Second only to war, pensions have become the most divisive—and, perhaps, the most decisive—issue of contemporary politics. Massive popular mobilizations on the question during the nineties brought down Silvio Berlusconi’s government in Italy (1994–95) and Alain Juppé’s in France (1995–96). In the summer of 2003, it poses the most direct political challenge to ruling parties of every hue: German Social Democrats, French neo-Gaullists, Austrian Christian Democrats and the newly elected pt in Brazil. Returned to power, Berlusconi is lobbying for a ‘Maastricht del welfare’, a Europe-wide downsizing of public pensions that would have, according to the Corriere della Sera, ‘the same binding force as Maastricht has had for the common currency’. Across the Atlantic, the mayor of Mexico City Andrés Manuel López Obrador is using Latin America’s second oldest (after Cuba) universal pension system—financed, within a pre-given budget framework, through more effective property management and by ‘republican austerity’ cutting bureaucratic perks—as a promising springboard for a possible presidential bid.

Pensions have made governments, as well as broken them. In the mid-fifties the new West German earnings-indexed pension system cemented Christian Democratic power, along with German rearmament and Westbindung, for another decade and more—worn down at last by the ineptitude of Ludwig Erhard, who had anyway opposed the pension reform. Swedish Social Democracy survived the political erosions of the fifties’ boom through an ambitious and carefully designed occupational pensions’ scheme, for which it campaigned vigorously. The master stroke was the provision that white-collar employees—most of whom already had a company or industry-wide, collectively bargained pension—could opt out in favour of a private arrangement that was equally comprehensive, generous and inflation-secure. Employers and the Liberal leadership of a major white-collar union both had a political interest in a separate scheme, but were forced to admit they could not come up with an equivalent alternative. From the 1960 election onwards, white-collar employees transferred their political support en masse to the Social Democrats, who remained in power for a further fifteen years until the nuclear issue polarized the electorate along different lines.

Pension policies stand at the intersection of three major social arteries. The changing human life-course—increasing longevity, earlier retirement—has made them, firstly, increasingly salient in everyday experience. Secondly, established entitlements for old age have tended to acquire a legitimacy bestowed on few other welfare provisions, and are often defended in terms of human rights. Tampering with these is a very risky enterprise in any democratic system; American ‘social security’ is perhaps the only major New Deal institution to have survived the attentions of Reagan, Clinton and Bush. Thirdly, given the massive funds involved, they engage the interests of high finance. Public pensions comprise 10–15 per cent of gdp in Western Europe and in the mid-nineties made up 7 per cent of gdp in the us. Pension funds, most of them private, have become major players in the world economy. At their peak in 1999, their total assets corresponded to almost half—46 per cent—of world income, having risen from about 30 per cent in 1992. After losses of $2,700 billion in the last three years—equivalent to almost two years of uk national income—pension fund assets are now back at a third of total world gdp, or nearly twice (180 per cent) the combined product of all low and middle-income countries. Fifty-six per cent of fund assets are held by American funds, 9 per cent by British ones.

Recognition of the importance of the political economy of pensions has been slow in coming, however. When, in the mid-eighties, a gifted Scandinavian graduate student told his supervisor, a very distinguished and perceptive Latin European political scientist at the European University Institute in Florence, that he wanted to write a thesis about pensions, he was met by a wall of incomprehension. Why should anyone be interested in such a boring topic? In 1994, however, the World Bank opened fire with its most ambitious and aggressive policy document to date. Averting the Old Age Crisis: Policies to Protect the Old and to Promote Growth is a book-length attack on public pensions—other than as final stopgap before indigence—and paean to privately funded systems, feeding into the financial markets. This remarkable publication combined the vast resources of the Bank, deployed for far-reaching research, with strongly biased comparisons and aggressive political pleading. Estelle James and the other World Bank policy-makers understood, long before Donald Rumsfeld, that the best way to attack the well-entrenched social institutions of Western Europe was to line up the Eastern Europeans, many of whose politicians, senior bureaucrats and opinion-makers had long been conditioned to rotate around a powerful sun. In 1996 the Bank organized an invited gathering in Budapest, flying in their economists—including a key ambassador of Pinochetista scheming in Chile—to ‘sell’ private pensions to East and Central Europe. All the social-policy specialists were either sceptical or critical; but Treasury officials were enthralled. Such fascination was not confined to the ex-Soviet bloc: that year’s Finnish budget bill was discovered to have lifted paragraphs directly from the World Bank report, without citation, under the guise of the Helsinki Treasury view.

Robin Blackburn’s Banking on Death is therefore a most timely book; it is also a beautiful read, enlivened by the wisdom of, inter alia, La Rochefoucauld, Gogol and Adorno, with illustrations by Goya, among others. As a scholar, Blackburn is best known as a major synthetic historian of slavery, but he brings to the study of pensions his wide-ranging experience as editor of nlr and recent transatlantic university assignments. Academic writers on social policy are usually either social scientists or historians, and tend to respect a deeply entrenched division of labour: historians write about origins and paths of development, social scientists on current issues and outcomes. Some historical sociologists, it is true, have plunged into the past; but Blackburn here is writing about the present as history, and as a narrative historian.