Die Neue Zeit
11th November 2010, 06:30
National-Democratization, Health-Industrial Complexes, and Comprehensive Workers Insurance
“Free medical care, including midwifery and medicines. Free burial […] Takeover by the Reich government of the entire system of workers’ insurance, with decisive participation by the workers in its administration.” (Eduard Bernstein)
It was from Otto von Bismarck’s Health Insurance Bill in 1883 and from the Erfurt Program in 1891 where modern society got the concept of public health insurance. Back in the day, there were solid arguments to be made that state-administered public health insurance was no dead-end reform, and that it was even a demand on the threshold. However, in concluding his contribution to the oppositionist “minimum” section of the Erfurt Program, Eduard Bernstein unwittingly inserted a demand with a much broader scope than unemployment insurance, workplace accident insurance (public insurance systems for compensating workers who are injured in the course of employment in exchange for the mandatory inability to sue employers for the tort of negligence), and other similar public insurance systems as we know them today. For one thing, there is hardly any participatory administration by all workers, let alone decisively participatory administration.
In 1917, that broader scope was defined more fully by some Bolsheviks in discussions to amend the party program:
Full social insurance of workers: for all forms of wage-labour; for all forms of disablement, namely, sickness, injury, infirmity, old age, occupational disease, child-birth, widowhood, orphanhood, and also unemployment, etc.; all insurance institutions to be administered entirely by the insured themselves; the cost of insurance to be borne by the capitalists; free medical and medicinal aid under the control of self-governing sick benefit societies, the management bodies of which are to be elected by the workers.
Mentioned in Chapter 6 was the imperative that health care reform beyond mere public health insurance must address health-related production even before considering truly socialized health care. However, health as a crucial area in any given national economy is also an industrial complex, spanning health insurance providers, pharmaceutical companies, biotechnology companies, providers of related scientific services, home health care providers, nursing homes, hospitals that those that specifically supply them, medical tourism, and services provided by health care professionals.
Furthermore, health as an industrial complex is closely related to other areas in the economy, such as the insurance of individuals. Sometimes in the past, countries placed all aspects of the “welfare state,” ranging from public health insurance and workplace accident insurance to unemployment insurance and public pension programs, under unified administration. In the private sector, life insurance companies provide more than just insurance services for paying beneficiaries upon the death of the individual insured, covering things like group life insurance, critical illness, long- and short-term disability, other private health insurance services (depending on the jurisdiction), annuities, private pensions (since pensions are a form of insurance), and various investment products. The addition of dedicated pension fund companies to the mix makes one appreciate these close relationships.
On the subject of private pensions, there are at least three illusions that need to be dispelled. First is the illusion of higher returns on the open market. Leaving aside the Iron Law of Disproportionate Immiseration and its downward pressures on individual savings (thus the ability to save for retirement in the first place), saving for retirement tends to be accompanied by a more conservative investment profile, even in younger age groups, than that accompanying non-retirement investing. The rates of return even in younger age groups can be matched and exceeded by public pensions such as the Government Pension Fund of Norway, the Dutch National Civil Pension Fund, the Quebec Deposit and Investment Fund, and the smaller Canada Pension Plan, depending on their respective investment profiles; only US Social Security is needless stuck with a low-return investment profile entirely of government treasury bills. Second is the illusion of legal security over one’s own pension investments. In the recent business restructuring case of the Big Three American automotive companies (General Motors, Ford, and Chrysler), existing pension contracts were nullified, and the legal position worldwide on employer-funded pension funds is that, despite whatever employer or non-employer trust arrangements may exist, absolutely everything in those funds not committed immediately to pension payments is the property of the employers. More emotional description of this accumulation by dispossession could be used here, such as “pension raids” and “pension theft.” Third is the illusion of ownership in individual pension investments, and this in fact extends to mutual funds. The money itself may belong to the individual investor, but there is no share ownership in either the fund companies or even the companies in the fund companies’ investment mix.
Mentioned in Chapter 3 was the point that “pension fund socialism” is merely a tool for big businesses to obtain additional financial leverage on the collective back of the working class, all the while continuing the exploitation of labour. The lack of legal security and actual employee ownership are only two of the three problems with this phenomenon. The remaining problem is political: it benefits mere sections of the working class, not the working class as a whole. Contrast this with increases in real and society-wide savings and investment resulting from the implementation of something like Rudolf Meidner’s economic plan, for example: mandatory and significant redistributions of annual business profits without allowances for net loss rebates, by private enterprises with more workers than a defined threshold, as non-tradable and superior voting shares to be held by geographically organized worker funds. Again, the respective specifics are twenty percent of business profits, fifty employees, and regional and not union-level organization of wage-earner funds.
However, in the specific case of the health-industrial complex and all assets of workers’ insurance and private pension funds, Meidner’s plan may not be enough. What certainly is a solid start, however, is the takeover of the health-industrial complex and all assets of workers' insurance and private pension funds into permanent public ownership, with levies against enterprise assets for any fund deficits, with appropriate pro rata transfer provisions for prospective pensioners, and with decisive worker participation in their administration. The levies prevent “pension raids” and “pension theft,” while the participation would be necessary in order for the new pension system not to degenerate into the joint, state-based speculation schemes known as sovereign wealth funds. On that note, one more illusion regarding private pensions should be dispelled, and this statement by Paul Cockshott and Dave Zachariah is equally applicable to insurance claims vs. insurance premiums:
The financial system now takes on the role of the feudal aristocracy and priesthood. They spend the nation's surplus product in conspicuous consumption. Instead of papal indulgences promising a better hereafter, they sell modern promissory notes supposedly guaranteeing a happy retirement. The promises are almost as egregious as those Luther protested against. Today's savings have gone on bankers' bonuses, air force jets and soldiers' wages. The truth is that the real consumption of the retired must always be supplied by the labour of their younger contemporaries. The enormous, expensive and unproductive financial system consumes savings today whilst being unable to conjure up new labour to support future retirees.
[…]
Since debts had been cancelled, firms, having no interest to pay, would remain solvent under these conditions. But they would cease to pay dividends, and shares would lose their value. This would impact private pensions. But the abolition of the national debt would leave the state in a position to substantially raise state pensions. Relatively wealthy pensioners would still lose out, but the majority of pensioners would gain.
REFERENCES
Programme of the Social-Democratic Party of Germany (Erfurt Programme) by Karl Kautsky and Eduard Bernstein [http://www.marxists.org/history/international/social-democracy/1891/erfurt-program.htm]
Materials Relating to the Revision of the Party Programme by Vladimir Lenin
[http://www.marxists.org/archive/lenin/works/1917/reviprog/ch04.htm]
Democratizing Pension Funds: Corporate Governance and Accountability by Ronald B. Davis [http://books.google.ca/books?id=S29crCk8FkIC&printsec=frontcover]
Towards a New Socialism: New preface, 3rd draft by Paul Cockshott and Allin Cottrell [http://www.ecn.wfu.edu/~cottrell/socialism_book/preface-a4.pdf]
Credit Crunch: Origins and Orientation by Paul Cockshott and Dave Zachariah [http://reality.gn.apc.org/econ/creditcrisis.pdf]
“Free medical care, including midwifery and medicines. Free burial […] Takeover by the Reich government of the entire system of workers’ insurance, with decisive participation by the workers in its administration.” (Eduard Bernstein)
It was from Otto von Bismarck’s Health Insurance Bill in 1883 and from the Erfurt Program in 1891 where modern society got the concept of public health insurance. Back in the day, there were solid arguments to be made that state-administered public health insurance was no dead-end reform, and that it was even a demand on the threshold. However, in concluding his contribution to the oppositionist “minimum” section of the Erfurt Program, Eduard Bernstein unwittingly inserted a demand with a much broader scope than unemployment insurance, workplace accident insurance (public insurance systems for compensating workers who are injured in the course of employment in exchange for the mandatory inability to sue employers for the tort of negligence), and other similar public insurance systems as we know them today. For one thing, there is hardly any participatory administration by all workers, let alone decisively participatory administration.
In 1917, that broader scope was defined more fully by some Bolsheviks in discussions to amend the party program:
Full social insurance of workers: for all forms of wage-labour; for all forms of disablement, namely, sickness, injury, infirmity, old age, occupational disease, child-birth, widowhood, orphanhood, and also unemployment, etc.; all insurance institutions to be administered entirely by the insured themselves; the cost of insurance to be borne by the capitalists; free medical and medicinal aid under the control of self-governing sick benefit societies, the management bodies of which are to be elected by the workers.
Mentioned in Chapter 6 was the imperative that health care reform beyond mere public health insurance must address health-related production even before considering truly socialized health care. However, health as a crucial area in any given national economy is also an industrial complex, spanning health insurance providers, pharmaceutical companies, biotechnology companies, providers of related scientific services, home health care providers, nursing homes, hospitals that those that specifically supply them, medical tourism, and services provided by health care professionals.
Furthermore, health as an industrial complex is closely related to other areas in the economy, such as the insurance of individuals. Sometimes in the past, countries placed all aspects of the “welfare state,” ranging from public health insurance and workplace accident insurance to unemployment insurance and public pension programs, under unified administration. In the private sector, life insurance companies provide more than just insurance services for paying beneficiaries upon the death of the individual insured, covering things like group life insurance, critical illness, long- and short-term disability, other private health insurance services (depending on the jurisdiction), annuities, private pensions (since pensions are a form of insurance), and various investment products. The addition of dedicated pension fund companies to the mix makes one appreciate these close relationships.
On the subject of private pensions, there are at least three illusions that need to be dispelled. First is the illusion of higher returns on the open market. Leaving aside the Iron Law of Disproportionate Immiseration and its downward pressures on individual savings (thus the ability to save for retirement in the first place), saving for retirement tends to be accompanied by a more conservative investment profile, even in younger age groups, than that accompanying non-retirement investing. The rates of return even in younger age groups can be matched and exceeded by public pensions such as the Government Pension Fund of Norway, the Dutch National Civil Pension Fund, the Quebec Deposit and Investment Fund, and the smaller Canada Pension Plan, depending on their respective investment profiles; only US Social Security is needless stuck with a low-return investment profile entirely of government treasury bills. Second is the illusion of legal security over one’s own pension investments. In the recent business restructuring case of the Big Three American automotive companies (General Motors, Ford, and Chrysler), existing pension contracts were nullified, and the legal position worldwide on employer-funded pension funds is that, despite whatever employer or non-employer trust arrangements may exist, absolutely everything in those funds not committed immediately to pension payments is the property of the employers. More emotional description of this accumulation by dispossession could be used here, such as “pension raids” and “pension theft.” Third is the illusion of ownership in individual pension investments, and this in fact extends to mutual funds. The money itself may belong to the individual investor, but there is no share ownership in either the fund companies or even the companies in the fund companies’ investment mix.
Mentioned in Chapter 3 was the point that “pension fund socialism” is merely a tool for big businesses to obtain additional financial leverage on the collective back of the working class, all the while continuing the exploitation of labour. The lack of legal security and actual employee ownership are only two of the three problems with this phenomenon. The remaining problem is political: it benefits mere sections of the working class, not the working class as a whole. Contrast this with increases in real and society-wide savings and investment resulting from the implementation of something like Rudolf Meidner’s economic plan, for example: mandatory and significant redistributions of annual business profits without allowances for net loss rebates, by private enterprises with more workers than a defined threshold, as non-tradable and superior voting shares to be held by geographically organized worker funds. Again, the respective specifics are twenty percent of business profits, fifty employees, and regional and not union-level organization of wage-earner funds.
However, in the specific case of the health-industrial complex and all assets of workers’ insurance and private pension funds, Meidner’s plan may not be enough. What certainly is a solid start, however, is the takeover of the health-industrial complex and all assets of workers' insurance and private pension funds into permanent public ownership, with levies against enterprise assets for any fund deficits, with appropriate pro rata transfer provisions for prospective pensioners, and with decisive worker participation in their administration. The levies prevent “pension raids” and “pension theft,” while the participation would be necessary in order for the new pension system not to degenerate into the joint, state-based speculation schemes known as sovereign wealth funds. On that note, one more illusion regarding private pensions should be dispelled, and this statement by Paul Cockshott and Dave Zachariah is equally applicable to insurance claims vs. insurance premiums:
The financial system now takes on the role of the feudal aristocracy and priesthood. They spend the nation's surplus product in conspicuous consumption. Instead of papal indulgences promising a better hereafter, they sell modern promissory notes supposedly guaranteeing a happy retirement. The promises are almost as egregious as those Luther protested against. Today's savings have gone on bankers' bonuses, air force jets and soldiers' wages. The truth is that the real consumption of the retired must always be supplied by the labour of their younger contemporaries. The enormous, expensive and unproductive financial system consumes savings today whilst being unable to conjure up new labour to support future retirees.
[…]
Since debts had been cancelled, firms, having no interest to pay, would remain solvent under these conditions. But they would cease to pay dividends, and shares would lose their value. This would impact private pensions. But the abolition of the national debt would leave the state in a position to substantially raise state pensions. Relatively wealthy pensioners would still lose out, but the majority of pensioners would gain.
REFERENCES
Programme of the Social-Democratic Party of Germany (Erfurt Programme) by Karl Kautsky and Eduard Bernstein [http://www.marxists.org/history/international/social-democracy/1891/erfurt-program.htm]
Materials Relating to the Revision of the Party Programme by Vladimir Lenin
[http://www.marxists.org/archive/lenin/works/1917/reviprog/ch04.htm]
Democratizing Pension Funds: Corporate Governance and Accountability by Ronald B. Davis [http://books.google.ca/books?id=S29crCk8FkIC&printsec=frontcover]
Towards a New Socialism: New preface, 3rd draft by Paul Cockshott and Allin Cottrell [http://www.ecn.wfu.edu/~cottrell/socialism_book/preface-a4.pdf]
Credit Crunch: Origins and Orientation by Paul Cockshott and Dave Zachariah [http://reality.gn.apc.org/econ/creditcrisis.pdf]