The Generation Game

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The useful pensions article by Solomon Hughes (September SR) contrasted 'pay as you go' and pre-funded (savings) pension systems, but it omitted a crucial economic point.

All methods of supporting pensioners are in reality 'pay as you go', or more accurately 'consume as you produce', and all are in fact based on 'intergenerational solidarity', ie today's workers providing goods and services for today's pensioners. This is concealed by the great con that is the money system, which also of course conceals the 'inter-class robbery' by which the ruling class get very generous goods and services out of us.

When we save for our old age we are obviously not piling up potatoes, televisions, clean water, operations and so on which we will consume years later when we retire. We are piling up money. Money in this case is just a promise to supply real goods and services at a later date. So when we spend this money after retirement, the workers who are then producing the potatoes and so on are keeping the 'promise', ie showing intergenerational solidarity, just as we who work now provide the goods and services for currently retired people.

Of course, when there is a capitalist slump this all goes wrong, as millions are thrown on the dole and production collapses. Governments then slash pensions, or hyperinflation makes them worthless. Either way, the precious promise becomes worth little or nothing as the real world of collapsing production bursts through the sham.

Everything consumed now is produced by those who work now. It doesn't mystically appear by someone spending money they saved long ago. That is also why the 'ageing population crisis' is baloney. The point is that there is plenty of wealth being produced--the fight is over how it is distributed. Robin Blackburn's book may be good, but his proposed 'worthy' pre-funded pension scheme just puts a liberal gloss on the great money scam underlying all savings-type pensions.

Pablo Stern
Sheffield