| Supercapitalism: The battle for democracy in the age of big business |
| Robert Reich, August 2008, Icon Books, 272 pages, £12.99. |
| Robert Reich must be kicking himself: his Supercapitalism – a critique of the way the US economic growth and prosperity has developed at the expense of democracy – was first published last year. Since then, of course, fundamental flaws in that economy and its financial system have become all too evident. Reich’s book now feels as if it’s fighting a minor skirmish while an all-out battle is waged elsewhere. |
| Nevertheless, there is good value to be had from his lucidly written account of how changes in the global economy, primarily related to technology, have created what he calls ‘supercapitalism’. Reich, a former Secretary of Labor under President Bill Clinton and now professor of public policy at Berkeley, argues that alongside the emergence of global supply chains, intense competition in global markets and the single-minded pursuit of profit has created all-powerful companies whose influence has suppressed the democratic voice of the people. |
| Reich describes at length a ‘Not Quite Golden Age’ in the US in the first two to three post-World War Two decades, during which a handful of corporate leaders of large companies worked in broad harmony with politicians and union leaders to run a largely self-contained economy with a relatively fair division of the spoils. The breakdown of this system he attributes not to any major political reform such as the Reaganomics of the 1980s, but mostly to changes in technology and transportation that created a far more vibrant, but also more competitive world economy. As companies scrap within this new world, the interests of the people as investors have become paramount, drowning out their voices as citizens. |
| Yet this is no standard left-wing, anti-globalization, big business-bashing polemic, even though the company most often cited is that exemplar of the banality of mass consumerism, Wal-Mart. Reich admits the compli-city of the people in this process, with consumers benefiting from greater choice and lower prices. Nor does he blame companies that, like Wal-Mart, are mostly operating perfectly within the law, and acting exactly as they should do by maximizing shareholder returns. Instead, he says it is time for a proper balance to be restored so that rules and legislation to curb the social downsides of unrestrained capitalism are again enacted through the democratic process. Business should largely be left to business, but politicians and citizens shouldn’t be afraid to set the parameters within which it works. |
| Reich says one reason why democracy has been subsumed by ‘supercapitalism’ is the vast extent of lobbying by corporate interests in Washington. For the non-American, this is one of the most interesting parts of the book, as a former Beltway insider illustrates for us how pervasive this practice has become. While the public imagination is seized by politics only intermittently, when debates on topics like abortion or immigration take place, most of the day-to-day action along Pennsylvania Avenue concerns technocratic matters, with companies, again quite legally, spending vast sums to influence legislators one way or another. In this way the workings of democracy have become just another extension of all-consuming corporate competition. |
| For Reich, concepts such as corporate social responsibility are almost entirely bogus, and thus useless to rely on as a means of ensuring the harmful effects of supercapitalism are mitigated: as he writes, “making companies more socially responsible is a worthy goal, but it would be better served by making democracy work better.” Even so, despite the power and length of his argument, his list of remedies – other than long sought-after US election campaign finance reform – is disappointingly short and sometimes weak. He suggests, for example, a $1,000 tax credit each year for people to give to organizations that lobby concerned with ‘citizen values’ such as a higher minimum wage or cleaner environment – causes which may be more in line with the values of a west coast professor than the general population. |
| Still, as public opinion, even in the US, now swings strongly towards greater regulation of markets and companies, Reich’s book is timely, despite its pre-credit crunch publication. With Barack Obama possibly winning the presidency alongside a Democratic-controlled Congress, the thinking of those like Reich who favour more government action to restrain the ‘supercapitalists’ is likely to be in the ascendancy for a few years. Even if this book had no other merit, the insight it gives into such thinking would be a good enough reason to read it. |
| Andrew Peaple |
| Writer on the Wall Street Journal’s ‘Heard on the Street’ column. |
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