new left review 9 may jun 2001 103

adam harmes

MASS INVESTMENT CULTURE

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.1 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 ‘defi ned-benefi t’ to ‘defi ned-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 wide-spread ‘investment culture’ which, in turn, has played a critical role in strengthening the hegemonic dominance of fi nance 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 fi nance itself.

A hegemonic order has classically been defi ned 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 ‘fi t’ between institutional structures, material conditions and the dominant ideology.2 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 benefi ts 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

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patterns that help to ‘embed’ the outlook of a particular order by natural-izing 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 ‘fi t’ between liberal ideology, institutional structures and material conditions. Importantly, productive capital granted a relatively high degree of material concessions: increased wages and benefi ts through Fordist mass production and mass consumption; welfare-state provi-sion, through the national control of macroeconomic policy enabled by Bretton Woods; low unemployment, through Keynesian demand man-agement; 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 hege-monic 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 refl ect the interests and growing power of fi nance capital—and a move from what has been described as the ‘embedded liberalism’ of the welfare state to a new ‘embedded fi nancial orthodoxy’, with a programme of increased capital mobility, shareholder value, ‘fl exible’ labour, minimal social provision and the privatization of economic risk.3 Ideologically, the leading proponents of neoliberalism fi rst attempted to draw on classical economics to make the case for the universal benefi ts of free markets, low taxes, low infl ation 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 mate-rial concessions offered to other social layers compared to those of the Keynesian postwar order. Restructuring has heightened job insecurity,

1 I would like to thank Stephen Gill, Eric Helleiner, Isabella Bakker, Timothy Sinclair and Craig Murphy for their insightful comments on earlier drafts.2 Stephen Gill and David Law, ‘Global Hegemony and the Structural Power of Capital’, in Gill, ed., Gramsci, Historical Materialism and International Relations, Cambridge 1993. 3 Philip Cerny, ‘American Decline and the Emergence of Embedded Financial Orthodoxy’, in Cerny, ed., Finance and World Politics: Markets, Regimes and States in the Post-Hegemonic Era, Aldershot 1993.

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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 predeces-sor: ‘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’.4

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 fi nance 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 poli-cies and structures, and creating a far more powerful ideological tool for fi nance capital than free-market orthodoxy alone can provide. By ensur-ing both the apparent benefi ts and the willing participation crucial to a genuinely hegemonic order, as well as helping to naturalize and depo-liticize its processes, the new mass investment culture may serve to reproduce neoliberalism in a far more consensual form.

Atomizing retirement risk

The origins of mass investment lie in the privatization of pensions. During the postwar period, the predominant form of retirement saving was through the defi ned-benefi t pension plan, under which companies would agree to pay their workers a specifi c, predetermined sum—based, for example, on a percentage of salary or a fl at 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. Defi ned-benefi t pension plans refl ected productive capital’s need to maintain a large core workforce, consistent with mass-scale, assembly-line manu-

4 Stephen Gill, ‘Globalization, market civilization, and disciplinary neoliberalism,’ Millennium, vol. 23, no. 4, 1995, pp. 400–2.

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facturing. 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 benefi ts 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.5 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 defi ned-contribution plans, which create individual investors, in place of defi ned-benefi t plans, which create individ ual entitlements’.6 Under the ‘defi ned-contribution’ system, the pension’s worth is no longer guaranteed by the employer: instead, work-ers (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 infl ation, 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 inves-tors. It is this shift of risk and control that characterizes the new era of mass investment.7

Just as the socialization of retirement risk in Anglo-Saxon countries was a product of the postwar order, its privatization is part of the trend towards free-market restructuring, and the demand by employers and shareholders for a more fl exible, ‘self-reliant’ workforce, with job secu-rity now a thing of the past. Under the defi ned-contribution system, laid-off workers carry their pension plans with them when they go. At

5 See John Kimpel, ‘Mutual Fund Investments in Participant-Directed Retirement Plans’, in Clifford Kirsch, ed., The Financial Services Revolution: Understanding the Changing Role of Banks, Mutual Funds and Insurance Companies, New York 1997.6 Richard Nadler, ‘The Rise of Worker Capitalism’, Cato Institute Policy Analysis, no. 359, 1 November 1999.7 Robin Blackburn has eloquently argued the case for small pension fundholders to take control of the funds, in order to use them for progressive ends: see ‘Grey Capitalism’, NLR I/233, Jan–Feb 1999. It is nevertheless the contention of this essay that the individualist ideology of investment culture operates as a powerful countervailing force to such collectivism, serving rather to reproduce the structures of neoliberal rule.

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the same time, traditional pay-as-you-go social security and state-pension plans—transferring income directly, via tax, from current workers to pensioners—have come under growing pressure from both fi scal and demographic trends. A 1998 report argued that:

The ageing of populations of the OECD area has produced a rising need for retirement products by increasingly wealthy and sophisticated individual investors. At the same time, the baby boom cohort is causing looming fi scal problems in countries relying predominantly on pay-as-you-go fi nanced state-pension provision systems.8

Neoliberal governments have been insistent on the need for individual retirement plans, and offered substantial tax incentives to encourage the move to private pensions.9 Meanwhile, the notion of a ‘coming crisis’ in state pensions has been energetically promoted by a lobby stretching from conservative think-tanks to public-education initiatives and the World Bank.10

Whether or not the state-pension crisis is as grave as some would insist, growing numbers now take it as given and have turned to private pen-sions. By 1996, only 10 per cent of American workers expected social security to be their most important source of future retirement income: 30 per cent listed ‘personal pension-plan contributions’ as their most important source, 23 per cent listed ‘personal investments outside of employer pension plans’ and 22 per cent ‘employer contributions to a pension plan’.11 Perceptions of a coming crisis in social security have contributed to an increasing acceptance, particularly among young people, that the downsizing of government and of company-provided retirement benefi ts is simply inevitable. A 24-year-old’s comment that ‘We no longer have the luxury our parents did of being able to wait, spend

8 Hans Blommestein and Norbert Funke, ‘Introduction to Institutional Investors and Institutional Investing’, in Institutional Investors in the New Financial Landscape, OECD, Paris 1998.9 New Labour’s so-called ‘stakeholder’ pensions, for example, proffer an immediate £792 top-up from the government, plus an additional subsidy of £648 claimable on tax returns: a £3,600 fund for the price of £2,160. See Isabel Berwick, ‘Take Hold of a New Tax Break’, Financial Times, 7 April 2001. 10 World Bank, Averting the Old Age Crisis, Oxford 1994.11 Survey by the American Employee Benefi ts Research Institute and Matthew Greenwald and Associates, July 1996, cited in Investment Company Institute, ‘Public Confi dence in the Social Security System’, Fundamentals, October 1996.

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forty years in the same company and expect it and the government to take care of us when we are old’, is illustrative of the pervasive attitude.12

Growth of mutual funds

In the course of the last decade, the ranks of small investors have been vastly swelled by the expansion of the mutual-fund industry. Again, neoliberal governments have provided vital support in the form of substantial tax breaks for personal-savings plans—effectively, a form of subsidy. Government boosters were reinforced by huge marketing campaigns and media attention—and, of course, enormously aided by the nineties bubble. In Canada, as in the US, over 50 per cent of house-holds now have some stake in the stock market. In Britain, the total number of unit-trust accounts rose from 4.45 million in 1991 to almost 10 million in 1997. This expansion has drawn broader social layers than ever before into a direct relationship with the fi nancial markets: by 1996, 41 per cent of US households with incomes between $35,000 and $50,000 owned mutual funds, as did 18 per cent of those with annual incomes under $35,000.13 The proportion of basic-rate and lower-rate taxpayers among UK unit-trust holders had increased to approximately 79 per cent by 1997.14 In Canada, over half of those who contribute to mutual funds through Registered Retirement Savings Plans have annual incomes of less than $40,000 (CDN).15 The median income of individual stock-owners is now around $40,000. The increase has been particularly dramatic among labourers and farmers (107 per cent), householders under 35 (65 per cent) and families with incomes under $25,000 (80 per cent). It would seem that ‘even the humblest saver has quick and relatively cheap access to the best fund managers in town’.16

12 Cited in Michela Pasquali, ‘Young face their fi nancial future’, Globe and Mail, 15 August 1996.13 Investment Company Institute, ‘Mutual Fund Ownership in the US’, Fundamentals, December 1996, and ‘US Household Ownership of Mutual Funds in 1997’, Fundamentals, February 1998.14 Association of Unit Trusts and Investment Funds, ‘PEPs Have Created a New Generation of Investors, Industry Research Shows’, Press Release, 20 January 1998.15 Investment Funds Institute of Canada, ‘Mutual Funds: a strategy for everyone (Advertising Supplement)’, Maclean’s, 12 January 1998, p. 6. 16 ‘The Seismic Shift in American Finance’, Economist, 21 October 1995.

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Transforming mass culture

When a product enters the wholesale market it becomes economically signifi cant; when it enters the retail market it becomes socially signifi -cant. With the growth of the computer industry, a technology once the preserve of a tiny scientifi c elite has become—through the marketing of PCs, video games and CD-ROMs, the development of the internet, the computerization of commerce, fi nance, industry and offi ce life—the vehicle of a mass cultural transformation, in advanced capitalist coun-tries at least. Familiarity and constant interaction with IT, in leisure time as much as at work, has helped to naturalize ideas about specifi c forms of progress and accelerating rates of change, and to depoliticize broader questions associated with the information revolution and with globali-zation more generally. The technology’s democratizing effect has been widely acclaimed; its leaders are now household names, accorded guru status in the popular press; ‘computer literacy’, in the advanced capital-ist countries at least, has become an essential skill. In sociological terms, the mutual-fund industry is now where the computer industry was ten years ago; the new culture of mass investment is creating a comparable, although surely more politically signifi cant, phenomenon.

A central strategy in the mass-marketing of mutual funds has been to naturalize stock-market investment as a popular activity, rather than an elite pursuit. To this end, mutual-fund investing is presented as an everyday purchase, no different from buying clothes or food, and equally frequent. As GT Global’s public relations manager put it, ‘investing should be one of the basics, you put money away every month’.17 Increasingly, the funds have been marketed in the same way as con-sumer products. American Express, for example, have offered points under their ‘reward programme’ to customers buying designated mutual funds with their AmEx cards—one point for every $10 invested. Noting that this was the fi rst time that the concept of loyalty bonuses had been applied to the selling of investments, the Financial Times described the AmEx campaign as ‘the latest development in an intensifying con-test between the biggest fi nancial services companies in the US to sell mutual funds using marketing and sales techniques previously reserved

17 Laura Curtis, Manager of Communications and Public Relations, GT Global, interviewed by the author: Toronto, 28 November 1997.

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for consumer goods’.18 In a similar fashion, the Bank of Montreal—one of Canada’s largest—has teamed up with McDonald’s restaurants in order to market its mutual funds, giving out a free investment self-test and information package with every Big Mac.19

Financial ‘supermarkets’ have sprung up, where funds ‘come decorated with an array of inducements normally applied to fast-moving consumer goods’.20 The concept of the fi nancial supermarket was introduced in 1984 by a San Francisco discount broker, Charles Schwab. Called ‘Onesource’, Schwab’s scheme allowed investors to choose a range of funds from different companies and to switch between them with-out any transaction costs. It has since attracted over $1 billion per month and spawned numerous pretenders, such as those run by Fidelity Investments (the second largest supermarket chain, offering 621 funds from 91 different companies) and the aptly-named ‘Investore’ run by the Bank of Montreal. Sums spent on mutual-fund advertising rocketed in the course of the nineties, soaring in Canada, for example, from $6.4 million in 1991 to $70 million in 1997.21

Speculation as self-expression

It’s been said that ‘if you had to create capitalism from scratch, and you wanted to make it popular, the fi rst thing you would do is invent mutual funds’.22 In stark contrast to traditional ‘defi ned-benefi t’ schemes, mutual funds have been marketed as a form of consumption that offers instant gratifi cation. ‘Besides reaping the material rewards that come with greater choice and higher returns, many people have discovered that managing their own fi nances can be tremendous fun’, enthused the Economist.23 For young white- or blue-collar workers, mutual funds can offer the illusion of upward mobility, a mass-market version of the trappings of global fi nance. In the peculiar neoliberal gendering of this

18 John Authers, ‘Razzle-dazzle lures investors’, Financial Times, 9 December 1996.19 Shirley Won, ‘Bank serves mutual funds at McDonald’s’, Globe and Mail, 6 February 1998.20 ‘Razzle-dazzle lures investors’.21 Andrew Willis and Andrew Bell, ‘Mutual Fund Mania’,Globe and Mail, 1 February 1997.22 Brian Barry, ‘A Survey of Fund Management: All Capitalists Now’, Economist, 25 October 1995.23 ‘All Capitalists Now’.

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culture, where masculinity is equated with market success, a young man can signify his status with a call to his fi nancial advisor on his mobile phone; a young woman, entering the traditionally all-male world of fi nance, can feel she has satisfactorily outstripped her mother’s more constricted role. With the market downturn, other paradigms are coming into circulation: the rugged frontier spirit, 49ers, true grit, pioneers. ‘Think of stock fl uctuations as your friend, not your enemy’, counsels Warren Buffett: investors with character are in there long-term. ‘Those valleys offer a rich environment for smart miners. Sometimes, investors have to dig deep for a payoff.’24

The ‘individualization’ of mutual funds—in the US, the number on offer rose from 564 in 1980 to 6,368 in April 1997—has helped cater to the perception that they offer small-time investors a greater degree of choice and control in their everyday lives; they can express their own individual identity by putting their money into one of the numer-ous ‘theme’ and specialty funds, niche-marketed in a similar fashion to consumer goods.25 One industry observer (once again, likening stock-market speculation to a casual purchase) described choosing a mutual fund as ‘a lot like buying ice cream. There’s a vast universe of fl avours to choose from, and more are being concocted all the time.’26 For those seeking a cosmopolitan or risk-taking image, there is a wide range of regional, international, global and emerging-market funds. To demon-strate a connexion to a particular industry, there are funds that specialize in the resource sector, health, entertainment or high-tech. In the UK, the Singer and Friedlander Group offers the chance to ‘share in foot-ball’s fortunes’ with its Football Fund which, according to a former Liverpool captain, ‘provides an easy way for supporters and investors alike to become real owners and not just fantasy managers’.27 In such cases, small fundholders may feel they are getting something from the process of investing, whatever returns the future may bring.

24 James Glassman, ‘From Foe to Friend: Turning the Bear Market into an Advantage’, International Herald Tribune, 2 April 2001.25 Investment Company Institute, Mutual Fund Fact Book, Washington 1997, p. 19.26 Shirley Won, ‘Investing: How to catch a rising star’, Globe and Mail, 13 September 1997.27 Cited in Singer and Friedlander brochure and Ian Cowie, ‘A risk of two halves for fans of football’, Daily Telegraph, 11 January 1997; Mitchell Jones, Private Client Fund Manager, Singer and Friedlander Group PLC, interviewed by the author: London, 23 February 1998.

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More overtly political forms of identity are also catered for. In 1997, the Mouvement des Caisses Desjardins launched a mutual fund invest-ing exclusively in Quebec stocks and bonds, ‘a move aimed largely at placating patriotic customers who want to keep more of their money at home’.28 For the more socially progressive, the emergence of ‘ethical’ mutual funds—including labour-sponsored venture-capital funds and green funds—can provide an alternative, fi nancial outlet for activist ten-dencies. In a similar fashion to the ‘liberation-marketing’ strategies of soi-disant Che Guevara and Malcolm X products, funds of this type help to channel forms of everyday resistance into directions compatible with the interests of fi nance capital. At the same time, by offering an alterna-tive mechanism through which employees can feel they express their identity, exercise control and even resist, the process of investing may help—albeit to a much lesser extent than the process of consuming—to offset, and create acquiescence to, a more profound alienation from the labour and political processes.

Acquiring ‘fi nancial literacy’

Mass investment culture has not emerged spontaneously: an entire sub-industry has been created to teach the new layer of investors the necessary basic skills. The trend began in a decentralized fashion, with individual fi rms offering ‘investment seminars’, primarily for the pur-pose of ‘relationship building’. Over time, the motivation of mutual fund companies became more sophisticated as they began to realize that educated investors were more likely to invest in complex instruments, generating higher commissions.29 By the mid-nineties, newspapers were running spates of articles on investment and personal fi nance, and there was an explosion of ‘how-to-invest’ books—many, again, niche-marketed.30

By the late nineties, the promotion of investment skills had become more centralized and strategically oriented, with the notion of ‘fi nancial

28 Konrad Yakabuski, ‘Desjardins launches Quebec mutual fund’, Globe and Mail, 20 June 1997.29 Terry LaCorte, Investor Relations, Zenon Environmental Inc., interviewed by the author: Toronto, 5 May 1998; Emily Black, Financial Advisor, Equion Group, inter-viewed by the author: 13 May 1996.30 See, for example, Marsha Bertrand, A Woman’s Guide To Savvy Investing, New York 1998; Rosanna Spero, Every Woman’s Guide to Personal Finance, Leighton Buzzard 1995.

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literacy’ gaining currency among industry umbrella groups, securities regulators, government departments and consumer groups. In 1997, the US Congress passed the ‘Savings Are Vital to Everyone’s Retirement Act’ and directed the Department of Labour to promote fi nancial literacy through public-service announcements, public meetings and seminars, educational materials and the creation of an internet site. In the same year, the US Senate Appropriations Committee directed the Securities and Exchange Commission ‘to provide a programme to inform investors of the risk and rewards of the market, including the need for diver-sifi cation’. In response, the SEC initiated its 1998 ‘Facts On Saving and Investing Campaign’ with a week of nationwide activities devoted to investor education. Starting from the premise that ‘America faces a fi nancial literacy crisis’, the SEC campaign comprised ‘investment education seminars’, a National Roundtable on Saving and Investing (bringing together leaders from government, the fi nancial sector, con-sumer groups and the media to discuss ‘fi nancial education strategies’), and a ‘National Investors Town Meeting’, a two-hour live broadcast, available nationwide via satellite TV.31 In Canada, the Ontario Securities Commission has established the ‘Investor Learning Centre of Canada’ and held an ‘Investor Education Week’, with the (state-funded) mass dis-tribution of ‘investor-education kits’ across the country.32 In Britain, the Association of Unit Trusts and Investment Funds has offered one-day courses on investing, produced educational factsheets and, in September 1996, launched a ‘Getting Personal With Finance’ campaign to ‘increase public awareness of unit trusts . . . and, in particular, to reach those who do not read the “money” sections of national newspapers’.33

Interestingly, both public and private-sector campaigns for ‘fi nancial lit-eracy’ have now started to target children. As with the adult-oriented initiatives, this began as a marketing strategy, with the introduction of special children’s mutual funds: Stein Roe’s ‘Young Investor’ and AIG’s ‘Children’s World’ in the US; Invesco’s ‘Rupert the Bear’ fund in Britain;

31 Cited in ‘Excerpts from Recent Polls and Studies Highlighting the Need for Financial Education’, SEC Press Release, Offi ce of Investor Education and Assistance, Washington, DC, 24 February 1998.32 Terence Corcoran, ‘Education weak [sic] at the OSC,’ Globe and Mail, 13 April 1998.33 AUTIF, Annual Report and Accounts 1996, London 1996, p. 13; Victoria Nye, Director of Training and Education, Association of Unit Trusts and Investment Funds, interviewed by the author: London, 23 February 1998.

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in Canada, the Imperial Bank of Commerce’s ‘Mutual Fund Youth Portfolio’ and GT Global’s ‘FUNds for Kids’ programme. Discussing the motivation behind FUNds for Kids, GT Global’s PR manager explained: ‘we decided that there was a void in the education system where one of the life skills, that being fi nancial literacy, was not being addressed and that, as a mutual fund company, we could play a part in fi lling that void’.34 The programme includes a package for children under nine, with a stuffed ‘Henry the Hedgehog’ (as in ‘hedge your investments’), a mock mutual-fund certifi cate and a storybook, Henry’s Mysterious Present: A Story About Mutual Funds. In the ‘how-to’ publishing indus-try, an increasing number of fi nancial education books for children have emerged with titles such as First Class: The Original Financial Guide for High School Students; The Money Tree Myth: A Parents’ Guide to Helping Kids Unravel the Mysteries of Money; and Wow the Dow! The Complete Guide to Teaching Your Kids How to Invest in the Stock Market.

Neoliberal governments have moved to ensure the formal inclusion of ‘personal fi nance teaching’ in national curricula. In Canada, the Bank of Montreal runs a ‘My Money Investment Club’ for children that includes the mass distribution of a ‘Simple Steps Investment Kit’ to schools, with a guide for teachers on how to teach ‘investment skills’ and an edu-cative investment board-game. The ‘Jump$tart Coalition for Personal Financial Literacy’ has produced a benchmark survey of the fi nancial literacy of American high-school students, and a set of guidelines for teaching basic investment skills. It also acts as a centralized clearing-house for all manner of teaching materials on the topic of personal fi nance.35 In Britain, the NatWest bank has been brought in by New Labour to run a characteristically illiterate ‘Face 2 Face with Finance’ programme in over 2,000 English and Welsh secondary schools, involv-ing some 150,000 students.36 In similar fashion, the Personal Finance Education Group—a coalition of investment-industry representatives, educators and consumer groups—have been lobbying to get ‘investment skills’ put on the UK National Curriculum, currently under review. The

34 Laura Curtis: 28 November 1997.35 Dara Duguay, Executive Director, and Renee Szabo, Programme Assistant, Jump$tart Coalition for Personal Financial Literacy, interviewed by the author: February 1999.36 Paul Slade, ‘Cash on the curriculum’, Sunday Telegraph, 22 February 1998; Linda Sargent, NatWest Financial Literacy Centre, interviewed by the author: Coventry, 3 December 1998.

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PFEG has developed ‘A Learning Framework For Personal Finance’, aimed to integrate a neoliberal fi nancial education more fully into the school curriculum by bringing it into traditional subjects, such as ethics and maths. In 1998, 24 schools in Manchester, Kent and London began a pilot programme that was expanded nationally in 1999.

‘Investment skills’ are thus increasingly being conveyed as essential life skills—as crucial a part of the curriculum as reading and writing, the necessity for contraception and the avoidance of drugs. This, in turn, may help to facilitate the internalization of ideas about fi nancial orthodoxy and individualism which underpin neoliberal ideology. In an apparently conscious, strategic recognition of the political implica-tions of ‘fi nancial literacy’ programmes, a project manager for the PFEG argues that ‘teaching personal fi nance is an essential part of making responsible citizens for the future’.37 To ensure the creation of such citi-zens, fi nancial literacy programmes promote both positive (‘the magic of compound interest’) and negative lessons (‘the necessity of investing’), serving both to naturalize ideas about self-reliance and to depoliticize more specifi c questions about the privatization of risk. For Americans, as the Investment Company Institute noted, one of key themes of the SEC’s ‘Facts on Saving and Investing Campaign’ is that ‘fi nancial security starts when you take personal responsibility for your fi nancial well-being’.38 At the same time, more precise lessons, such as the neces-sity of diversifi cation, stockpicking and developing a lifelong fi nancial plan, teach small investors to look out for the benefi ts of capital mobility, shareholder governance and low infl ation.

Global fi nance in everyday life

In contrast to ‘passive’ investment vehicles, such as bank deposits, many sorts of mutual funds demand a greater degree of attentiveness on the part of fundholders, who inevitably become drawn into a concern with the day-to-day workings of the market from having to track their own portfolios. As the Economist wonderingly noted, ‘the rise of mutual-fund ownership is having a huge effect—not just on America’s stock market but also on the nation’s culture. Ask the man in the street what the Dow has been up to lately and there is a good chance that he will be able to

37 Cited in ‘Cash on the curriculum’.38 ‘The Facts on Savings and Investing Campaign’, Investment Company Institute website: http://www.ici.org/aboutfunds/sec_inved_slogan.html

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tell you, because some of his own money is at stake’.39 Such information has become far more accessible now that coverage of the fi nancial mar-kets has been institutionalized in the popular media. Tellingly, Newsweek describes how magazines like Worth and Smart Money, websites like thestreet.com and cable networks like CNBC and CNNfn now ‘cover the market like pro sports, ready with the highlight reel at the end of the day’.40 Readership of the eleven top US business and personal fi nance magazines has nearly doubled, from under 4 million in paid circulation in 1982 to over 7 million in 1997.

Such familiarity and constant interaction with the workings of fi nancial markets may help to naturalize investing and self-reliance as a way of life and, more indirectly, to start to make people evaluate the world around them through the lens of an investor. If small fundholders are begin-ning to feel that their interests are tied to the ups and downs of the markets, they are also, increasingly, becoming intertwined with interna-tional events. The logic of globalization may also come to seem more inevitable, more natural and depoliticized, if broader layers begin to per-ceive world events, such as the 1997–98 crisis in Southeast Asia, in terms of how they may affect their investments. The advent of 24-hour investment hotlines and online trading—itself a crucial element in the whole emergence of mass investment culture: members at America Online routinely request over 70 million stock quotes a day—have vastly expanded opportunities to interact with the stock market, and its pen-etration of everyday life. It is now possible for millions of people to act on their investments at almost any time, and from almost anywhere. Should any North American fastnesses seek to resist, the Bank of Montreal’s ‘Investore’ has recently developed a mobile trading bus which visits remote communities, complete with fund information, fi nancial news, trading via satellite—and, inevitably, investment games for the kids.

So far have investment practices penetrated into everyday life that they are beginning to structure elements of leisure time. Mushrooming investment clubs have started to transform ‘fi nancial literacy’ training and stockpicking—especially among women—into a form of social activity. Promoted by organizations such as the National Association of Investment Clubs and the Canadian Shareowners Association, these

39 ‘All Capitalists Now’.40 John Leland, ‘Blessed by the Bull’, Newsweek, 27 April 1998.

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clubs generally meet once a month to learn new investment skills, track their investments and alter their portfolios, over coffee and cakes at a member’s home.41 One of the most prominent—the Beardstown Ladies Investment Club—has published a bestselling book. For teen-agers, Competitive Edge Enterprises has created an investment board game—‘Mutual Mania’—now being marketed in North American toy-stores.42 In Canada, GT Global sponsors an annual summer ‘FUNd Fair’, offering traditional carnival games with an investment twist. At the Balanced Portfolio Throw, children are encouraged to diversify, winning more GT Global dollars by hitting more of the targets: ‘Savings Account’, ‘Mutual Funds’, ‘Stocks’ and ‘Bonds’. When they grew tired jumping up and down in an infl ated bouncing castle dubbed the ‘Trading Floor’, they could get sustenance from cookies in the shape of dollar signs.43

Universalizing capital’s interests

Under the postwar Fordist system, productive capital sought to univer-salize its interests with the claim, ‘What’s good for General Motors is good for America’. Today, fi nance capital might claim that ‘What’s good for Fidelity Investments is good for America’—and good for the world.44 For mutual funds have had a direct role to play in the hegemonizing strategies of fi nance capital and in the promotion of its more concrete policies. One of the earliest attempts to theorize mass investment along such universalizing lines argued that the mass ownership of corporate stocks (via pension funds) made the US a de facto socialist paradise:

In terms of socialist theory, the employees of America are the only true ‘owners’ of the means of production. Through their pension funds they are the only true ‘capitalists’ around, owning, controlling, and directing the country’s ‘capital fund.’ The ‘means of production’, that is, the American economy . . . is being run for the benefi t of the country’s employees.45

41 ‘Club takes time to analyze stocks’, Toronto Star, 16 June 1997.42 Marc Dacey, ‘Mutual Mania turns funds into play’, Globe and Mail, 6 November, 1997; and interview with Thomas Hopkins, President, Competitive Edge Enterprises, interviewed by the author: Guelph, Ontario, 10 December 1997.43 Laura Curtis: 28 November 1997.44 Fidelity Investments is the largest mutual-fund company in America—and the world—with over $750 billion in assets.45 Peter Drucker, Unseen Revolution: How Pension Socialism Came to America, New York 1976, pp. 2–3.

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More recent conservative observers have shied away from Drucker’s rhetoric, preferring to characterize the emergence of mass investment as a form of ‘investor democracy’ or ‘worker capitalism’. David Hale, the global chief economist for the Zurich Group, argues that:

Today, retirement plans are expanding their ownership of the stock market but are not producing a form of pension-fund socialism. The US is, instead, embarking upon a new experiment in the democratization of bond and equity ownership through a mixture of mutual funds, defi ned-contribution pension plans and direct ownership of securities.46

Similarly, a 1999 report by the conservative Cato Institute suggests that ‘capital ownership, once the signature of wealth, has become widely diffused’.47 In the media, an increasing number of articles with titles such as ‘All Capitalists Now’ and ‘Like It or Not, You’re Married to the Market’ have sought to universalize the interests of fi nancial capital by promoting the general view that ‘fi nancial markets do not just represent the rich; most people have some savings, whether in a small savings account, a mutual fund or their future pension’.48

This purported universal, ‘democratic’ aspect of fi nance capital can then be used to legitimate the denial of democracy commanded by neo liberal orthodoxy elsewhere. Justifying global structures of capital mobility and the loss of local democratic accountability, the Economist has argued that, ‘in some ways, capital markets, driven by the decisions of millions of investors and borrowers, are highly “democratic”. They act like a roll-ing 24-hour opinion poll [on government policies]’.49 The message here, of course, is that people need not be concerned at losing their ability to infl uence government policy through their role as citizens, as this is more than offset by their supposedly powerful new ability to discipline governments through their role as investors.

Concern for the little guy

In another universalizing tactic, fi nance capital has been able to use the mass holding of mutual funds to justify its own agenda. Thus Time mag-

46 David Hale, ‘Experiment in democracy’, Financial Times, 4 February 1994.47 ‘Rise of Worker Capitalism’.48 Pam Woodall, ‘Who’s in the driving seat? A survey of the world economy’, Economist, 7 October 1995.49 ‘Who’s in the driving seat?’.

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azine could legitimate the Clinton government’s bailout of Mexico in 1995 in terms of defending small investors:

What many Americans discovered last week was that, for all the beltway rhetoric pitting Wall Street against Main Street, Wall Street long ago inter-sected with Main Street. At risk in [Mexico] were not only US banks and giant investment fi rms but mutual funds held by tens of millions of little-guy investors who bet their savings on double-digit yields in emerging markets like Mexico. ‘This wasn’t about bailing out Wall Street,’ a congres-sional staff member said of [the rescue package], ‘but about mutual and pension funds and that means average Americans’.50

Similarly, a lobby group for the mutual-fund industry could press for the neoliberal reform of Canada’s foreign-content limits on tax-exempt sav-ings plans in the name of ‘average Canadian pensioners’:

It is not just wealthy Canadians who are saving for retirement. It is aver-age Canadians who realize that the government may not be able to support them in their golden years . . . A change in the foreign property rule would go a long way to ensure that Canadians’ retirement nest eggs are not too concentrated in one basket and that these nest eggs can take advantage of growth industries in other countries.51

Such rhetorical strategies as these draw their effect not merely from the material resources used to promote them, but from their resonance, through the broadening of mutual-fund and pension-fund holdings, in people’s everyday lives.

Defusing arguments against neoliberalism

A further, ‘negative’ ideological effect of mass mutual-fundholding has been to defuse anti-neoliberal arguments that the new fi nancial ortho-doxy has led to stagnation in workers’ wages. Aggregate numbers during

50 George Church, ‘Mexico’s troubles are our troubles’, Time, 6 March 1995.51 ‘Mutual Funds: a strategy for everyone’, p. 6. Illustrating the seemingly direct material interests involved, a study by the management consultancy fi rm Ernst and Young points out that a ‘30 per cent foreign-content limit over the last 25 years [up from the existing 20 percent] would have allowed Canadians to earn up to 1.6 per cent more per year on their retirement savings portfolios . . . For an average investor who contributes $5,000 a year to an RRSP or defi ned-contribution pen-sion plan, even half a per cent increase over 25 years would amount to an additional $32,000 at retirement’.

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the 1990s could, indeed, be made to support the neoliberal claim that declining incomes were somewhat offset by rising stock-market returns. In Canada, for example, personal disposable income, after rising by an average of 2.9 per cent per year between 1961 and 1989, declined by an average of 1 per cent per year between 1989 and 1997, giving a total decline in real incomes of over 7.5 per cent. Part of this decline was due to lower returns on bank deposits and other interest-bearing invest-ments, meaning that the total real decline in wages and salaries during the 1990s was approximately 3.5 per cent. However, despite this decline in real incomes, household net worth (assets minus liabilities) contin-ued to rise—on paper, at least. Between 1961 and 1989, household net worth grew by 2.9 per cent per year. While slowing in the 1990s, house-hold net worth continued to grow at a positive rate of 1.3 per cent per year, with most of this growth coming from capital gains on rising stock values which grew at double the rate of gains from real house-hold assets, such as homes and land.52 By 1997, net fi nancial wealth accounted for 45 per cent of total household net worth, up from only 35 per cent in 1980.53

Thus while material benefi ts received from productive capital (through wages and salaries) may have declined during this period, the aggre-gate numbers give the impression that they had been offset, through mutual-fund returns, by benefi ts from fi nance capital. On this basis, it has been argued that ‘there are millions of Canadians whose incomes from working have fallen, but who do have mutual-fund investments, employer pension plans or personal pension plans on which they have made compensating gains’.54 A similar situation obtained in the United States, where the median wage declined by almost 3 per cent between 1989 and 1996, while household net worth roughly doubled, rising to a national total of $35 trillion in 1999, up from $16.8 trillion in 1987.55 Though higher tangible assets, such as homes and cars, accounted for some of this gain, most of it came from fi nancial assets, including

52 Paul Ferley, ‘Rising Net Worth Provides a Better Indication of Household Finances than Falling Income’, Bank of Montreal Special Report, 3 July 1998.53 Jim Stanford, Paper Boom: Why Real Prosperity Requires A New Approach to Canada’s Economy, Ottowa 1999.54 Bruce Little, ‘Turning to the stock market with our savings’, Globe and Mail, 27 July 1998.55 Louis Uchitelle and N. R. Kleinfi eld, ‘On the Battlefi elds of Business, Millions of Casualties’, New York Times, 3 March 1996.

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approximately $8 trillion in paper stock gains.56 We will consider below how real such benefi ts have been; the point here is to note the ideologi-cal role of these apparent gains for investors in helping to reinforce the hegemonic dominance of fi nance capital and in the dismissal of anti-neoliberal alternatives.

Shareholder politics?

What effect has the naturalization of the stock market in everyday life had on the political outlook of mutual-fundholders? In a detailed analysis of public opinion polls, the executive director of the American Shareholders Association has argued that ‘the growth of share ownership is changing the values and perceived political interests of voters—increasing the body politic’s support for investor-friendly policies’. The study seeks to show how mass investment is changing popular outlook on policies such as the capital-gains tax and social programme funding:

Shareholding workers support policies that cut taxes for important life-cycle events such as education, health care and retirement. Conversely, workers who have investments exhibit rising skepticism toward government-run entitlements . . . Portfolio owners are shown to be more likely than non-owners to support a capital-gains tax reduction. This effect is found in almost every demographic group, suggesting that investment infl u-ences opinion independently of the income, race, or other characteristics of the investor.57

The survey also cites changing reading habits as evidence that ‘working investors are internalizing attitudes long associated with the capitalist class’. Pointing to the broadening readership of such fi nance-press sta-ples as the Wall Street Journal, Investor’s Business Daily, Forbes, Business Week and Fortune, and the expanding TV ratings of CNN Financial News, CNBC and Bloomberg, its author observes that ‘although the impact on workers’ attitudes is impossible to quantify, the editorial content of [the fi nancial press] certainly varies from the fare in the Philadelphia Inquirer, the Washington Post, and the Los Angeles Times’.

The rise of mass mutual-fund investment has thus created the percep-tion that the interests of far wider strata are becoming linked to those

56 Robert Samuelson, ‘Hell No, We Won’t Save!’, Newsweek, 22 February 1999.57 ‘Rise of Worker Capitalism’.

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of fi nance capital. As investors, many workers now appear to have a direct material interest in neoliberal policies such as capital mobility, price stability, low capital-gains tax and shareholder value. Commenting on this trend, the Washington Post has argued that, ‘as more and more Americans gain a stake in stocks, their views undoubtedly will change on such matters as business regulation, taxes, anti-trust policy, trade and even foreign affairs’.58 What is the justifi cation for such claims?

Limits of ‘investor democracy’

On average, the real incomes of North Americans declined somewhat in the nineties; on average, these losses were somewhat offset by mutual-fund returns. For proponents of neoliberal fi nancial orthodoxy, the fact that over 50 per cent of North Americans now have a stake in the stock market means that, on average, the policies that have benefi ted the fi nancial community should also have been of benefi t to the majority of the people. The fi rst problem with this view is that averages are not always the best way to see what is going on in a country: they can mask enormously different experiences. Half the glass of mutual-fund owner-ship, for instance, is empty: nearly 50 per cent of the population have no stake in the stock market at all and, of the half that do, over 40 per cent (20 per cent of the population) own only negligible amounts. Seen this way round, it can be argued that some 70 per cent of US households still own few or no stocks, either directly or through mutual funds, and that the rise of mass investment is more about breadth than depth.59 Commenting on these fi ndings, even Business Week has been compelled to notice that ‘juicy market returns do little for the average person. Instead, they fatten the wallets of the top quarter of households, which owns 82 per cent of all stocks’.60 A survey conducted by Marketing Solutions Inc. in 1996 found evidence of a similar concentration of the benefi ts of mutual-fund returns among upper-income earners in Canada, with 70 per cent of those earning $70,000 (CDN) per year owning mutual funds, compared to only 14 percent of those earning less than $20,000 (CDN). As the survey observed, ‘High [mutual-fund] own-

58 James Glassman, ‘The Growing Investor Class’, Washington Post, 7 April 1998.59 James Poterba and Andrew Samwick, ‘Stock Ownership Patterns, Stock Market Fluctuations, and Consumption’, Brookings Papers on Economic Activity, no. 2, 1995.60 Aaron Bernstein, ‘Sharing Prosperity’, Business Week, 1 September 1997.

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ership among wealthier families fl ies in the face of conventional wisdom that mutual funds appeal largely to unsophisticated investors with lower incomes’.61

In practical terms, this unequal distribution of mutual-fund ownership means that, even at the height of the bubble, real stock-market gains for large layers of the population have been either small or non-existent. In net terms, they shrink still further when set in the context of the social and economic dislocations produced by neoliberal fi nancial orthodoxy—stagnating wages, corporate downsizing, cutbacks to social programmes and so on. Here lies the contradiction for small fundholders: many of the neoliberal policies which might benefi t them in their role as inves-tors will adversely affect them as workers. Noting this paradox, Newsweek observed that ‘growing numbers of Americans have been cast into a psychological twilight zone. As workers, they often fear the harsh man-agement of the 1990s, with its constant “restructurings” . . . but as mini [more accurately, micro] capitalists, they crave “shareholder value”.’62 At the same time, it is those least likely to receive any benefi ts at all from mutual-fund returns who are being hit hardest by neoliberal restructur-ing. Even the Investor’s Business Daily has been compelled to remark, ‘the general prosperity fed by the stock market is not providing more wealth for most families and doesn’t offer them a way to improve their lot’.63

If the reality of a new era of ‘worker capitalism’ is not supported by the fi gures, how can we account for the persistence of this myth—not just among policy-makers and the media but in the wider population? Part of the answer must surely lie in the fact that, while the rise of mass invest-ment has not given birth to a new ‘investor democracy’, it has ushered in a new investment culture, one that serves to reinforce neoliberal ideology by naturalizing and depoliticizing the processes of global fi nance, and by generating consent to its preferred policies. With the vast expansion of mutual funds and private pension plans, the norms and practices of fi nance capital are becoming culturally embedded in people’s everyday

61 Cited in Jonathan Chevreau, ‘Funds held by 40 per cent of households, survey fi nds’, Financial Post, 26 September 1996.62 Robert Samuelson, ‘Why We’re All Married to the Market’, Newsweek, 27 April 1998.63 Robert Ginsburg and Edward Wolff, ‘Do We Really Live in Wonderland?’, Investor’s Business Daily, 11 March 1999.

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lives, in a way that a downturn in the stock market cannot destroy: when stocks crash, investors simply make a temporary switch to bonds. Signifi cantly, this emerging culture has helped to create the perception that material benefi ts are accruing to broader layers through the struc-tures of neoliberalism. In contrast to the postwar era, where hegemony was constructed primarily through productive capital and the state, consensus today is increasingly shaped through the vehicle of fi nance capital, as the perceived gains of mutual-fund returns and the effects of investment culture reinforce both positive and negative aspects of neo-liberal ideology.

Finally, it is important to note that while the new ‘investment culture’ has developed primarily in the Anglo-Saxon countries, it may not be a purely Anglo-Saxon phenomenon. Rather, its emergence appears to be a product of neoliberalism in general, and of the shift to more liber-alized and securitized national fi nancial systems. Where governments shift from bank-based to capital market-based national fi nancial struc-tures, investment vehicles such as mutual funds will emerge to fi ll the fi nancial intermediation gap. When this occurs, it is likely that many of the trends associated with an investment culture may also begin to develop. Whether countries beyond the Anglo-Saxon fold will in fact go down this path is a debate beyond the scope of this article. But if they choose to do so, the Anglo-Saxon experience may provide a useful indi-cator of the developments that lie ahead.