[This review was published in the Spring 2008 issue of The Journal of Social, Political and Economic Studies, pp. 125-129.] 

 

Book Review 

 

Supercapitalism: The Transformation of Business, Democracy, and Everyday Life

Robert B. Reich

Alfred A. Knopf, 2007 

 

            Robert Reich is one of America’s leading commentators on social and economic issues.  He is a professor at the Goldman School of Public Policy at the University of California at Berkeley, a weekly commentator on National Public Radio, and an author of ten previous books who has also compiled an extensive resume of articles in leading national outlets.  The public may know him best from his having been Secretary of Labor under President William Clinton.

            In this latest book, Reich adds his voice to the now-vast literature about how global low-cost competition has with gale force changed fundamentally the American economy, and with it the political system, from what they were even so recently as thirty years ago.  He cites chapter and verse about how globalization (spurred by innovative transportation and communications), new systems of production, and the deregulation of business have introduced a searing competition that drives all before it.  He sees the post-World War II American economy as having been a “stable oligopolistic system” in which corporate executives were able to act as business statesmen and firms could be called upon to perform a number of public functions under the rubric of “social responsibility.”  That system, which he calls “democratic capitalism” and describes as “a planned economy run by business,” has now been irretrievably shattered, with the “supercapitalism” of fierce world competition taking its place.  He describes the growing polarization of income, with great rewards going to those at the top while U.S. workers’ remuneration fails to keep pace with the rapidly expanding productivity.

            His description of these developments is good, but hardly seems necessary in light of the many other books (which give considerably more detail) on the same subject.  His contribution is found in certain additional facets that he explores—and it is the expression of ideas about them that seems to be Reich’s main reason for writing this book.

             One, of course, is his before-and-after comparison of the post-World War II “democratic capitalism” with the current hyper-competitive global system.  The move from one to the other amounts, in effect, to a paradigm shift that calls for some new thinking and new policies.

            Second, it is in that context that the book features an excellent exploration of the transformation’s political effects.  In what is perhaps the strongest section of his book, Reich gives several examples of how massive lobbying has enveloped government—not always as the expression of a united front on behalf of business in general, but often as a reflection of how business interests struggle against each other for favorable governmental treatment or to prevent measures they perceive as harmful to themselves.  The cacophony of competing voices and the moneyed influence it brings to bear overwhelm the political system, drowning out “citizens’ voices” (by which Reich means a more general consideration of what serves the public good).  This leads to “the real crisis of democracy in the age of supercapitalism.”

            Although Reich’s discussion of money’s swamping of the political system deserves praise for its informative examples and for adding a dimension (inter-company political competition) that many of us will not have thought of, a reader is justified in thinking that his analysis is far from complete or adequate.  We recall that John Stuart Mill observed in his Essay on Bentham and Coleridge that most systems of thought contain important truths in what they assert as true, but fall short because of what they fail to consider.  The same applies here.  The mass of Americans have long constituted a “silent majority,” with policy and respectable opinion crafted by elites that ignore, or even view with contempt, what the average person wants.  For a more complete discussion, Reich would at least have to consider the towering role today of the transnational elite that cultural commentator Samuel Huntington speaks of as “the Davos culture.”  Further, the considerable power of ethnic lobbies should be considered.  And, in a much longer and broader context, the historic adversarial role of the “alienated intelligentsia” ought not to be ignored.     

            Third, Reich makes it a chief undertaking of the book to challenge one of the more sacrosanct tenets of post-World War II American liberalism.  (He does this despite being firmly planted himself within America’s left.)  For several decades, it has been a truism within politically correct circles that large corporations have a “social responsibility” to serve voluntarily as major social service agencies.  Although the much-respected free-market economist Milton Friedman argued against this by contending that corporations are investment vehicles into which people put their money in the expectation of profit, Friedman’s admonition was treated mainly as a starting point for rebuttal, and both the corporate and academic worlds declared “corporate social responsibility” a must.  An academic discipline sprang up within the colleges of business in American universities, and classes in social responsibility have now long been a required part of business curricula.  It will be interesting to see whether Reich’s counter-arguments make any dent in this. 

            It would perhaps help if he were to explain in depth the history of American liberal thought about the delivery of social services.  It would help because what Reich is doing is reverting to the view, indeed, that had become conventional within the American Left before World War II.  The “social responsibility” thesis, to the extent that it calls upon business to act voluntarily and without government direction in performing some or all of the functions that a welfare state would perform, is something that would have been viewed with contempt by most pre-World War II liberals.  If Reich’s current view becomes accepted, it will mean that the American “social conscience” (as determined by the Left) will have passed through four stages: first, a welcoming of a crusading form of private charity during the Progressive period; then in the 1920s and ’30s a belief that private charity is humiliating and insufficient, and that government should embrace the tasks of social welfare; third, after World War II a placing of “social responsibility” onto business as a moral imperative; and now a reversion to the view that it is indeed government, not business, that should play such a role.

            Most of the time, Reich stresses how impossible in is for corporate executives in today’s global market to look to anything other than making a profit for shareholders.  If they don’t maintain an exclusive focus there, he says, they will soon be out-competed by others who do—and thus fail to survive in business.  But at at least one place, Reich places the argument on a different ground, saying “they had no business giving away their shareholders’ money.”  This tells us that he agrees with Milton Friedman’s moral/legal argument (which, if it is accepted, was as valid in earlier decades as it is now).  Among the “powers that be” in American society, this won’t be nearly as persuasive in doing away with the “social responsibility” expectation as his argument-from-necessity and call for the resumption of full governmental responsibility.

            A fourth point Reich stresses is important as American society looks to the future.  He believes that there is no going away from the blast of global competition and that in that context individuals and firms have no choice but to struggle for survival and no ability to change the overall picture.  This leads him to see that systemic solutions are called for, one of them being a much-increased public safety net.  For him to say this can be taken in either of two ways: as a mere reiteration of what the American Left has been calling for for well over a century; or as a response to the vastly changed economic situation.  There will be those who disagreed with the desirability of  a “welfare state” at a time when capitalism primarily undergirded a largely ubiquitous “middle class,” but who will agree that matters have changed now that the radical polarization of incomes is washing away a middle class.

            From the foregoing, we see that Supercapitalism is worth reading for its contribution to the issues it stresses.  Just the same, it is regrettable how greatly Reich embarrasses himself with his conventionality, shallowness, ideological bias and superficiality on so many things.  One prominent reviewer says “the book succeeds brilliantly.  [It is] clear-eyed, well-reasoned and insightful….”  But this is pure puffery.  If, for example, we look at Reich’s ideological biases, we see that he writes of “communist witch hunts” and “the perceived threat of Soviet communism” [this reviewer’s emphasis].   Never mind that serious scholars have put the death toll from Communism at between 85 and 100 million.  It is an embarrassment to Reich (and to the editors at his publisher) that his text is allowed to refer to “Minnesota senator Joe McCarthy” who “fomented against alleged communists with the U.S. government and in the media and entertainment industries.”  (Readers will hardly need to be reminded that McCarthy was a senator from Wisconsin and that he had nothing to do with the investigations into the entertainment industry.) 

            Ideology, however, is just a minor contributor to Reich's superficiality.  We don't want to compound the examples here, but let's consider at least one more: his definition of "democracy."  He stays within the conventional meaning (as the term is used in the United States) when he says that "democracy is more than a process of free and fair elections."  He unknowingly deviates quite fundamentally from that conventional meaning when he adds that "democracy, in my view, is a system for accomplishing what can only be achieved by citizens joining together with other citizens to determine the rules of the game whose outcomes express the common good."  What Reich doesn't realize is that this definition is one that will appropriately fit any cultural, social or ideological system that embodies or gives expression to the sensibilities of its population.  Democracy in this sense, which agrees with Rousseau's eighteenth century concept of the "General Will," just as much describes a system based on tribal values as it does one based on individual rights.  National socialism in Germany would have had no difficulty accepting his definition as describing itself.  Since it seems certain that Reich does not intend such a meaning, a reader will be justified in finding Reich's thinking on the subject superficial, in that it fails to make distinctions that are essential to his own position.

                                                                                                                                                                                                                             Dwight D. Murphey