As the life expectancy per capita in all major developed countries continues to climb, governments are attempting to alleviate the pressure of providing social security for aging populations by putting a raise in the national retirement age on their policy agendas. Proposals for delaying retirement have aroused huge popular reactions in various countries, reflecting the fierce exchange between the official and civil discourse. Intense conflicts have occurred as a result. In view of the fact that the implementation of this policy will have a significant impact on all aspects of society, there are still many issues to be explored in serious academic discussions. It should be noted that most researchers and policymakers mainly rely on the one-sided, interest-oriented thinking of liberal economics and a linearized, empirical approach, while analyses from the perspective of political economy are not yet common. Fortunately, the economic discussion of production relations and labor time has always been at the core of Marxist political economy. In the face of such an important policy change, which concerns the length of working hours, comfort in later life, and freedom for all people, the absence of political-economy discourse is a great pity. Based on this, I use the political-economy perspective to clarify some misunderstandings and provide some new policy ideas.
Analyzing the Effects of Delayed Retirement
From the perspective of political economy, social pensions are essentially a division of the overall labor wage. Under the wage-labor system, capital, through the payment of wages, obtains the right to use a worker’s labor power for a certain period of time, and thus can also dominate a worker’s remaining labor time and obtain surplus value. To maintain such a stable system of labor domination, then—in terms of the prescriptive nature of the labor wage—a retirement pension should reflect the cost of labor production and reproduction over the entire course of a person’s life. In this way, we can divide the labor wage into two parts according to the working status of human beings: in-service wage and pension on the one hand, and the contribution of a certain amount of pension insurance premiums by enterprises and of individuals since joining the workforce, on the other. The latter is also equivalent to a kind of savings account for employees at the time of their retirement. After clarifying the qualitative nature of this provision, there is only the quantitative distribution of labor wages between the two parts of the proportionality of the relationship. In a market economy, so-called pension insurance is in fact nothing more than a division of the total labor wage, which fundamentally represents a mathematical distributional relationship. Under this analytical framework, the ideal state would do a good job of long-term planning and allocation of funds, so that the pension insurance system could maintain a dynamic balance in financial terms.
Delaying retirement also means lengthening the labor time of employees, which, in essence, reduces the wages per unit of labor time of active employees while disguising this reduction. For capitalists, labor wages belong to the category of costs and expenses in operation; meanwhile, the nature of capital is profit-seeking, aimed at continuously obtaining higher profits and seizing the surplus value of workers. Therefore, in order to maximize profits and satisfy the unlimited greed for surplus labor, capitalists will try all means to reduce labor wages. Since there is great resistance to lowering wages directly, they can reduce wages indirectly by lengthening labor hours, and so obtain absolute surplus value. In particular, as capital continues to accumulate, the general rate of profit tends to decline, and in order to maintain a certain level of profitability in the competition of the market, capital is more inclined to extend the working hours of the labor force. In a situation in which the power of capital is unrestricted, it is theoretically possible to extend the working day to any length within twenty-four hours.
Delaying the retirement age of active workers across the board is really an attempt to expand the supply of labor time and reduce social pension expenditures (essentially, labor wages) in the face of increased labor costs. It is important to point out that while many scholars tend to cite the increase in life expectancy per capita to suggest that the entire population’s life expectancy has gone up, and that the expected number of years for which workers receive a pension has thus also increased. That the labor hours of the working population should increase alongside life expectancy is a commonsense error, as it misinterprets life expectancy per capita. Life expectancy per capita does not refer to the actual life expectancy of all people, but only to the life expectancy of the birth cohort—that is, the number of years a person born in a particular year is expected to live. The increase in this indicator is mainly a reflection of the advancement in the level of social development. Moreover, life expectancy is not equal to healthy life expectancy, which, for many people is much lower than their actual life expectancy.
Delaying the retirement age will in fact deepen the conflict between capital and labor. Since neoclassical economics focuses only on one-sided economic interests and fails to see the overall social production and distribution system, it has created many vulgar theories and false contradictions. In the wage and employment theories of orthodox economics, only the bourgeoisie is seen to be creating wealth and feeding the workers. This shows a lack of understanding that workers’ labor is the real source of value. It is believed that wage income can only be earned through labor, without understanding the essential provisions of labor wages and social pensions. Under this way of economic thinking, when there are difficulties in the payment of social pensions, economists seek to reduce expenditures and solve immediate problems—but they do not dare to ask capital to cede part of its profits to supplement contributions into pensions when the level of labor wages is already very low. Moreover, when faced with rising labor costs and sluggish economic growth, they attribute the cause to workers retiring too early, and they demand that retirement be delayed in order to increase workers’ lifetime labor hours.
The question that needs to be asked is: When the macroeconomic situation is good, why is there a reluctance to increase labor wages and allow workers to retire early? If they are not willing to transfer profits to increase social pensions when economic conditions are good, why do they demand a reduction in such expenditures when economic conditions are bad? The theoretical arguments in defense of delayed retirement policies are untenable and unconvincing.
Political-Economic Reflections on Delayed Retirement
The shortening of the working day in relation to the earliest phases of capitalist development is in line with the general development trend of society. Historically speaking, the lack of order and norms accompanying the initial rise of large-scale industry under the capitalist mode of production resulted in the unlimited oppression of the working class, both in terms of labor intensity and labor time, to an alarming degree. It is in this context of repression and “social disembedding” that the progress made by social movements for the protection of the labor force has been reversed, and the core of this protection has been the improvement of labor conditions and the fight for a shorter workday. The eight-hour working day eventually became a reality through the united struggle of the working class in the developed countries. The idea of limiting and regulating the working day and rest time as a universal concept was gradually accepted by countries all over the world and guaranteed by national laws.
The universal shortening of the working day did not only fail to reduce the profits of the bourgeoisie. On the contrary, the efforts of many companies to reduce labor costs due to market competition and increase innovation stimulated the rapid development of science and technology as a substitute for human labor, leading to a great increase in social labor productivity. Historical experience and the current situation in the advanced capitalist countries have demonstrated amply that the constant shortening of the working day is in line with the law of social and historical development. The delayed retirement policy is a concession to capital that is tantamount to throwing away the historical achievements of the working class in shortening the working day, and will inevitably inspire a new round of workers’ struggles for a shorter working day. It is notable that news about strikes and revolts by workers in the West is often in the press. This is determined by the inevitable contradictory relationship between labor and capital, and the state of détente is only temporary.
Shortening labor time is an essential requirement for realizing the comprehensive development of human beings. Labor and the division of labor are important clues to understanding the problem of human development. In the Grundrisse (1857–58), Karl Marx, on the basis of this materialist conception of history, put forward a three-stage theory of human development: (1) the stage of “personal dependence” and all-around material dependence; (2) the stage of “personal independence founded on the general metabolism, of universal relations”; and (3) the stage of “free individuality based on universal development of individuals and their subordination of their communal, social productivity as…[direct] social wealth.”1 Under the conditions of capitalist production, and despite the great progress of the productive forces of society, people have not yet freed themselves from their dependence on commodity production relations; that is, they are still in the stage of material dependence. People are forced to sell their labor and to submit to the social division of the labor system in order to realize the production and exchange of social products. It is also in this prescribed order of division of labor that people are bound to specific occupational positions, which not only leads to their own one-sided development, but also minimizes the space for self-development, due to the large amount of time absorbed. The trend in human social development is to progress from the stage of “material dependence” to the stage of “free and comprehensive development.” Long-term alienated labor is completely contrary to this development trend. In order to enable the self-liberation and free and comprehensive development of human beings, it is necessary to transcend the ruthless capital order and strive to realize the liberation of labor.
In order to achieve this goal, it is necessary to promote continuously the integration of the social division of labor and strive to free the masses of workers from the bondage of the rigid social division of labor positions. At the same time, it is also necessary to be able to reduce the time of mandatory labor with the growth of material wealth in society so that people can have more leisure time and to create the prerequisites for the freedom of all-around development. The most obvious sign of the progress of this process should be the continuous shortening of labor time for all. Such intrinsic demands have been put forward repeatedly along with the progress of the productive forces. With the increasing development of science and technology, advanced machinery and equipment have been put into greater use. This not only produces more abundant material products, but also saves a great deal of labor power. Yet, today economic progress does not generally bring about a reduction in human labor time, but rather results in increased labor time, which is obviously not in line with rational development.
Unproblematic Issues: The Paradox of Old Age
Thinking deeply about the social reality, we will inevitably ask a question: If the continuous development of the huge social productivity has created unprecedented wealth, why can we not solve the problem of elder care for all? This seems to be a paradox of old age. The problem appears to belong to the category of social and demographic reproduction, and the supposed lack of retirement capacity can be regarded as a demographic issue. As early as the seventeenth century, the modern meaning of social poverty and the existence of large numbers of destitute people forced governments to take a variety of measures to help the poor. It was against this historical and social background that the demographic theory of the economist Thomas Robert Malthus became popular among the upper classes. In Malthus’s view, since the number of people and their consumption needs grow geometrically while the means of subsistence grows arithmetically, these so-called laws of nature determine that there will inevitably be a portion of the population that cannot be supported and is thus a “surplus population.” Consequently, the rate of population growth must be limited by restricting the birth rate of the poor. Marx severely criticized the reactionary Malthusian law of population, which was developed in isolation from social relations. In response to the Malthusian demographic approach, Marx proposed the concepts of the reserve army of labor and the proletariat. In his view, the creation of modern poverty—or the existence of a relative surplus population—is entirely due to the existing capitalist mode of production and the law of capital accumulation, and it is only in the critique of the political economy of modern societies that the true laws of population can be revealed. The current argument that there are too many old people and that social pensions are overburdened, as well as the idea of delayed retirement (which seeks to keep the “supposedly overpopulated” elder population working), are nothing more than Malthusian demographic neologisms in disguise, reflecting theoretical retrogression.
Vulgar economists focus on what they see as workers’ early retirement, which will result in a labor force that, because of lower unemployment, cannot be driven by capital. However, they miss the glut of goods and overcapacity that abounds everywhere and the concomitant massive waste of labor. With the advent of the great industrial age of machines, there has been an explosion in the productive capacity of human society. The material production capacity for satisfying the basic needs of human beings grew much faster than population growth in this era. Today, the production capacity of the society again has seen a phenomenal increase. Comparing absolute social productivity with the population, the industrialized countries are fully capable of solving the problem of social security for the majority of the people—so why can they not solve the problem of retirement for people in their twilight years?
In the antagonistic movement of capital and labor, the power of capital, on the one hand, has been brought into full play, laying the material foundation for more advanced social stages; on the other hand, it has also led to the alienation of labor and the polarization of social classes. The working class has created enormous social wealth, but even the right to exchange labor for the means of living is not well protected. Thus, the creation of a surplus population, and the resulting problem of caring for the elderly, is rooted in the existing mode of social production itself. The crux of the problem does not lie in the fact that the government cannot afford to pay pensions, or that it does not have the ability to afford the consumption of material wealth needed for old age. It is just a statement of the inevitable historical fact that the absolute contradiction does not lie in the social wealth needed for the social security of the people, but in the antagonistic system of social production and distribution dominated by the logic of capital.
Seeing the production and total supply capacity of society as a whole, “old age” should not be a problem. Therefore, in thinking about the problem of retirement, we must start from the specific production and distribution relations and, through institutional design, gradually promote changes in the social relations of production. This would require adjusting the structure of national income distribution in line with socialized production, as well as the distribution of the community model so that the people can effectively enjoy the fruits of economic development.
Reforms for Solving the Pension Problem
The problem arising from delayed retirement is not simply a large pension gap, but it involves our understanding of the inevitability of economic and social development. If we limit our attention only to current economic conditions, then the solution to the pension problem is to do a good job in line with the “iron law of wages” under the current division and adjustment of labor wages. Wages themselves are linked to the economic situation and undergo cyclical changes due to the unorganized competition of the capitalist mode of production. In times of economic prosperity, both wages and pensions rise; in times of recession, both shrink. In the long run, pensions remain dependent on the average of wages themselves. Obviously, this does not really solve the problem of aging populations.
From the viewpoint of Marx’s theory of social reproduction, all the fruits of the country’s labor in terms of economic surplus can, from a social standpoint, be divided into two parts: the production fund, which mainly is used to compensate for the loss of fixed assets, additional investment, and reserve insurance; and the social consumption fund, which is mainly used for common consumption, including the necessary management expenditures, maintenance expenditures on schools and health care facilities, and the expenditures for the support of those who are incapable of working. Based on this perspective, the expenditure on old-age protection for retirees is in fact a partial deduction from the total consumption fund of the society, and it will increase with the continuous improvement of social civilization. In view of the reality of the pension problem, we can begin with the following reform ideas.
First, we must unite the two means of government regulation and market adjustment to build a socialist economic system. It is necessary to abandon the bourgeois illusion that the existing social relations of production will not be changed in an attempt to maintain the contradictory relationship between capital and labor for eternity, and to eliminate such erroneous economic understandings as the “middle-income trap” and the “disappearance of demographic dividend.” Given the narrowness of the mode of production based on the requirements of capital interests, those seeking to alleviate demographic problems can no longer leave the existing social relations of production unchanged, but will have to take positive action, and even use the economic crisis to create conditions for the development of a new mode of production. An economic system that better meets the requirements of the social division of labor, social relations, and the needs of individual development will be established.
Second, the national fiscal and financial system should be improved, macroeconomic intervention and guidance should be strengthened, and fiscal and tax policies should be harmonized with investment and consumption. Maintaining a certain proportion of tax revenue enables the redistribution of social income and promotes the expansion of social reproduction. This also requires that fiscal expenditure be rationalized according to the ratio of social investment and consumption to avoid overproduction. In addition, controls must be established on the direction of the flow of financial funds in order to guide the allocation of social resources, to continue to revolutionize the means of production, and to provide the material conditions for the reduction of labor time. The goal is to provide a guarantee for the development of more advanced relations of production while engendering a more harmonious relationship between labor and capital.
Third, capital should be restrained in areas relating to the national economy and people’s livelihoods, and investment in social programs should be constantly increased to expand the supply of public services. Expenditures on education and culture, medical and health care, and public recreation and community care for the elderly, all of which are related to the people’s well-being, can be included in the scope of expenditure of the community’s consumption fund. In these areas, if capital is allowed to dominate, then private profits inevitably will raise the cost of the corresponding social services. Just as in the medical field, there are a series of parties with interests in patent companies, drug companies, medical consumables companies, pharmaceutical sellers, hospitals, and so on. Therefore, support should be provided by public finance, and the government should take the lead in organizing social undertakings.
Fourth, with economic development and social progress, social/labor security should be strengthened and working hours should be gradually shortened. We must continuously strengthen social/labor security legislation and law enforcement, and, on the basis of strict regulation of the existing eight-hour workday, actively encourage and promote a shorter workday with fewer working hours. Shorter working hours not only increases jobs and eases the so-called social pressure on employment, but also raises labor costs, thereby promoting the advancement and accelerated application of technology that replaces human labor and creates greater social wealth. As people’s leisure time increases and their free individuality is liberated from labor bondage, imagination and creativity can be more fully developed, making unexpected contributions to society as a whole.
Notes
- ↩ Karl Marx, Grundrisse (London: Penguin Classics, 1993),158.
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