Robert Reich’s latest book continues a series of publications that have established Reich as the premier political economist in the country. To loyal readers of Reich, he plows some of the same ground as earlier books though this book takes his description of modern American political economic history to almost the present (the current economic downturn started after the book was published). For those who haven’t read Reich before, prepare to be treated as a thinking, rational adult who is learned but not academic. This is an excellent primer for any reader as it shows how our country, and much of the world, has moved from Democratic Capitalism to Supercapitalism.

Reich begins with definitions. Capitalism’s role is to enlarge the economic pie while the role of democracy is to determine how the slices are allocated. The problem is, “Capitalism has become more responsive to what we want as individual purchasers of goods, but democracy has grown less responsive to what we want as citizens.” Power has shifted, not among individuals but within the individual, from individuals as citizens to individuals as consumers and investors through access to more choices and better deals and fewer common goods and less shared wealth. Technologies, globalization and deregulation have empowered the consumer and investor within us to get better deals. These deals have reduced the relative equality, stability and other social values from our system. Efficiency has won out over equity and values.

Is Supercapitalism all bad? Reich speaks of people being of two minds. As consumers and investors, we cheer the deals we get while our citizen lobe abhors the social consequences. In the end, Reich quotes that philosophical sage Pogo, “We have met the enemy and it is us.”

Reich’s clear thinking and overwhelming evidence and examples helps to smash some urban economic myths. He does very well in determining the true causes of many phenomena (e.g. the decline in union membership, the two-decade long rise in the stock market, globalization, technological advances and, of course, supercapitalism) that can replace the knee-jerk answers proposed by many. Reich doesn’t blame Wall Street, Wal-Mart, corporations in general, greedy CEOs or the Republican Party for our problems but neither does he propose a solution based upon the benevolence of liberals such as Ben & Jerry or Starbucks for our salvation. He even clearly explains the incredible increase in U.S. worker productivity that so mystified Alan Greenspan (see “The Maestro”) though Reich’s explanation is mostly a revision of Joseph Schumpeter’s “Creative Destruction.”

In general, Reich sees the answer to supercapitalism to entail reducing the benefits we receive as consumers and investors (i.e. higher prices and lower returns) in order to increase the benefits we receive as citizens (i.e. more government protection of workers and restrictions on actions by corporations that would improve the quality of life of society). The problem with these solutions is that, “Our voices as citizens – as opposed to our voices as consumers and investors – are being drowned out.” Competition among rival corporations, who dominate the political sphere, elevates us as consumers but denigrates the common good, which is important to us as citizens.

Specifically, Reich believes no changes can be made without changing government itself. There must be reform of campaign contributions and lobbying laws before any specific changes can be made. The true answer lies in public policy, or what Reich terms the democratic process. Generosity from corporations, boycotts or movements will not create change as change won’t come about voluntarily. Laws must force corporations to consider the citizen as well as the consumer and investor.

Reich often quotes John Kenneth Galbraith and Michael Sandel has called Reich, “our generation’s Galbraith.” But if that is the case, something is still missing. If William F. Buckley was Iago to Galbraith’s Othello, who then is Reich’s antagonist? Where is the conservative to parry the liberal political economy champion? I am redundant but I do surely miss William F. Buckley.

Go Yotes.

Dr. Jasper M. LiCalzi
Professor
Department of Political Economy
The College of Idaho