level - if
>ordinary people are to get interested. The stock market, on the
>other hand, is the home turf of financiers, and any games played on
>their turf usually end up being played by their rules.
Doug