With efforts toward health-care reform in progress as this review is being done, the book, "Supercapitalism" would seem to cast light on the relationship between modern, globalized American capitalism and American democracy, and how these two intertwine in the health-care reform efforts.
For this reason, if no other, I think this makes the book a good read.
Reich begins his book by reminding us that capitalism has triumphed over communism/socialism worldwide. Giving capitalism its well-deserved due, he tells us that "Capitalism's role is to enlarge the economic pie." On the other hand, he tells us that "How slices are divided...is up to society to decide. This is the role we assign to democracy."
But an important point that he makes repeatedly in the book is that the relationship between capitalism and democracy has evolved significantly over the past 30-40 years, saying that "Capitalism has become more responsive to what we want as individual purchasers of goods, but democracy has become less responsive to what we want together as citizens." Supercapitalism, he would argue, has been responsible for the soaring stock markets, increased profits of giant corporations, shrinking of labor unions, and increased influence of lobbyists in Washington. In the process, it replaced democratic capitalism, and there simply is no hope at all to return to the democratic capitalism of the `50's and `60's. No, we are left with the situation where "The purpose of companies is to play the economic game as aggressively as possible. The challenge of us as citizens is to stop them from setting the rules."
See what I mean about the book being relevant to the current discussions about health-care reform in the country? What he is saying, I think, is that the doctors, hospitals, insurance companies and others with a stake in the outcome of health reform can be predicted to exhibit ruthless self-interest. That is what they are all about, by definition. But it is still up to us, as citizens, somehow, under our rights in a democracy, to move toward a health care system that is for our common good, whether the various companies and other entities like this or not. But - and here, perhaps, is the crux of the argument -- we are also the collective stockholders and consumers who hold most of the cards. And it is not easy for us to move in directions that may be against OUR self-interests. Whether we want to admit it or not, we "tend" to want to get the best return for our investments, while we "tend" to want to get the best bang for our buck when we shop.
Back to the book, Reich gives us a chapter on the history of government regulation and how it has tried to "ensure that capitalism served the people." And he tells us that up through the 1950's the U.S. was not much of a trading nation. No, it was America's foreign policy, principally the war in Viet Nam, that "created new opportunities for American corporations."
And here we come to the gist of what he has to say in the book: New transportation and communication technologies changed the rules for the big corporations. This was the basis of supercapitalism. No longer could these big corporations be assured to stay in power. They could be overthrown swiftly and completely by a smaller rival, using the latest tools available. And it was easier to enter the marketplace. Suddenly, there were more car companies, television stations, airlines, chain stores, etc. Wal-Mart and the Internet emerged. "All across the American economy, the power of large corporations to set prices had suddenly declined," says Reich. Capitalism was more and more dependent on the demands and whims of investors and consumers, at the expense of individual citizens. The rise of the mutual fund industry empowered individual investors; the spread of malls and big-box stores empowered individual consumers. So, by the late 1970's "a fundamental change has occurred in democratic capitalism in America....Power has shifted to consumers and investors." Competition had reached all time heights. It was fierce.
The good news was that the nation's Gross National Product essentially tripled in the `70's, and the DOW went from 1,000 in 1972 to 11,000 in 1999. Productivity soared and, clearly, Americans were materially better off than before. Cheap imports added to consumer confidence. But there was bad news, as well: Companies closed and factories disappeared. Masses of workers were laid off and/or redeployed. Union membership declined, as did economic security. The spread between average worker wages and the salaries of company CEOs widened spectacularly. The rich got richer, and the super rich did even better. It was all part of the new supercapitalism.
Per Reich, greed is not at fault, nor are the super rich, under supercapitalism. Nor are the companies, themselves. The enemy is, of course, us. As the primary investors and consumers, we hold the cards under supercapitalism, not the companies or the CEOs. They perform as we demand. They succeed or fail, depending on whether we buy their stock and/or buy their products. And, in general, we don't care where things are made or who makes it. We encourage globalization and its goal to reduce costs. We do this, again, by our support, or lack of support, of stocks and products. We act collectively, by default. And, we act without a great deal of individual exposure or identification.
Reich says that the whole world is embracing supercapitalism, in one form or the other. China, he says, "is surging toward supercapitalism with no democracy at all...."
But back to the U.S., he tells us of the growth of lobbyists in Washington over the past 30-40 years. In 1950, he says, there were fewer than 100. By the late `70's, there were more than 5,000, and by the late `90's things really took off. By the end of the decade, "more than 500 American companies maintained offices in Washington D.C., and employed some 61,000 lobbyists...." The reason? "...the demands of corporations seeking to influence the policy process had grown as competition among them has intensified." The corporations would seem to have no choice. Again, because investors and consumers hold most of the cards, any advantage in government policy can be the reason for success or failure. Unfortunately, per Reich, "The result is a broader form of corruption." Companies will do just about anything to gain an advantage. Also unfortunately, per Reich, "Our voices as citizens...are being drowned out."
And, per the author, this "is not the way capitalism and democracy must evolve." The question, however, is who is to balance the new order...and how? What needs to be done, he says, is "to separate capitalism from democracy and guard the border between them." And, in many ways, this is where the author really gets interesting. He does not expect the companies, themselves, to agree to or abide with this solution. No, he says "companies under supercapitalism no longer have the discretion to be virtuous....(and).... Most consumers want good deals, period." And forget about asking corporations to do good things voluntarily. Why should stockholders want a company to donate millions of dollars for some good cause, for example, at the expense of using that money to increase profits?
So, what needs to be done? Says Reich, "The most effective thing reformers can do is to reduce the effects of corporate money on politics and enhance the voices of citizens." This populist view means that somehow, as citizens, we need to stop companies from corrupting democracy in their self-interest. And some things that government can do to accomplish this include:
* Improve our education system
* Provide a more progressive tax system
* Decouple health care from employment
* End big contributions by lobbyists to political candidates or campaigns
* Understand that corporations under supercapitalism are not interested in the public good and should not be
* Abolish corporate income tax and treat income as personal income of shareholders
To end with a word on the health-care reform debate, Reich clearly is in favor of removing the burden of companies to provide health care insurance to employees. As such, he would seem to be favoring a single-payer or public option system, with government setting the rules of the game. How he would propose to pay for such and/or what tax incentives or options he would offer to offset health care insurance premiums, I don't find in the book. What I do find, for the last time, is a sound theory that corporations/companies and lobbyists and politicians who are bound to them should never again be expected to provide, against their self-interests, for the public good.
I enjoyed the book, found it a smooth read, and highly recommend it to others.
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Top reviews from other countries
- Luc REYNAERTReviewed in the United Kingdom on November 5, 2009
Where are the customers?
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Florentin BlancReviewed in France on February 7, 2009
Enfin un livre vraiment intelligent
- @iGlinavosReviewed in the United Kingdom on May 7, 2011
Great ideas, great presentation, underdeveloped argument
