The race to the bottom in pensions continues at Olympic pace.

The sleight of hand is none too subtle. It consists of the private sector falling over itself unilaterally to tear up its previous pension obligations and then expressing outrage that by comparison public-sector pensions (typically £7,000 in the NHS, £4,200 across the Civil Service) are now so generous. Read CBI director-general John Cridland’s weaselly piece in The Guardian last week. Not only is it unreasonable, Cridland laments, that the private sector now has to support better public-sector pensions through taxation: these preposterously gold-plated provisions make it harder – in some cases impossible! – for the private-sector to bid successfully for public-sector contracts.

Pensions are deferred pay. What is Cridland boasting about when he complacently asserts that ‘there is so much to be learned from the changes made [in pensions] in the private sector’? Put bluntly, that employers over recent years have cut their contributions in half and payouts by up to two-thirds. And now he wants the playing field further levelled down so that private companies can cherry-pick the public sector too.

Notice that objective justification for reducing the already pitiful level of UK pension provision is never offered. It is taken for granted. The argument is that because lots of companies have done it, it must self-evidently be right.

Unfortunately, slippery and self-serving though this ploy is, almost all commentators have bought it. But the real question is the opposite one. The problem is not the profligacy of public-sector pensions (if only!): it’s the utter failure of the funded private-sector ones which a decade ago were being touted as the reason why the UK’s economy would be transformed and Europe’s wouldn’t. If, as Cridland obligingly notes, there are four companies in the FTSE 100 still offering traditional defined-benefit schemes, the obvious question is not why 96 companies aren’t doing it but why those four still can. How can we level up the playing field, rather than bring everyone down in the gutter?

Baldly, the CBI and others are asking us to accept that that the richer we get, the less we can afford a measure of collective retirement security. That to keep bankers and corporate grandees in comfortable old age, the mass of citizens in one of the richest nations in the world must accept cutbacks and pensions not much above the poverty line. In short, that progress requires civilisation to go backward.

That simply defies belief.

Or if it is true, then it casts doubt on either our system’s priorities, or, even more troubling, its underlying competence – or both. If capitalism is in such a poor way that the only way of saving its institutions is to slash the benefits of, or make redundant, those in whose name the returns are being protected – shareholders in pension and insurance schemes – then we’re in a looking-glass world and it needs seriously rethinking.

In fact, both are involved: the system’s bent pension priorities, grossly skewed in favour of finance and the very rich, are symptomatic of a capitalism that is running cancerously out of control. The Gadarene stampede from proper pensions is just part of what has been termed the ‘Great Risk Shift’ in which governments and companies have used any excuse to offload risk that was previously shared on to individuals and families. Retirement is going the way of career, social security is being weakened, trade union rights progessively reined in. The underlying justification was the idea that self-interested individuals acting in efficient markets would be better able to look out for themselves than the collectivity.

But 2008 taught those who hadn’t already twigged that there are tight limits on both self-interest and efficient markets. Extreme self-interest, as Alan Greenspan famously lamented, didn’t prevent the banks blowing themselves up, and shareholder-oriented governance was spectacularly incapable of providing countervailing checks and balances. As for efficient markets, the successive and increasingly frequent bubbles of the last two decades blows the idea out of the water.

The circle is vicious, not benevolent, the bursting bubbles being intimately connected with the current pensions debacle: the declining market returns blamed by companies for the non-viability of traditional pensions have been caused by stockmarket crashes as the ‘ponziconomy’ built on towering misallocations of resources repeatedly tumbles down. But it is not the middlemen in the City and Wall Street who have suffered from the serial busts caused by the Asian crisis, the dotcom boom, merger and acquisition mania and the great financial crisis – none of which could have occurred if markets were truly efficient – but the private- and now public-sector workers who are being asked to pay with their miserable pensions.

Just as with the banks, big business now wants the rest of us to bail them out for the malfunctioning pension system which that they’ve demanded we accept. Well, no. As Polly Toynbee recently remarked in The Guardian recently, ‘the ideal of the entrepreneurial, hyper-efficient private sector is as much a myth as the ideal public servant’.

The CBI’s pension arguments and the coalition’s opening up of the NHS to competition show that life (and vested interest) still remains strong even in ideas like this that have been discredited in practice as well as theory.

But most people don’t believe them any more. Most people believe that the roll-back of social protection (and concomitant glorification of the individual) of the last 30 years has gone too far, and that, as economist John Quiggin puts it, ‘we have the capacity to share and manage risks more effectively as a society than as individuals’. It’s time to put the Great Risk Shift into reverse. When private companies can show they match and beat the retirement payouts of the public sector, we’ll applaud and listen to their advice. But not until.