The Subterranean Politics of Pension Financialization

• In Event: The World Under Financialization

Abstract

Over the past twenty years, financialization research has made a large contribution to the field of political economy. Thanks to studies of financialization, we have been able to make great strides in our theoretical understandings of models of capitalism, particularly as they pertain to questions of institutional change. A more recent development in financialization studies is scholarly attention for the political role played by finance, both within national political economies and at the global level. Studies focusing on the structural and infrastructural power of finance have generated important insights into the influence of finance over the policy process. A downside of such studies is the focus on public displays of financial power, e.g. lobbying activities or contributions to consultation procedures.
In many political economies, however, financial actors also influence the policy process outside the public view, for instance in policy committees or expert groups within the bureaucracy. In these capacities, financial actors provide much-needed expertise to policy-makers, who often lack deep knowledge on the inner workings of the financial system. It’s through their role as invited experts that financial actors can influence various dimensions of the policy process, such as problem definition and policy formulation. Deviating slightly from Hacker’s (2002) use of the term, I call this “the subterranean” politics of finance. The subterranean politics of finance raises a number of questions: How should we conceptualize financial power in light of the different models of capitalism? Where can we observe subterranean expressions of financial power? And what kind of methodologies should we use to excavate those manifestations of power that occur outside the public eye?
Addressing these questions, I will use illustrations from an ongoing book project on the financialization of the Dutch pension system. The book shows how financial actors have influenced major pension reforms in the Netherlands over the course of the 20th century through their “invisible” embeddedness in policy committees and working groups within the bureaucracy. My paper will show how financial power is exercised, even in a corporatist political economy where labor market actors (organized business and unions) hold formal decision-making power over pension policy.

Author

• Natascha van der Zwan, Leiden University