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End Corporate Feudalism with Industrial Pensions

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Private Pensions in Crisis

Over the past 2 years of economic crisis the system of workplace benefits in the United States has been under attack from greedy executives as well as prevailing capitalist economics.  Pensions have been devalued and many of the funds have failed.  Health benefits have become increasingly more expensive, with many companies forcing workers to pay more for their healthcare or refusing to offer it at all.

Through this all, the blame for these problems has been placed squarely on the shoulders of the workers themselves.  The myth of the auto worker who makes $70.00 per hour is probably the most popular example, with the capitalist press and government blaming the Unions and the workers for the inability of the Big Three automakers to compete with other companies.  If only the company did not have to abide by the Union Wage and benefit scale, they claim, the companies would be free to compete with Japanese and other auto makers who built their factories in right-to-work states where they would not have to worry about unions.

After the union’s formation in the 1930s, the UAW and other CIO unions of the time were very militant and their sit down strikes set the bar for establishing unions in auto plants.  However, during World War II, the Federal Government moved towards a government-planned war-time economy, and many unions were forced to accept a no strike pledge and a wage freeze to produce for the war.

Despite the wage freeze, many workers continued to agitate and strike and employers needed to find a way to placate thems.  The solution employers found, with the help of the unions, was complimentary benefits, namely pensions and healthcare.  Pensions were supposed to be simple.  Bosses and workers both pay into a fund, and when workers reach a retirement age they receive a monthly payment from the fund, with the amount based on the number of years of service to the company.

When these plans began, there were far more workers than retirees.  So, if a worker was 64 when the pension was created, and they retired at 65, they would receive a full pension despite only paying in for one years worth of benefits.  This creates a shortfall, because current workers are paying in and benefits go to the current retirees.  Companies promised to make up this difference with a lump sum payment sometime in the future.  Instead, the Employers tried to close the gap by investing pension funds for profit and hoping that there would always be more workers than retirees, so the shortfall could be put on the back of the workers, not the company.

During this same time period, the Capitalists worked to find ways to shift production towards highly mechanized factories which needed fewer and fewer workers.  This technological change led to higher profits and efficiency and less workers to pay for all of the retirees.  Eventually, the capitalist system took its toll and the situation reversed.  Now retirees vastly out-number the active work-force and for each person working in the auto industry, there are several retirees collecting pensions.  The system is short a great deal of money, and the companies claim that they don’t have to make up the difference.

The companies that once masqueraded as benevolent patriarchs are now looking for ways to skip out on the check after years of dining at the worker’s table.  Hundreds of thousands of retirees and workers are wholly dependent on these Corporate behemoths, who for years sold the lie that “we are all in this together” and of collaboration between workers and bosses for the benefit of both.  Now the companies want to cut them off and destroy their retirement income as well as their access to affordable healthcare.

Putting Worker’s wealth toward the benefit of the Working Class

This privatized benefit system creates what Wobblies at the time called Corporate Feudalism.  Corporate Feudalism confuses the interests of the working class with those of the employing class and workers and retirees become wholly dependent on the survival of a single corporation.  Corporate failure is tied to the current and future success of working people, and the rhetoric of “we are all in this together” takes hold.  Like the serfs in Feudalism, workers produce all for the company, and when they are too old to work anymore, workers are dependent on the benevolent kings of industry to care for them.

Under the capitalist system of wage labor, workers are forced to work for a wage that is far less than the value of what they produce and the Bosses keep the surplus value.  This is one of the primary relationships of Capitalism.  Under Feudalism, however, there was no currency.  In exchange for labor, workers received food, housing, healthcare, and retirement care.  Corporate Feudalism mixes these systems, with workers generating greater surplus value for their bosses in exchange for benefits instead of higher wages.  If you dare leave the Industrial Plantation, however, your benefits evaporate.

With corporate managed pension funds, this situation gets even worse.  Bosses use the workers’ pension money to support other anti-union enterprises and increase class oppression.  In addition to the surplus value, workers turn over a portion of their wages to the Boss, who then invests it at their whim, sometimes losing money, and always to the detriment of the workers.

Many workers have greatly benefited from these programs; retirees have lived out their lives without having to work and with expansive medical coverage that is very affordable or free.  But now with the system crushing under its own weight and the pyramid turning upside down, it is time to return to the alternative visions that were offered in the 1930s.  Wobblies at that time had ideas for regional-based benefit pools, or pools that covered entire industries, with control of the funds resting in a democratic organization based in local communities.  As a compliment to the struggle for Industrial Unionism, this would be a struggle for Industrial Pensions, a Pension that moved with you from job to job in a fund that is managed by workers and not bosses.

The goal of these funds would be to ensure that workers do not turn over one dollar more of their money than necessary to the capitalists, and to ensure that workers pension money is used to advance the cause of the working class, not the employing class.  Instead, this money could be used to build schools, to make loans to construction projects that use union labor, offer low APR mortgages to union members, or to supply low cost medical treatment in our communities.  The most important principle has to be that if the fund will be used for investment, then workers’ money must benefit the working class and not the employing class.

There are potential pitfalls with these models.  Managing large sums of money can leads to corruption and bitter arguments.  The craft business unions, such as the Carpenters and the Teamsters give us a vision of what that could look like.  The answer to these problems, however, is transparency, democracy, and education.  If workers will manage their own retirement funds, everyone must know what the fund is being used for, how this will benefit all involved, and most of all, have a democratic say in the process.  These other funds lack these elements, and that has lead to drastic problems.

Nonetheless, as we reflect on workers struggle this May Day with the current Corporate Feudalism system collapsing under its own weight, we have an opportunity to look to the future.  We can all imagine a world where all workers are able to retire, live in a home, get enough nutritious food to eat, and have access to healthcare and education.  But only the destruction of the Capitalist system can ensure the end of instability in all workers’ lives.

Destroying this system of Corporate Feudalism will not, in and of itself,  end the capitalist exploitation of workers, but taking back the workers’ wealth and putting it to the benefit of the working class would deal a devastating blow to the capitalist bosses who have profited off of this terrible and manipulative system for so long.  We will never destroy Capitalism unless we also destroy Corporate Feudalism!

Two other interesting articles about Pensions:



Written by Walt

April 5th, 2010 at 11:13 pm

Posted in Uncategorized

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