The reign of neoliberalism in Britain, Canada and the United States has witnessed the vast expansion of the mutual-fund industry, with a battery of mass-marketing techniques and friendly pundits at its disposal.footnote¹ Neoliberal governments on both sides of the Atlantic have offered tempting tax breaks to draw small savers into the equity market through such funds (known as unit trusts, in Britain). At the same time, the switch from ‘defined-benefit’ to ‘defined-contribution’ pensions has left millions more with their futures dependent on the stock exchange. By the late 1990s, over 50 per cent of US households had a stake in the stock market, up from 25 per cent in 1987 (and from only 3 per cent in pre-crash 1929). This exponential growth, it will be argued, has led to the emergence of a widespread ‘investment culture’ which, in turn, has played a critical role in strengthening the hegemonic dominance of finance capital—linking the perceived interests of tens of millions of workers to its own by embedding ‘investor practices’ in their everyday lives and offering them the appearance of a stake in the neoliberal order. In this sense, the mutual-fund industry can be said to represent the mass marketing of the structures and processes of global finance itself.

A hegemonic order has classically been defined as one in which ‘consent rather than coercion’ characterizes the relations between classes, and between the state and civil society; one in which there is a ‘fit’ between institutional structures, material conditions and the dominant ideology.footnote² In positive terms, a hegemonic social force must be able both to project its own interests as being for the universal good, and also to provide—or appear to provide—real material benefits to those consenting to its rule. In negative terms, it will try to deny or preclude the existence of any alternatives; here, ideological dominance can be reinforced by cultural patterns that help to ‘embed’ the outlook of a particular order by naturalizing it in everyday life and depoliticizing it.

In these terms, one can describe the postwar order in the ‘Anglo-Saxon’ countries as a broadly—though not exclusively—consensual alliance between productive capital and labour, with a workable hegemonic ‘fit’ between liberal ideology, institutional structures and material conditions. Importantly, productive capital granted a relatively high degree of material concessions: increased wages and benefits through Fordist mass production and mass consumption; welfare-state provision, through the national control of macroeconomic policy enabled by Bretton Woods; low unemployment, through Keynesian demand management; and the socialization of economic risk through New Deal and national insurance schemes. Delivered in part through the structures of productive capital, in part through the state, these concessions saw the emergence of a ‘consumer culture’ which served to reinforce the hegemonic ideology of the American Dream.

Since the breakdown of Bretton Woods in the early seventies, capitalist restructuring has entailed a shift towards institutional structures and policies that reflect the interests and growing power of finance capital—and a move from what has been described as the ‘embedded liberalism’ of the welfare state to a new ‘embedded financial orthodoxy’, with a programme of increased capital mobility, shareholder value, ‘flexible’ labour, minimal social provision and the privatization of economic risk.footnote³ Ideologically, the leading proponents of neoliberalism first attempted to draw on classical economics to make the case for the universal benefits of free markets, low taxes, low inflation and self-reliance, as well as the notion, most famously associated with Margaret Thatcher, that ‘There is no alternative’. Critics, however, have pointed to the decline in material concessions offered to other social layers compared to those of the Keynesian postwar order. Restructuring has heightened job insecurity, lowered real wages, lengthened working hours, contracted the welfare state and increased inequality. It has been suggested that the harsh free-market practices of neoliberalism represent a ‘politics of supremacy’ on the part of capital, rather than a ‘politics of hegemony’. In this view, the latest capitalist order is seen as more brittle than its Fordist predecessor: ‘whilst there has been a growth in the structural power of capital, its contradictory consequences mean that neoliberalism has failed to gain more than a temporary dominance over our societies’.footnote⁴

Yet while the concessions that served to link the interests of workers to those of productive capital may be in decline, new trends, associated with the rise of the mutual-fund industry and the emerging ‘investment culture’, may be creating the perception of a growing link between the interests of workers and finance capital. By transforming tens of millions from passive savers into ‘active’ investors, mutual funds may be vastly expanding the constituency in favour of neoliberal macroeconomic policies and structures, and creating a far more powerful ideological tool for finance capital than free-market orthodoxy alone can provide. By ensuring both the apparent benefits and the willing participation crucial to a genuinely hegemonic order, as well as helping to naturalize and depoliticize its processes, the new mass investment culture may serve to reproduce neoliberalism in a far more consensual form.

The origins of mass investment lie in the privatization of pensions. During the postwar period, the predominant form of retirement saving was through the defined-benefit pension plan, under which companies would agree to pay their workers a specific, predetermined sum—based, for example, on a percentage of salary or a flat rate per year of service. To pay for the pensions, companies would create an investment fund from contributions deducted from workers’ wages. For employees, the advantage was that the risk of making enough money from investing the fund was taken over by the employer, who was responsible for paying the guaranteed pension even if investment returns fell short. Defined-benefit pension plans reflected productive capital’s need to maintain a large core workforce, consistent with mass-scale, assembly-line manufacturing. They generally operated on the principle of ‘imperfect vesting’, where pension rights accrued to the employee only after a number of years of service, and were used as a mechanism for reducing labour turnover. Pension benefits were thus more of an entitlement than a return on investment; individual workers more akin to passive savers than active investors, or speculators on the stock exchange.

By the 1990s, this system had decisively shifted.footnote⁵ The new order—or, as one right-wing think-tank chose to call it, the ‘rise of the worker capitalist’—was seen by its proponents as ‘inextricably linked with the rapid and recent substitution of defined-contribution plans, which create individual investors, in place of defined-benefit plans, which create individ­ual entitlements’.footnote⁶ Under the ‘defined-contribution’ system, the pension’s worth is no longer guaranteed by the employer: instead, workers (and/or their employers) contribute to an investment fund that will pay out a sum entirely based on its market value when retirement comes. In this type of plan, all risk (of inflation, low market returns, etc.) is borne by the individual worker. Since most such pension plans are invested in mutual funds, chosen and monitored by the employee, huge sections of the workforce have thus been obliged to become active investors. It is this shift of risk and control that characterizes the new era of mass investment.footnote⁷