economics | Supercapitalism: The Transformation of Business, Democracy, and Everyday Life by Robert B. Reich, Knopf, $25, 288 pages
For a long time now we've been told we are living in an age of excess and nowhere is this more true than in our use of language. No longer is it sufficient, for example, for an exceptional athlete to be referred to merely as a star, but rather as a superstar or, better yet, a megastar. Such escalation, moreover, often bleeds into obfuscation. Tall coffees at Starbucks are really smalls, and a grande is actually a medium. Seats in the "second mezzanine" -- mezzanine from the Italian for middle or intermediate -- of many arenas are actually the highest (and worst) in the buildings, and large soft drinks and large orders of fries are really, well, mezzos in our fast-food nation. And for at least a decade now, the simple word "capitalism" has not been adequate to describe the economic system under which almost everyone in the world lives today. Edward Luttwak may have started all this with his 1998 book "Turbo-Capitalism," and since then coinages such as uber-capitalism, and hyper-capitalism have become common.
In his smart and provocative new book, Robert Reich -- secretary of labor under Bill Clinton and now a professor of public policy at Berkeley -- creates a neologism of his own to refer to today's economy: Supercapitalism. By this term, Reich essentially means the highly volatile, ruthlessly competitive international economic system that began to emerge in the 1970s, the result largely of globalization, new technology and production processes, and deregulation. As a result of such factors, we have experienced over the past 30 years both a radical compression of space and time, and the creation, in Manuel Castells' words, of "an economy that works as a unit in real time on a planetary scale." Supercapitalism has led to much higher levels of productivity worldwide, and higher GDP per capita not only in the United States, but also in many other parts of the world. Over this period it has enriched investors and enhanced the well-being of consumers in innumerable ways. In so doing, however, it has had other, much less positive repercussions as well, the most profoundly disturbing of which for the U.S., according to Reich, are growing inequalities, increased economic insecurity and the decline of democracy itself. In "Supercapitalism," Reich traces the transition from an earlier era of democratic capitalism in the U.S. to our current era, details how and why this transition came about and proposes some reforms that would in his view allow us to retain the economic gains associated with supercapitalism without allowing it to kill off democracy in the United States.
According to Reich, the economic era from the end of World War II until the mid-1970s contrasted sharply from the era of supercapitalism that succeeded it. In the first period -- which many writers refer to as the Postwar Boom, but which Reich calls the "Not Quite Golden Age" -- America "struck a remarkable accommodation between capitalism and democracy." During this 30-year period, the economy grew steadily, but equitably, with almost all regions, sectors, groups and classes improving their lots. The economy was dominated by large corporations, mass production and highly regulated, oligopolistic markets. Unions were strong, and labor and capital established a fairly amicable working relationship, in large part because the structure of the economy enabled them to pass along to consumers negotiated increases in workers' wages and benefits. If there wasn't all that much competition in the economy, if consumers and investors had far fewer choices than they do today, the economy was more or less democratic in its overall outcomes: "A rising tide lifted all boats," as John F. Kennedy used to say.
Beginning in the mid-'70s, though, "something happened," (to appropriate the title of a 1974 novel by Joseph Heller). Around that time, innovations in transportation and communications, along with technological gains in other areas, began to bring the whole world closer together, ushering in one of the world economy's periodic waves of globalization, and with it, a very different economic order. Technological change cum globalization begat the era of supercapitalism and ended the "Not Quite Golden Age" for the American economy, which in Reich's view was not entirely a bad thing. As suggested earlier, with supercapitalism, robust growth continued, but virtually everything else changed. Ruthless competition brought down real prices across the board, presenting consumers and investors with options beyond their wildest dreams. Such competition, at once cause and effect of deregulation, shattered the comfortable oligopolies of the past, and, withal, the informal postwar compact between labor and capital. The tide that once lifted all boats no longer did so, and, if some regions, sectors, groups and classes have benefited mightily, others have, in a sense, been rendered into jetsam and flotsam.
With increased global competition have come other changes as well. American corporations have had to get more involved in the political process in order to try to shape the economic environment in ways amenable to their interests. In so doing, other voices have often been muffled, if not silenced altogether. Similarly, enhanced economic competition has increasingly crowded out all concerns other than the bottom line, and, as a result, corporate CEOs no longer have the inclination nor, for that matter, the ability to act in behalf of any claimants other than shareholders and consumers. If corporate CEOs don't provide strong returns to the former and good, cheap products and services to the latter, these groups will migrate in search of other corporations that do. What about workers? Communities? Well, what about them?
Reich's proposed responses to supercapitalism are at once bold and surprising (especially for a liberal). Unlike many liberals, indeed, many Democrats, he does not want to turn away from supercapitalism. He realizes that its benefits are far too great. Rather, he wants to find a way to retain the best features associated with it -- innovation, wealth generation and freedom -- while restoring to it some of the democratic features associated with American capitalism during the "Not Quite Golden Age." While he personally favors many items on what might be construed as a progressive economic agenda -- a more equitable tax policy, polices making it easier for unions to organize, moderate restrictions on financial capital, and greater investment in human capital -- he is more concerned with getting corporations out of the political realm and in finding ways to get the American citizenry back in so that citizens rather than corporations can again begin to shape the contours of American economic and social life.
In developing his overall argument, Reich mounts a number of provocative sub-arguments along the way, some of which are again surprising coming from a liberal. One in particular -- his spirited case against corporate social responsibility -- was music to my ears. As he has done in a number of other books over the years -- "The Next American Frontier" (1983) and "The Work of Nations" (1991) come immediately to mind -- Robert Reich challenges us in "Supercapitalism" to think deeply about political economy, something Americans, liberals and conservatives alike, could profitably do a lot more of.