The Role of Pensions within the Modern System of Family and Class
The standard distinction between the bourgeoisie and the proletariat is simple and clear-cut. The proletariat is one who sells their labour on the market, while the bourgeois is one who buys this labour and through capital converts it into the production of commodities.
To further simplify this into the most common formula used to understand Marx’s theory: the proletariat is the worker and the bourgeoisie is the owner. The worker works, the owner owns. This is the schema that makes Marx’s class distinction so easy to understand, and so powerful in its capacity to mobilize and politicize large swaths of the population. This explanation is also completely wrong.
Now let us pause after this assertion — we will return to it later. It is time to introduce a concept that is very common and generally understood in our society: pensions. Pensions generally refer to two things, state pensions, and private pensions. Further state pensions can be divided into public pensions for all retirees, and pensions for former public servants. Private pensions can be employer-funded or personally funded.
Public pensions are usually disbursed based on state funds collected from taxes (although they can also be self-funding with strategic investments), while private pensions (whether individual or employer-funded) are obtained from investment portfolios. Speaking of private pensions, given that as of 2018, according to the US Bureau of Labor Statistics (1), 55% of US workers participated in a workplace retirement plan (commonly under a 401k account) and 42% participated in pension plans (which can include a cash-balance plan), a question arises — if that pension money is being invested (which it is within private pensions), are these workers not capitalists?
We have just defined the proletariat as those who work while defining the bourgeoisie as those who own. Now we find out that in the United States, the majority of those who work own some form of capital through their retirement accounts. On the macroeconomic side, this effect is rather sizeable. 37% of US corporate stock is held by retirement accounts, while over 20% of household wealth is held in stock, up from just over 10% in 1989 (2).
This is a question that does not only concern the US, however, after all the largest pension fund in the world is the GPIF (Government Pension Investment Fund), a public fund carrying investments for workers in Japan (3). The Ontario Teachers Pension Fund, 19th on the list of largest pension funds, is a Canadian pension fund that manages the money of some 329,000 teachers, both working and retired (4). Under these conditions, can workers with pensions be considered proletarians?
Class in Human Society
This is where the previously defined class analogy breaks down, and not on Marx’s side. It is just that the reduction, while intuitive and easy to understand, is one that is essentially ignorant of the full picture. The notions of ownership and enclosure (in the sense of enclosing property from others) are primarily social relations between people within society. These social relations go far beyond our common notions of legally defined property but touch on every single interaction that is had with the world around us. It is under these conditions that Classes as a category of social relations are far more expansive than the active arena of their struggle suggests.
Both the bourgeoisie and the proletariat are foremost not classes but humans, part of one continuous human society, one that is both cleaved yet whole. Humans in their natural life cycle are born, grow up as children, become adults, and in their old age — die. Of these, the total time spent performing wage labour (with a workweek of 39.2 hours accounting for holidays) is about 90 000 hours or 14% of a 76-year lifespan (5). Within capitalism, this amount of time is the cost that humans must pay to arrange and perform production. The rest of the time (minus sleep of course) is structured by other social relations. In this case Capital, that is the productive (relating to the process of production) ownership has not totalized itself across the human experience.
Capital itself is nothing more than a mediation of a mediation, that is the mediation to the process of production which is itself a mediation to the social life of mankind. By relentlessly optimizing itself as a set of social relations it strengthens and improves the process of production (in some cases at the expense of human lives or wellbeing). That process of production, itself the decision of what to produce and for what wants and needs — is also a mediation puncturing into our social life. It is in that sense that we are different from most of the animal world, having separated production and consumption and inserted this process of production upon which capital is later built.
Why is this relevant? Good question. Because even as capital emerges as a mediation upon the process of production it is one that is constantly expanding and replacing other structures, even as they begin to fall apart under their contradictions and failure to uphold social relations in the world-history unfolding before us. So, the line of struggle expands into a key economic factor of social life absent capital. In the case of pension, this happens to be the family.
Marx and more concretely Engels identified the role of the family in social reproduction (Origin of the Family, Private Property, and the State) which is intimately tied to the processes of production in society. The role of inheritance needed to be tied to the production of children, and the productive process itself still, in the modern day, cannot go on without the existence of unborn children as a future labour input. There exist parts of the family that are rooted in human existence separate from the productive process, but ultimately the family is a structure that acts to fulfill the purpose of reproduction under a sexed division of labour.
That structure is now being destroyed.
A Short History of the Family, Poverty, and Pensions
When the traditional family still held strong as an institution and the disintegration of family life has not yet forced the state to act, the few workers who were not able to save for their retirement, and who were not able to continue to work in their old age were sent to poor houses. These poorhouses were reserved for the dregs of society, the elderly, the mentally ill, orphans, the physically disabled. These were people who could not, because of their life-situation contribute to the conditions of production and were too poor to afford capital (6). Thus, they were considered undeserving and left to languish in horrible conditions, forced into poorhouses to prevent them from contaminating wider society. Living off meager alms they existed within terrible, barely livable conditions.
In the United States these poorhouses remained mandatory (practically prisons) until after the Civil War when the 14th Amendment was passed (1868). Despite their “liberation” many of the denizens (for such an institution cannot be in good conscience called a residence) were still forced to reside there, primarily due to their economic situation. In the United Kingdom poor houses were only abolished in 1930, converted to retirement homes because of the increasing number of elderly people who came to fill the institution (7).
In such a situation a worker could save, and some did. Yet the cultural understanding that one would be taken care of by their children as they aged was not so easy to dislodge (and persists in many cultures today). The social consciousness of the working population started to separate from the material reality of their family life, and so a new question emerged to trouble the state: what to do with workers who had outlived their usefulness?
Around that point, the average worker had realized the precarity of his situation and had already begun issuing demands for some sort of social protection so as not to follow his elders to the poorhouse. The line of struggle between the proletariat and bourgeoisie had now begun to creep into the function performed by the family.
This demand for pensions that emerged in the late 19th and 20th century was fundamentally rooted not in the proletarian wage relation, but in the disintegrating structure of the family. Urbanization decreased the number of children that a family would have (placing the burden of elderly care on fewer individuals) while increased labour mobility meant further distances between elders and their children. The cost of old age could no longer be contained by family and capital had begun creeping in.
Although pensions existed intermittently in pre-modernity, it was only in the 19th century that the concept of pensions started picking up steam to decrease strikes by private firms. It soon became a state policy by which to wrest power from socialist movements, as Chancellor Bismarck’s reforms which included a national pension for citizens aged 75 and over in Germany, 1871. In the United States the first pension plan was created in 1935 with the Social Security program. In Canada, a similar act was passed in 1927. (8)
The family provided both labour and a certain means of subsistence for the elderly. The family also received back labour in a certain form from its elderly. It could take the form of childcare or transmission of life experience and skills to the younger generations. For the elderly, the functions of the family were gradually replaced by pension funds, and for the other family members — the transmission of knowledge was replaced (to an extent) by the vast adoption of standard education programs (as well as growing literacy). Childcare was slowly shifted to daycares (both state and private), though the proximal cause was the increased entry of women into the labour market.
Beyond the Mediation
Capital and the process of commodification that comprises it seek a constant expansion into the realm of society. The tremendous growth of production is not the only form of growth that capital contains within itself. As a social relation, it also penetrates culture, subsumes ritual practices, eviscerates traditions. In its totalization and constant reinvention Capital leaves no stone un-turned following exactly Marx’s original predictions:
“All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.” ~ The Communist Manifesto Chpt. 1
Here, the more important part of the passage is the notion of the “real conditions of life” and “relations with his kind”. The uprooting of the family by capital reveals the functions that have been hitherto mystified. The pension now actions as a sad and drab replacement for familial care and respect for the elderly, fulfilling an economic function of a key social institution in retreat.
The original question still stands. Can proletarians hold pensions in modern society? The answer with a full understanding of Marxism must be an emphatic yes. The pension, although it can be considered capital within a reductive understanding is nothing more than a crude replacement for the family in the process of production. Just as family reproduces itself through the generations so too does capital reproduce itself. The ultimate purpose is the same for both the family elder and retiree, to live their twilight years as part of the social life around them, not locked away in a poorhouse or dying on the streets in poverty. In the first case, productive labour is continued (but obfuscated from the price system) within the family but with a disproportionate remuneration from the labour of filial piety. In the second case dead labour (pay for past participation in production and its investment) serves to provide a similar living style.
There is no fundamental change in social relations, no “new man” that is created. The primary locus of the struggle for the proletarian remains the wage relation and the distinction between the proletariat and bourgeoisie is not abolished, even as capital seeks to devour the productive process.
Sources.
1. Data obtained from https://www.pensionrights.org/publications/statistic/how-many-american-workers-participate-workplace-retirement-plans
2. Chart and percentage of stock ownership data by retirement accounts obtained from https://www.taxpolicycenter.org/taxvox/only-about-one-quarter-corporate-stock-owned-taxable-shareholders
3. Pension funds by size https://www.consultancy.org/news/147/the-largest-pension-superannuation-funds-in-the-world
4. Ontario Teachers Pension Fund https://www.otpp.com/corporate/about-teachers
5. Time spent at work https://revisesociology.com/2016/08/16/percentage-life-work/
6. Poorhouses https://www.disabilitymuseum.org/dhm/edu/essay.html?id=60
7. Poorhouses in the UK https://www.historyextra.com/period/victorian/the-rise-and-fall-of-the-workhouse/
8. History of pensions https://retirehappy.ca/a-history-of-pensions-in-canada/
