From the greatly admired author of The Work of Nations and The Future of Success, one of America's greatest economic and political thinkers as well as a distinguished public servant in three national administrations, a breakthrough book on the clash between capitalism and democracy.
Mid-twentieth-century capitalism has turned into global capitalism, and global capitalism--turbocharged, Web-based, and able to find and make almost anything just about anywhere--has turned into supercapitalism. But as Robert B. Reich makes clear in this eye-opening book, while supercapitalism is working wonderfully well to enlarge the economic pie, democracy--charged with caring for all citizens--is becoming less and less effective under its influence.
Reich explains how widening inequalities of income and wealth, heightened job insecurity, and the spreading effects of global warming are the logical outcomes of supercapitalism. He shows us why companies, fighting harder than ever to maintain their competitive positions, have become even more deeply involved in politics; and how average citizens, seeking great deals and invested in the stock market to an unprecedented degree, are increasingly loath to stand by their values if it means biting the hands that feed them. He makes clear how the tools traditionally used to temper America's societal problems--fair taxation, well-funded public education, trade unions--have withered as supercapitalism has burgeoned.
Reich sets out a clear course to a vibrant capitalism and a concurrent, equally vibrant democracy. He argues forcefully that the spheres of business and politics must be kept distinct. He calls for an end to the legal fiction that corporations are citizens, as well as the illusion that corporations can be "socially responsible" until laws define social needs. Reich explains why we must stop treating companies as if they were people--and must therefore abolish the corporate income tax and levy it on shareholders instead, hold individuals rather than corporations guilty of criminal conduct, and not expect companies to be "patriotic." For, as Reich says, only people can be citizens, and only citizens should be allowed to participate in democratic decision making.
In this compelling and important analysis of the triumph of capitalism and the decline of democracy, former labor secretary Reich urges us to rebalance the roles of business and government. Power, he writes, has shifted away from us in our capacities as citizens and toward us as consumers and investors. While praising the spread of global capitalism, he laments that supercapitalism has brought with it alienation from politics and community. The solution: to separate capitalism from democracy, and guard the border between them. Plainspoken and forceful, if somewhat repetitious, the book urges new and strengthened laws and regulations to restore authority to the citizens in us. Reich's proposals are anything but knee-jerk liberal: he calls for abolishing the corporate income tax and labels the corporate social responsibility movement distracting and even counterproductive. As in 2004's Reason, Reich exhibits perhaps too much confidence in Americans' ability to think and act in their own best interests. But he refuses to shift blame for corporations' dominance to the usual suspects, instead pointing a finger at consumers like you and me who want better deals, and from investors like us who want better returns, he writes. Provocatively argued, this book could help begin a necessary national conversation. (Sept. 6)
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1 . Business and Politics Collide to make Supercapitalism.
Posted November 29, 2009 by D. Blizzard , New YorkThis book is very informative as to the relationship between business and government. Quite simply, under supercapitalism, where business aims only to please investors and customers, messing with the wheels of government is one of only a number of levers a business has to increase profits. The author goes into great detail as to how businesses are able to manipulate customers and politicians into getting exactly what they want. The author makes the point that supercapitalism is here to stay and we cannot go back to what we had before due to the global nature of business. He lists a few obvious changes the citizen can take and what to look out for from politicians and corporations, but does not spell out exactly what is to be done. Overall, a great read for anyone interested in politics or business.
September 03, 2007
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Excerpt from Supercapitalism by Robert B. Reich
Chapter One: The Not Quite Golden Age
Roughly between 1945 and 1975, America struck a remarkable accommodation between capitalism and democracy. It combined a hugely productive economic system with a broadly responsive and widely admired political system. America in those years achieved its highest degree of income equality (since measurements have been available). It generated a larger proportion of good-paying jobs than before or since, and more economic security than ever for more of its people. Perhaps not coincidentally, in those years Americans also expressed high confidence in democracy and trust in government, both of which sharply declined in subsequent years. That singular success and that powerful promise extended the moral authority of the American system throughout the world. In contrast to Soviet communism, America became an exemplar of both political freedom and suburban middle-class affluence.
The economy was based on mass production. Mass production was profitable because a large middle class had enough money to purchase what could be mass-produced. The middle class had the money because the profits from mass production were divided up between the giant corporations and their suppliers, retailers, and employees. The bargaining power of these latter groups was enhanced and enforced by government action. Almost a third of the workforce belonged to a labor union. Economic benefits were also spread across the nation--to farmers, veterans, smaller towns, and small businesses--through regulation (of railroads, telephones, utilities, and energy supplies) and subsidy (price supports, highways, federal loans). Thus did democracy offset the economic power of large-scale production and widely disperse its benefits.
But it was not quite a golden age. Women and minorities still struggled for political equality and economic opportunity. Much of the nation's poverty was hidden away in rural hollows or black ghettos. Foreign policy, ostensibly shaped by the perceived threat of Soviet communism, all too frequently pandered to the needs of large American firms for cheap raw materials abroad, such as bananas, tin, and oil. Civil liberties were imperiled during Senator Joe McCarthy's anti-communist witch hunt. Much of American life was monotonous, conformist, and deadly dull. And yet for all its shortcomings, democratic capitalism seemed to be working remarkably well, and on the way to working even better.
In order to understand what happened to the Not Quite Golden Age, we first need to understand how it came about.
The evolution began as the nineteenth century ended, when large corporations posed a profound challenge to American democracy. They brought a new level of prosperity to the nation but also sweatshops, child labor, and unsafe working conditions, and they monopolized whole industries. The unprecedented economic power of these giant companies made them politically unaccountable. America groped for a way to respond.
It started with outsized personalities whose footprints are still visible--J. P. Morgan, a banker's son who sold stocks for the railroads, engineered a huge rail combination, and became a wealthy financier (J. P. Morgan and Sons, which evolved into today's Morgan Stanley); Andrew Carnegie, who began as a telephone clerk, rose to the presidency of the Pennsylvania Railroad, and then made a fortune as a steel magnate (Carnegie Steel); John D. Rockefeller, who started as a bookkeeper in Cleveland, bought his first oil refinery in 1862, cornered the oil market in the 1890s with his Standard Oil Company (whose descendant is ExxonMobil), and then moved into coal, iron, shipping, copper, and banking (Chase Manhattan); and, subsequently, Henry Ford.
With these men and others like them flowed a stream of new inventions--steam engines, railway locomotives, the telegraph, electric turbines, internal combustion engines, and iron and steel machinery with interchangeable parts--that allowed all sorts of things to be made and shipped in very large volume. Costs could be spread over so many units that each single one was cheap to produce. Procter & Gamble devised a new machine for mass-producing Ivory soap. Diamond Match used a machine that made and boxed matches by the billions. A cigarette-making machine invented in 1881 was so productive that just fifteen of them satisfied America's annual demand for cigarettes. Standard Oil, American Sugar Refining, International Harvester, and Carnegie Steel, among others, gained unprecedented efficiencies through giant furnaces, whirling centrifuges, converters, and rolling and finishing equipment.