3. Risky Business! The Crisis of Insurance and the 'Law of Lottery'

The lottery, with its weekly payout of enormous prizes, was the one public event to which the proles paid serious attention. It was probable that there were some millions of proles for whom the lottery was the principal if not the only reason for staying alive. It was their delight, their folly, their anodyne, their intellectual stimulant. Where the lottery was concerned, even people who could barely read or write seemed capable of intricate calculations and staggering feats of memory . . . But if there was hope, it lay in the proles.
(George Orwell, Nineteen Eighty Four)

There can be little doubt that in recent years life has become increasingly risky. The collapse of the Keynesian Welfare State (KWS) has meant that levels of social welfare and access to employment have increasingly become a game of chance — a lottery. In the UK this national lottery has recently been accompanied by an official version — the National Lottery. Risk and chance are thus basic characteristics of the production and reproduction of neo-liberal social formations: positing the economic, political and ideological premises for social reproduction. There is an increasing risk of redundancy or of not being adequately cared for when one is ill, but this is legitimated through a state-sponsored discourse of risk and chance. In other words, the lottery has developed into a social form — a form of social being — which I explore as the 'law of lottery'.

In this chapter I consider the development and role of insurance as a capitalist social form, and the relationship between actuarial risk and the circulation of capital. I consider the way in which the development of Fordism and the KWS were premised on the regulation of state and society according to the 'law of insurance' and the way in which the crisis of Fordism and the KWS is simultaneously a crisis of the 'law of insurance' which has been supplanted by the 'law of lottery'. 'The law of lottery' is connected to the increasing problems of assessing risks through actuarial principles, which is itself a crisis of the planner state. I explore this through an analysis of the workings of the National Lottery and the linkages between the crisis of insurance and the crisis of the state. I conclude this chapter through a critique of recent sociological analyses of risk and provide the outlines of an alternative materialist analysis of risk.

The National Lottery

There is nothing new about national lotteries. In Britain the first, sanctioned by Elizabeth I, took place in 1569 and consisted of 400,000 lots at 10 shillings each. In the years that followed, the lottery became an essential tool of public finance. The profits from lotteries were used to repair harbours and ports and provided funds for military campaigns: £10 million between 1710 and 1714 to fund the War of Spanish Succession and later over £70 million for the war against the American colonies. The lottery also provided resources for important infrastructural investment: both Westminster Bridge and the British Museum were established with resources from lotteries. The lottery also benefited members of the 'propertied class', who bought vast quantities of the tickets, which were priced at between £10 and £100. These tickets were beyond the means of ordinary people and wealthy agents were able to sell shares in lottery tickets at a premium. This practice was formalised in 1788 when the Treasury sold all tickets to 'lottery contractors' — often stock-brokers — who were responsible for generating the feverish excitement around the drawing of the lottery. Alongside this was the underground practice of 'insurance', whereby individuals could 'hire' a lottery ticket for one of the days on which the lottery was being drawn and were thereby entitled to any prize drawn on that day. There was therefore both the lottery and a lottery within a lottery: gambling on the outcome of the lottery.

The demise of the lottery is often attributed to the wave of public opposition generated by the new generation of political economists. In the seventeenth century William Petty described the lottery as a tax on 'unfortunate, self-conceited fools'. Adam Smith, David Ricardo and Henry Thornton all commented on the negative effects of lotteries on both the moral and economic health of the nation. According to a Parliamentary Report of 1808 the results of the lottery were that:

Idleness, dissipation and poverty were increased: the most sacred and confidential trusts were betrayed, domestic comfort was destroyed, madness was often created, suicide itself was produced and crimes subjecting the perpetrators to death were committed.

This was compounded by the declining proportion of the lottery which contributed to the Exchequer; by 1819 the lottery was contributing less than 1 per cent to the 'ways and means' account of the Government. Consequently, the lottery was abolished in 1823, and apart from premium bonds, which were introduced in 1956, and the football pools (defined as a game of skill rather than chance), it has lain dormant ever since. Indeed, from the Victorian period gambling has been presented by both the state and the Church as a crime and a sin. These attitudes persisted into the twentieth century as can be illustrated by the words of Geoffry Fisher, Archbishop of Canterbury, who, fulminating against the introduction of premium bonds, argued that gambling:

debas[ed] the spiritual coinage of the people [and that] . . . the Government knows, as well as the rest of us, that we can regain stability and strength only by unremitting exercise all through the notion of the old fashioned and essential virtue . . . honest work honestly rewarded.
(quoted in Financial Times, 9 January 1995)

Harold Wilson dubbed premium bonds a 'squalid little raffle'. However, in 1994 the National Lottery was reintroduced, following an absence of over 170 years, with the support of all the political parties and only stifled murmurs of discontent from the established Church. The new National Lottery began operating in November 1994. In its first full year of operation the lottery operated under licence by the Camelot company had achieved sales of £5.2 billion, raised £1.4 billion for various 'good causes' and contributed £677 million to the Exchequer (Camelot, 1996; Fitzherbert et al., 1996). The UK National Lottery is the largest and most efficient lottery in the world, when assessed in terms of the level of sales and as the relationship between sales and contributions to the Government and 'good causes'. Despite odds of 14,000,000 to 1 of winning the jackpot, the lottery attracts 30 million regular players to both a twice-weekly draw and to a variety of scratch cards. Camelot have made great strides to appear as the 'people's lottery' and have invested in extensive 'market research' in order to assess the views of players and to engender a sense of 'ownership' amongst lottery players. Camelot itself has become an important corporate actor: in 1995–6 the company achieved an operating profit of £66.7 million, employed 600 staff and allowed retail agents to earn at least £265 million in extra sales (see Camelot, 1996).

The 'good causes' that benefit from the lottery come under five headings: arts, charities, heritage, millennium and sport. Money is distributed through the Arts Councils, the National Lottery Charities Board, and National Heritage Memorial Fund, the Millennium Commission and the Sports Councils. In deciding on the eligibility of projects for lottery funds, these bodies have to take into account the financial viability of projects, particularly as money is contributed to capital expenditure costs rather than to running costs. With the exception of charities, most grants are dependent on 'partnership' funding from the applicant. Together with the restrictions on local authority capital spending, this has resulted in lottery funds being disproportionately aimed at 'flagship' projects in London and the south-east, whilst the 5 per cent of the population living in the most disadvantaged areas fail even to get a 5 per cent share of funds. In 1995–6 this amounted to 1.7 per cent arts, 1.4 per cent heritage, 3.9 per cent sport, an exception was charities which are directly aimed at this disadvantaged section of the population but still only managed 13 per cent (see Fitzherbert et al., 1996).

As a social form the National Lottery clearly articulates the contradictions of the capital relation. What, however, have been the key historical and logical factors behind its development and increasing importance at the present juncture? Lotteries have become increasingly popular in all advanced societies: indeed, a key argument in supporting the development of a lottery in the UK was that apart from Albania, the UK was the only European state not to have some type of lottery. The National Lottery has played an important role in resolving the fiscal crisis of the state; it represents an ideological form which turns the payment of taxation into a leisure pursuit. The National Lottery is a clear form of voluntary taxation: taxation that is, moreover, highly regressive, with lower earners spending an average of £4 per head as against £1.20 by the better-off (Financial Times, 28 June 1995). In a clear link to the past, the fastest sales of lottery tickets have been in the poorest and richest parts of the UK: the devastated council estates of Sunderland and in the Lombard Street Post Office in the City of London (Financial Times, 15 July 1995). The state has, in essence, encouraged the expansion of gambling from 74 per cent of the population prior to the lottery to 89 per cent following the introduction of the National Lottery (Financial Times, 5 June 1995).

The introduction of the lottery also reveals important insights into the way in which the neo-liberal state has been reconstituted in the UK. The lottery is a new form of nationalisation. An intensification of state power which attempts to colonise the worlds of gambling, charity and culture and make them increasingly functional for the neoliberal accumulation of capital. Casualties of this process have been capitals within the UK gambling sector. Following the introduction of the National Lottery, the football pool industry suffered a loss in turnover of between 10 per cent and 15 per cent and Vernons, the second biggest pools operator, suffered a £230 million pre-tax loss in 1994 (Financial Times, 11 March 1995). Similarly, spending in the UK's 900 bingo halls has dropped by 20 per cent and the cash pouring into the UK's 210,000 one-arm bandits is £8 million a week less than before the introduction of the lottery. Related to this has been a 17 per cent increase in calls to 'Gamblers Anonymous'. There is also an important sense in which the lottery amounts to an important step towards the nationalisation of culture. Whilst the National Lottery has been presented as part of a 'new cultural golden age' it also will mean the death of many arts organisations which fail to attract lottery funding either because they are not financially viable or because they fail to generate partnership funding. Arts groups will be increasingly dependent on private sector sponsorship to generate partnership finance and this will obviously favour large, commercially viable and mainstream arts groups and projects.

Using the UK as an example, I argue that the regulation of societies through the 'law of lottery' has become increasingly important as the crises and contradictions of the planner state have intensified. In order to understand this process I shall explore the actuarial principles underlying insurance, the way in which these principles underpinned the social form of the Keynesian planner state and how the crises and contradictions of the planner state is simultaneously a crisis of insurance which has resulted in the development and increasing importance of the lottery as a social form.

The Economics Of Risk

The category of risk is the fundamental concept underlying the actuarial principles of insurance. The concept of risk was a central concern of classical political economy. According to Adam Smith it is an intrinsic human failing to over-value the chance of gain and hold risk in presumptuous contempt (Smith, 1970: 210–11). This was evident, Smith argued, in the universal success of lotteries through which individuals were systematically encouraged to pay overinflated prices for tickets when the prospective prize was worth only a fraction of the money paid by the total number of subscribers. Conversely, despite the moderate profits and premiums of insurance companies, many individuals held risk in contempt and chose not to insure themselves against potential injury. For Smith, the value of risk amounted to the compensation of common losses and the expenses of management: the profits of insurance being no greater than in other common trades. The level of risk was intimately connected with the level of return to labour and capital (ibid.: 213): levels of wages and returns on stock being proportionate to the hazards faced in their employment in particular sectors. Risk becomes, therefore, the original contribution made by capital in the process of production: the level of reward accruing to labour being a derivative of the level of risk taken by capital (Clarke, 1991: 27).

The unplanned nature of capitalism makes risk a central feature and dynamic in the both the reproduction of capitalist social relations and the continual crisis which threatens the reproduction of these relations. In neo-classical economic theory the category of risk is analysed in terms of the way in which uncertainty is a disutility to marginal maximising individuals. It is a commonplace assumption that the return to capital varies proportionately with the degree of risk to which it is exposed. Uncertainty imposes a cost on 'society' and the removal of uncertainty will be a source of gain (Willett, 1951: 8). Uncertainty is a disutility and will only be borne if something can be gained from doing so. The assumption of risk, therefore, attracts a special economic reward which varies with the degree of uncertainty. Risk is objectified uncertainty and the degree of risk is ascertained by applying the laws of probability to the accumulated results of past events. In this way the utility and disutility of uncertainty allow economic actors to choose between the avoidance, prevention or assumption of risk in particular circumstances.

Insurance is an important means through which uncertainty and the costs which it imposes on capital can be prevented or reduced. Insurance is the 'transfer' of risk to a specialised undertaker of risks in the form of an insurance company. Insurance companies combine and concentrate risks in order to reduce uncertainty and thereby reduce the cost of risk to the wider 'society'. The risk carried by an insurance company is less than the sum of the risks of the insured. The insurance premium makes the incalculable calculable. Insurance constitutes a cost to capital and labour in the sphere of circulation. In the long run insurance is constituted by a 'mutual' insurance fund out of which losses and the costs involved in the provision of insurance are paid by the insured.

[I]nsurance companies divide the losses of individual capitalists among the capitalist class. But that does not prevent these equalised losses from remaining losses so far as the aggregate social capital is concerned.
(Marx, 1956: 140)

Insurance is the social form through which the losses resulting from the non-valorisation of capital are socialised:

This is a question of the distribution of the surplus value amongst the different sorts of capitalist and of the deductions which are consequently made from (the surplus value accruing to) the individual capitalists. It has nothing to do with either the nature or the magnitude of the surplus . . . Instead of each capitalist insuring himself, it is safer as well as cheaper for him if one section of capital is entrusted with this.
(Marx, 1956a: 357–8)

Insurance constitutes the alienated form in which unexpected losses are socialised in capitalist society. Insurance projects future configurations of time and space on the basis of the past. As time and space are increasingly subordinated to the abstract logic of capital accumulation so they reflect the contradictory determination of all social forms in capitalist society. In capitalist society time and space increasing imply both the possibility and development of not-time and non-space: configurations of time—space outside the circuit of capital. The riskiness of the reproductive cycle of capital accumulation is thus reflected in the social, spatial and temporal representation of insurance as a social form. The crisis of insurance is ultimately a crisis of the rational ordering of time and space on the basis of the capital relation.

The 'Law Of Insurance' And The Crisis Of The Planner-State

In this section I trace the historical processes which link the crisis of insurance to the crisis of the state and the way in which this has resulted in the subordination of the state by the 'law of lottery'. I shall approach this through an exploration of the origins, development and crisis of state insurance in the UK. The origins of social insurance are to be found in the administrative moment of the state. As I mentioned in chapter 1, in capitalist society law and money are the abstract social forms through which the capital relation is produced and reproduced: the creation of formal equivalence through generalised commodity production and exchange by 'free' and 'equal' legal subjects. The state appears as a separate authority to represent the 'impersonal' interests of the system. Capitalist commodity production, however, requires the substantive domination of labour within the labour process and hence the contradictions of capitalism as a social form cannot be totally formalised within the legal and money forms. Alongside formal regulation, therefore, emerges substantive administration. The historically specific form of the state is a result of class struggle: the struggle of labour to achieve 'political' gains through the state which escape commodification and which thereby precipitates a process of state restructuring which attempts to reimpose commodification on the production and reproduction of the capital relation.

One of the ways in which labour attempts to escape commodification is through unemployment. This can be either through choice (refusal/crime) or through the anarchy of the market (denial). Either way the potential existence of labour outside the sphere of capital is a threat to the reproduction of the capital relation: highlighting to the working class both the dangers and the possibilities of existing against capital. The problem of unemployment has thus always posed a problem that required administration. In the early development of capitalism, marked by the underdevelopment of the socialised worker, the problem could be administered through punitive measures such as the workhouse and poor relief. These forms of administration, however, denied the equality of labour as both workers and citizens, and as the working class developed as a political force, these forms of administration provided the basis for alternative social arrangements based on the possibility of real equality and freedom against capital (communism). It is necessary, therefore, to explore the way in which these developments resulted in the reconstitution of the state on the basis of the 'law of insurance'.

In the work of classical political economists such as David Ricardo civil society was conceptualised as a 'natural' and self-regulating order of independent labourers. In this approach, the circumstances of the worker were a result of individual decisions taken in the context of natural laws. The conceptualisation of workers as independent labourers was, however, increasingly punctured by the inequality and domination faced by workers in the sphere of production. The abstract regulation of labour needed, therefore, to be increasingly supplemented by the direct and unmediated administration of labour. An attempt to grasp the importance of these changes, albeit in a partial and fetishised way, is provided by the work of William Beveridge on unemployment and insurance.

The work of Beveridge on social insurance was an important moment in the redefinition of poverty and the role of the state in the amelioration of poverty.1 Beveridge recognised the way in which the development of the working class shattered the apparent naturality of the economy and attempted to demonstrate empirically the factors which constantly forced the labour market away from a condition of equilibrium. The imperfections of the market undermined the independence of the worker. In other words, the market needed administration. An important focus of Beveridge's investigations were, therefore, the causes of unemployment. Beveridge's investigations sought to explore why the laws of political economy had failed to operate and to uncover ways of making them work. The notion of 'independent labourer' could be upheld only if workers were rewarded for behaviour and character congruent with the morality of money. Beveridge was thus concerned to create administratively the conditions in which the morality of the 'independent labourer' could be rewarded. Beveridge deepened the concerns of classical political economy through the way in which the 'independent labourer' was made both a premise and goal of political economy. In policy terms the labour exchange was to administer the relationship between the supply and demand of labour. In the context of a socialised working class the surplus population could not simply be discarded as Ricardo had done: political economy needed administratively to create and maintain the conditions for the existence of the 'independent labourer' and to adequately differentiate between these independent and dependent workers.

The 'discovery' of poverty and unemployment was inextricably tied to the potential for socialism. This is the context in which social insurance was developed. Insurance recognised the potential of the working class against capital, and attempted to reincorporate the working class through the administrative reconstruction of the 'independent labourer'. The system of social insurance established by the Beveridge reforms was premised on a state-administered compulsory insurance scheme which socialised the risk posed to the integrity of the 'independent labourer' by the poverty associated with unemployment, and thus a state-administered 'collective wage' replaced the individual wage. The efficient administration of this process was premised on the accurate calculation of likely levels of unemployment and thereby politicised these levels through their transformation into an administrative category. The discretion inherent to the administrative moment of the state, therefore, posed both a threat to the actuarial soundness of the system and threatened to deepen the crisis of the liberal form of the state.

The 'law of insurance' was necessarily mediated by the abstract social forms of money and the law. The monetary relationship was premised on the contributions paid by the worker and the asymmetrical relationship between benefit and the wage. The system was to be 'policed' by making benefits dependent on genuine 'need' and the punishment of malingerers and fraudulent claimants. In order for social insurance to work it was necessary for the state to calculate the level of unemployment accurately in order to balance contributions and benefits. The administrative discretion inherent in state insurance as a social form, however, allowed the state to cover higher than expected levels of unemployment through general taxation. Social insurance, therefore, linked aggregate levels of unemployment to the fiscal crisis of the state. In other words, insurance became a form of class struggle. Throughout the 1920s and 1930s the working class in the UK struggled over the form of insurance: a struggle for ad hoc benefits and against the means test. Where it was politically expedient — as in 1919 when exservicemen and munitions workers were granted extra benefits in order to quell potential revolt — levels of benefit were indeed increased through administrative intervention.

The development of the welfare state thus resulted in the Ricardian 'law of nature' being replaced by the 'law of insurance'. The abstract premises of the actuary were, however, constantly ruptured by the concrete development and movement of the working class, and Beveridge himself conceded that during the 1920s the actuarial basis of the state insurance system was never adhered to (Beveridge, 1930: 277 quoted in Dixon, 1996). The development of the 'insured worker' forced the organising principle of the insurance scheme from contract to status: benefit linked to classes of claimants rather than to the contribution of benefits. The crisis of insurance was ultimately addressed by Keynes who devised a way of setting levels of unemployment by the state.

As I mentioned above insurance makes the incalculable calculable through the way in which it projects future configurations of time—space on the basis of the past. Through the political establishment of an aggregate level of unemployment, Keynes allowed the future to be projected on the basis of a recognition that the working class could be maintained only if the subjectivity of labour could be tied inextricably to the development of capital in its most abstract and inscrutable form — money. This required the further administration of money through fiscal and monetary policies which regulated the money supply in order to provide levels of benefits and services demanded by labour through the representative channels of the KWS. The 'law of insurance' was thus dependent on the monetary stability provided at the global level by the Bretton Woods agreement and the subsequent global hegemony of the dollar and the stable administration of money domestically by the nation state.

Keynesianism thus provided a way of socialising and thus controlling risks inherent to capital accumulation at the global level. Paradoxically, however, this was a highly contradictory and risky strategy for capital to undertake. The law of value cannot be suspended through administrative intervention because the capital relation on which the law of value is premised is not a thing but a social relation. The state is a political form of this relation and is thus unable to resolve the contradictions on which it is premised as a social form. The state is premised on the coexistence of the circuits C-M-C and M-C-M' and the provision of administrative goods and services through the circuit C-M-C is necessarily mediated by the forms of abstraction inherent to the circuit M-C-M'. The crisis of the capital relation, therefore, became increasingly manifest as a crisis of the state. The state provided welfare and social insurance, but in alienating and oppressive forms designed to contain the costs of administration within the socialised valorisation imperatives of capital. The working class demanded reforms to the social welfare system through the extension of benefits and the reform of provision. The 'law of insurance' was thus the historical manifestation of class struggle in the postwar period.

The internal decomposition of Keynesianism was eventually compounded by a global crisis of overaccumulation engendered by the contradictions inherent in the administration of global money by the IMF and the World Bank. The crisis was resolved through the restructuring of capital and the state through the ways in which the administrative and political forms of Keynesianism were (re)subordinated to the abstract power of money and law. The temporal and spatial configuration of capital became liberated from place and the result was a global intensification of capital accumulation and the neo-liberal restructuring of the nation-state (Burnham, 1996). The intensification and globalisation of capital has made the actuarial calculation of risk increasingly problematic. The state no longer has the dirigiste mechanisms to maintain aggregate levels of employment and the spatial and temporal impact of unemployment has, therefore, become a matter of chance: a lottery. The 'law of insurance' has thus been supplanted by the 'law of lottery'.

The neo-liberal restructuring has involved the simultaneous restructuring of the economic, political and ideological aspects of the capital relation. The political deconstruction of the institutions of the welfare state and the economic deregulation of the market has thus been accompanied by the development of an ideological focus on chance and risk. The National Lottery is the most developed institutional form of this process. Against the certitude of protection from ill-health, unemployment and poverty is the chance of abject poverty or untold virtues. The crisis of state insurance is thus part of a wider crisis of capital as the intensity of change and the increasingly massive risks faced by humanity make the calculability of the future increasingly problematic.

The Sociology Of Risk And The Risks Of Sociology

As Anthony Giddens has rightly argued, life has always been a risky business. He continues to question why risk and assessments of risk have become so significant in modern societies (Giddens, 1991: 29). Modern sociology has explored the increasing importance of risk through an exploration of the ways in which individual and institutional reflexivity facilitated by the development and intensification of modernity open up the space for counterfactual thinking and action. The debate between modern and postmodern sociologies has hinged on the ontological status of reflexivity: cognitive or aesthetic. Within sociology the dominant approach has been to present risk as an ontological category which develops through a 'reflexive' project of the self. The abstract premises of this approach, however, precludes a rigorous assessment of the role of real (abstract) processes, such as capital accumulation, in the constitution of the self: the way in which individual conceptions of time and space develop in a dialectical relationship to the restructuring of time and space by material social processes. In other words, the complex and contradictory relationship between 'object' and 'subject' inherent to social forms of capital.

The 'cognitive' approach to 'risk society' has been developed by Beck (1992), who is concerned with the self-conscious project through which the dangerously modern social world, the catastrophically normal 'risk society', might recreate itself as a sustainable modernity. He combines a postmodern denial of the rationality of scientific endeavour (scientism: 'modernisation': industrial society) — which he sees as a not yet completed process responsible for the creation of previously unconsidered dangers, risks and arrested developments beyond compensation in the form of ecological disaster, disruptions of work, gender, class and political relations — with an historically informed Habermasian enlightened logic. This casts off the pessimism of Adorno, Weber and Foucault and provides for a modernity developing beyond its industrial design. Through a cognitive political sociology, he argues that the creation of this 'risk society' creates its own ethical critique (security), the rational is rationalised through a process of existential biographical reflection driven by the inadequacies and dangers inherent in the scientific process. He describes this critical, customised, self-consciousness as reflexive modernisation: a condition of being, determined by consciousness (knowledge). The realm within which this consciousness thrives is not the gaseous test-tubes of the laboratory, but the democratically neurotic, ambivalent, anxious and pragmatic managed institutions of civil society.

The focus on 'risk' as a central mediation in modern processes of cognitive reflexivity is also a feature of the recent work of Giddens (1990, 1991). Risk and uncertainty result from the restructuring of time and space by the dynamic processes of modernity. Modernity is marked by the development of 'abstract systems' or 'disembedding mechanisms' which result in a process of 'time—space distanciation': the separation and abstraction of time from concrete space. These abstract systems include 'symbolic tokens' such as money and expert systems such as the state. These abstract systems are the processes through which time and space are organised and constantly reorganised and form the basis of the subjectively defined 'trust' and 'ontological security' of individual social actors. In the 'globalised' and 'intensified' state of 'high' or 'radicalised' modernity the unpredictable and unforeseen consequences of modern development undermine trust in 'expert systems' and make 'risk' and 'risk assessment' the centrally defining feature of individual subjectivity. Increasingly, the 'future' is perceived actuarially in terms of counterfactual possibilities. In a similar way to Beck, Giddens highlights the way in which counterfactual discursives form the potential for social movements to recapture control over future configurations of time and space through 'utopian realist' political projects.

The 'cognitive' conceptualisation of reflexivity and risk has been challenged by Lash and Urry (1994), who argue that in 'late' or 'post-' modernity reflexivity takes on an increasingly 'symbolic' or 'aesthetic' form. Lash and Urry argue that the 'cognitive' approach to reflexivity results in the polarisation of subject and object, which ignores the self-referential nature of reflexivity alluded to by writers such as Mauss and Bourdieu, and the importance of the 'symbolic' and the 'allegorical' in the construction of (post)modern social subjects. Time and space are 'emptied out' of their material content and Cartesian configurations of time—space become subjective and symbolic time—space. The city becomes either an 'urban heterotopia' or emerges as a source of subjectively defined moral affectivity and the basis for the fragmented symbolic struggles of new social movements. Time is emptied of its concrete 'Taylorite' and 'Fordist' content and becomes discursively defined by flexible and subjectively oriented forms of post-Fordist production and consumption. Lash and Urry argue that these forms of (post)modern aesthetic and symbolic reflexivity have potentially liberatory potential by opening positive 'life-spaces' for individuals in all spheres of social existence. While the (post)modern world is risky, therefore, risk is an inherently empowering and liberating process.

The strengths of Beck and Giddens are that they attempt to recover the political power of human activity driven by rationalised needs and capacities. The weakness is that their work is founded on an idealist premise which detaches political power from economics and economics from society.2 In this way it conflates the normative rational assumptions of bourgeois social science with the alienated (irrational) capitalist forms within which human sociability is expressed. Whilst Lash and Urry highlight the potential for struggle and opposition against the constantly crumbling edifice of capitalist social forms their foundationless relativism nevertheless celebrates the irrationality of these forms. This occurs through a conflation of value and values — between capital and the self.3 This cannot be repaired by subjecting the source of this alienation: capital, to a Beck-like critique, as Rustin (1994) suggests; but can only be deconstructed by an immanent critique not simply of risk, but of the concept of modernity itself.

The Materiality Of Risk: Historical And Logical Determinations

I shall conclude this chapter through the elaboration of an alternative materialist analysis of risk. I will approach this with reference to the reproduction schema presented by Marx in Capital: Volume Two. The dynamism and the contradictions underlying the development of the modern condition is premised on the contradictory coexistence of the circuits C-M-C and M-C-M'. The latter is an inherently risky process as far as capital is concerned. In the metamorphosis of capital through its successive forms — money capital, productive capital, commodity capital, (more) money capital. M-P . . . C-M' — time and space are constantly ruptured and there is constant risk and uncertainty with respect to the (re)structuring of time and space in a way which permits the successful accumulation of capital. The process is ruptured by the necessary social reproduction of labour through the wage (money) form (Marx, 1956b: 35). The unfettered subjectivity of labour is denied by its necessary reproduction through the wage form: money advanced through the wage to enable labour access to commodities necessary for their own reproduction (L-M-P). Hence:

The risk faced by individuals in everyday life is thus the alienated and fetishised form in which the risks attendant on the reproduction of capital appear.

In the (post)modern world 'risk fetishism' is the sociological accompaniment of commodity fetishism. The 'actuarialisation' of society is the ideological expression of the risks faced by capital in the neo-liberal process of global capital accumulation.

The crisis of insurance is thus a crisis of private property. A crisis of private property becomes a crisis of the most concrete form of private property: money. A crisis of money becomes a crisis of money's most abstract form: capital. A crisis of capital becomes a crisis of the law and its enforcement: the state. A crisis of the state demands a more concrete imposition of capital through its most concrete form: the enforcement of the law of money through poverty in an attempt to moralise the demoralised, and through bigger risk to offset bigger disaster. The imposition of poverty and bigger risk becomes a crisis of insurance (more crime, bigger disaster). The state can no longer protect the social relationship out of which it is derived and expressed as private property. Vigilantes are required to enforce poverty. Bigger risk lies beyond the world of quantifiable redemption!

Insurance makes the world a safer place for capital. Insurance predicts the risks to future patterns of spatial and temporal development on the basis of the past. The increasingly intense and globalised circuits through which capital flows has made prediction increasingly problematic. Indeed, the rational, capitalistic ordering of time—space has reached the limits of its contradictory form. This is the crisis of insurance. The increasingly uncertain nature of the future makes the quantification of risk increasingly difficult. It is important to recognise however that capital is not a 'thing' or a 'symbol' but a social relation: a relation premised on the subordination of living labour power to the abstract power of money capital. The crisis of insurance is thus a crisis of the reproduction of labour as labour-power in the circuit of capital accumulation. The crisis is manifested in many forms: crime, ecological disaster, nuclear Armageddon . . . The material manifestation of the risk society is thus a generalised crisis of uninsurability expressed through the 'law of lottery'. The death of the future — how soon is now?

• 1We would like to thank our friend William Dixon for providing historical and theoretical insights into the significance of William Beveridge to the development of state welfare insurance.
• 2This is evident in Giddens's institutionalist approach to the analysis of modern societies. Giddens argues that modern political and economic institutions are 'bounded' but his own structural functionalist methodology precludes an assessment of the dynamics through which boundaries are developed and sustained. See Giddens (1985: 294–341).
• 3Lash and Urry argue that both value and use-value were 'abstract' in the modern age and have both been transplanted by 'sign value' in the post-modern age (Lash and Urry, 1994: 14). Similarly, Foucauldian writers allude to the 'capitalization of everyday life' and the constitution of individual subjectivity through discursive projects of enterprise and money (Foucault, 1991; Rose, 1989).