Citizenship in a financialised society

While the New Labour-ish language of ‘financial inclusion’ and ‘asset-based welfare’ has been quietly eschewed, since 2010 the Conservative Party has continued its predecessor’s agenda around promoting more extensive and intensive participation in the financial system, through asset ownership, in order to enable individuals to play an enhanced role in ensuring their own long term financial security.

This agenda is, understandably, usually assessed in terms of the impact on financial well-being. Yet its implications for the meaning and practice of citizenship may be just as significant.

The immediate context in which financial inclusion has been pursued is the apparent financialisation of UK society. Financialisation refers to the increased role of finance in individuals’ daily lives as well as the economy in general. Financial inclusion has invariably been presented as a progressive ‘response’ to financialisation. This leads to the suggestion that financial inclusion policies represent a new form of citizenship-based entitlements. As the economy evolves, so the argument goes, welfare-based protections must evolve too. The threat we are being therefore protected from is financial exclusion.

However, it must also be pointed out that by increasing participation in the financial system, and subjecting greater numbers of people to risks associated with engaging with the financial system, financial inclusion also serves to advance the process of financialisation. As such, financial inclusion policies contribute to exposing the financially excluded to new forms of risk, and intensifying financial risks for the already included.

The promotion of individualised ‘defined contribution’ pensions – by all recent governments in the UK – is a telling example. Under the guise of providing a new right to a workplace pension, the coalition government accepted New Labour’s support for this highly individualised form of pensions saving, dismantling the risk-sharing mechanisms that had already existed in private pensions at the behest of employers, as well as simultaneously reducing state pension entitlements.

So, the right to support in saving is established, yet immediately superseded by a duty to shoulder more of the risks of capital market participation. Indeed, the Conservative government is in the process of taking this agenda to its logical extreme, by ‘liberating’ pensions saving by relaxing tax restrictions on how savings can be accessed and used, before and after retirement. Again, the language of entitlement is part of the justification here – but the reality for most people will be a greater burden to make complex, risky financial decisions.