With the advent of a Social Democrat-Green coalition in Germany, with socialists or social democrats in the governments of thirteen out of fifteen members of the eu and with Communists in the French and Italian Cabinets, the European Left faces an historic opportunity. The swing to the Left in Europe coincides with an extraordinary economic conjuncture, with wide-spread turbulence in global markets and nervousness about the launch of the euro, continuing high unemployment and profound anxiety concerning pension and welfare reform.

The French and German governments have already proposed a package of measures designed to create jobs and prevent the stalling of the modest economic recovery already underway. They will need to make sure that these very necessary measures are in harmony with the launch of the euro and the interest rate policy of the European Central Bank. The combination of open-handed fiscal policy and tight monetary policy is not a recipe for sustainable growth. A much overdue assault on the scourge of unemployment has been promised but has yet to assume any clear shape. As far as fiscal and welfare policy is concerned, Oskar Lafontaine, the new German Finance Minister, has proclaimed the need for a harmonization of tax and welfare arrangements to prevent the logic of ‘social dumping’. But there remains an absolutely critical area of social policy—provision for old age—where the strategy of the European left parties remains very indistinct. This is particularly remarkable in view of the fact that the defeat of Berlusconi, Juppé, Major and Kohl, which cleared the way for the formation of these governments of the Left, was, to a significant extent, the result of popular anger at their pension policies.

State pensions are threatened everywhere, as the tax-raising powers of government are squeezed, and as the greying of the population requires today’s workforce to support ever-larger numbers of the retired. The latter, having themselves paid a lifetime of contributions and taxes geared to more generous provision, find that their income plummets on retirement—in the uk the basic pension is less than a fifth of average earnings—and they are deemed an inconvenient burden on the health service. At the same time, workers are being urged to entrust their savings to private pension funds just at a time when world markets are exceptionally fragile. Indeed, it will be the argument of this article that a ‘grey spectre’ haunts capitalist accumulation itself, since private pension and insurance funds have grown hugely in importance, and have contributed in a major way to the turbulence of the world economy.

The speculative lurches and tremors of the exchanges are of vital concern to large numbers of employees as well as to the corporate élite. In Britain, private pension ‘mis-selling’ on a huge scale contributed to the débâcle of the Major government; New Labour, having first canvassed the desirability of mandatory ‘stakeholder’ pensions, to be offered by trade unions and other collectively owned and managed associations, announced in December 1998 that the stakeholder pensions were to be voluntary and to be managed by the private pensions industry.

In what follows, I am going to argue that pension funds help to constitute a new pattern of political economy which is deeply implicated in current economic woes. The doctrines and policies of neoliberalism certainly bear heavy responsibility for market turmoil, but the roots of the latter lie in the innermost structures of the financial complex to which the funds belong. Simply giving more resources and authority to the imf will not restrain the forces of competitive mayhem. And while capital controls and national economic regulation are part of the solution, they will not be effective if they are simply imposed from above by the authorities rather than stimulating an economically active citizenry. The new régime demands a specific response from progressive forces, on the terrain of the new reality and based on recognition that the pension issue joins up with other, even larger, questions concerning the shape and direction of society as a whole. While the Left in Europe now has the possibility, indeed necessity, to address these problems they arise in one form or another in almost every region—and most particularly in the us, where Clinton has proposed a dramatic plan to rescue the social security retirement fund.footnote1