Global welfare

Nigel Harris exaggerates when he writes of a new global civil society, says Robin Blackburn. In reality, it is tiny, fragmented and lacking any transformative perspective. Adding to Harris's 'global left agenda', Blackburn suggests how the corporations that run the world can be made to pay for a new system of global welfare

December 3, 2007
6 min read

There is a lot to agree with here – the attack on militarism, the scepticism about the nation state, the insistence that, despite appalling problems, all is not lost and that wild accumulation could be tamed. My main reservation is that the new global civil society that Nigel Harris celebrates remains without a transformative perspective.

Harris exaggerates when he writes of a new global civil society, ‘vast, inchoate, constantly changing and creative’. The organisations he mentioned are mostly admirable but, far from being vast, they are – in global terms – tiny, fragmented and often without any real purchase on the accumulation process. While there are a handful of such humanitarian ‘multinationals’ and monitors there are around 40,000 multinational corporations with many millions of employees, billions of semi-captive customers and command of the lion’s share of the world’s resources.

I heartily agree on the need for innovation and for thinking outside the space of the state. The confusion of ‘nationalisation’ with public ownership and the insistent portrayal of the welfare state as a vehicle of national impulses must change.

But the national phase did embody some achievements – the NHS, the US social security programme, pensions in a number of countries. These must be defended from the marketisers and privatisers – as well as being supplemented by new global programmes.

A significant omission from Nigel Harris’s manifesto is any mention of the need to build a new global system of social protection, to finance this by obliging the multinational corporations and banks to contribute as they once contributed to national welfare states and to begin to socialise and democratise the accumulation process.

The improvements in longevity Harris mentions will lead to a steadily ageing population over coming decades. At present there are 560 million older people in the world (over 60 in poor countries or over 65 in richer countries) and the over-80s are the world’s most rapidly expanding age cohort. By 2050 there will be two billion older people and, if nothing is done, the great majority will be immersed in great poverty. At present four fifths of the planet’s adults have no pension coverage at all and little prospect of ever receiving any.

In February 2007, Global Action on Aging organised a briefing session at the UN building in New York for the Economic and Social Commission, at which the idea was floated of a global pension of a dollar a day. In July the commission published a report showing that even at such a modest level a global pension would have a major impact in reducing world poverty. South Africa, since the downfall of apartheid, has shown the way, becoming one of the few developing states with a universal pension scheme. Indeed the pension has played a vital role in a country where – because of the ravages of Aids – grandparents have often had to step into the parenting role.

While many might agree that a global pension of a dollar a day would be desirable, how could it be financed? The first pensions in advanced countries were set at at a time when those they catered for comprised only 5 per cent or less of the population. Today they are nearly ten 10 per cent and they are on course to become 20 or 25 per cent. The governments in today’s poor countries have many calls on their resources and few sources of income.

I have suggested that a very mild tax on global corporations – set at a level of no more than 2 per cent of global profits or 0.5 per cent of global share transfers – could come up with the $205 billion needed to finance the global pension. In a previous issue of Red Pepper (‘Sharing the burden’, March 2007). I discussed potential new taxes. The most suitable would be a requirement on corporations to issue new shares equivalent to 2 per cent of their profits each year. But an acceptable substitute would be a 0.5 per cent tax on the buying and selling of shares.

It might be thought that any idea of global taxes is hopelessly utopian. But 120 years ago national tax regimes were very modest and no country had a state pension. Today taxes take 40 per cent or more of GDP and there are a multitude of social programmes that would have been seen as utopian by the Victorians. Is one dollar a day for the elderly really such an outrageous demand?

Notwithstanding tax havens, governments still raise serious sums from corporate taxation. They know that they could raise more by tackling the havens and the OECD has cautiously begun to tighten regulation. But it is not easy to agree on who should benefit. A global profits tax paid to a global fund network for a universal old age pension would surely be a deserving candidate as beneficiary. The money or securities could be distributed to roughly a thousand regional funds throughout the world. The pensions would be paid directly in cash to those who qualified. It would not be appropriate to explain this further here but I go into further details in ‘A global pension plan’ (New Left Review, Sept/Oct 2007).

The global pension could be paid directly to many of the world’s poorest by a network of regional funds. These would assist poorer communities to manage funds efficiently with a mixture of expert and local recruitment. South Africa has pioneered some of the necessary apparatus with mobile ATM machines activated by a finger print device.

The regional fund network would have its own staff and be accountable to local communities. The regional fund would not be able to vary the size of the pension, but would receive needed resources commensurate with their demographic profile and would have some scope for investing revenue from their holdings of securities. They would also be able to vote the shares they held at company AGMs. The role of the local funds could be compared to Fairtrade schemes, which often use the extra revenue from a premium price to build locally-controlled social funds.

Of course this is just an example designed to show how global civil society might be empowered to really take on the corporations that run the world. The strategies we need should propose specific measures for redistributing and socialising capital or they will flounder and fail.

Robin Blackburn is author of Age Shock: How Finance is Failing Us, (Verso, £19.99). He has set out ‘A global pension plan‘ in New Left Review (No 47, Sept/Oct 2007)

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