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Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (Borzoi Books) By Robert B. Reich ( Knopf )
Release Date: 2007-09-04
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Product Description
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.
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 Supercapitalism ( joemath )
The author describes the growing disconnect between capitalism and the communities served by our economic system. Initially, he discusses the 1873-1897 Long Depression which economists still debate today. Workers migrated from farms to factories. Between 1945-1975, democracy and capitalism seemed to work side by side. The mass production economy was the foundation of the American middle class. A full 1/3 of the workforce belonged to labor unions with predictable wages and guaranteed benefits.
Incrementally, the planned economy in the USA was orchestrated by big business. This phenomenon drove the prosperity of the 50s onward. Corporate governance was balanced against the plethora of stakeholders.
Over time, technology empowered consumers in order to secure better deals. Herein, the roots of many problems began to surface . Chief among the problems was the creative destruction of the older industries. As jobs and income became less secure, the need for a public safety net became more evident.
From the 1970s to the year 2000, the DOW grew from 1000 to 12,000 and more. Productivity grew incrementally. Executive pay outstripped workers up to a 400: 1 discrepancy between the entry level workers and executive management.
Supercapitalism tends to erode democracy because national boundaries are blurred in favor of the objectives of corporate governance. Supercapitalism doesn't encourage charity that erodes the bottom line.
Overall, the book documents important economic history. The author could write another book on transitioning from the supercapitalism model to a participatory model which could benefit workers and the community more significantly. Perhaps, our bureaucratic structures need less bureaucratic levels and a flatter organization to redistribute pay and power more equitably.
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Reich changes my worldview ( sunlhad )
There are really three things I think I would've wanted to know about this book before reading it.
1. Reich's book treats us to a great many (quite persuasive) counterintuitve explanations. I'm a sucker for (good) explanations about phenomena that cut against intuition. For instance, when you learn in basic training that a bullet drops at the same rate as a paperclip, it's obviously true, but counter to your intuition.
2. The book isn't perfect, but it is without any _serious_ flaws of reasoning. His least cogent argument is his claim that corporations cannot be responsible, unless being so happens to be good for the stakeholders of the company. First, I'm not sure that's true for privately held companies. Think of Caribou Coffee, for instance. Nevertheless, his point that the raison d'etre of a modern publicly-traded company is to make stockholders richer is hardly controversial. My view of this section is that he makes too much of some aspects of his case, without considering other non-governmental companies or the actual deeply held values and motivations of corporate executives. Furthermore, his argument would've been made stronger by some knowledge of attribution and dissonance studies.
3. Reich changed my mind on some significant matters of practical import. For instance, if you think, as I did, that many large corporations seem to be failing in their civic responsibilities, this book will challenge that. (This may simply be an instance of 1 above.)
All in all, I expect this book to leave a mark on future debates on the proper role of business in civic matters and government in business matters.
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 Can This Mess Be Fixed? ( rcarlberg )
Reich was interviewed on NPR in September 2007, and some of his comments promoting this book were eye-opening and counter-intuitive. His 'driveway moment' suggestions included eliminating the corporate income tax, putting lobbyist contributions into blind trusts so politicians could not know who gave what, preventing punitive fines on corporate malfeasance, eliminating the ability of corporations to challenge business-limiting regulations, and not giving tax advantages to corporations who keep their headquarters in the United States. These were some revolutionary recommendations and I was anxious to read his preparatory research.
Unfortunately this book is a good bit less convincing than his radio interview. The second through fifth chapters are devoted to a litany of scolds about multinational corporations, globalization, outsourcing, Fair Trade laws and other sins of 'supercapitalism.' On nearly every page within these four chapters he mentions Wal-Mart at least once. He rightly blames market forces for the intense competitiveness which drives such corporations to look no further ahead than their next quarterly statement. He correctly places the blame on public ownership for changing corporate focus from customer satisfaction to stock price. There is nothing noteworthy here, and it is 2/3rds of the book.
The first chapter is an excellent summation of the thirty year period 1945-1975, when most of us grew up, when government stimulus and regulatory bite combined to create a hugely-successful economic engine. During this period (our formative) a vibrant Middle Class emerged; educated, financially rewarded, productive, acquisitive and procreative. The new markets thus opened up drove industry to create more and better products, which in turn created more wealth shared among the workers. It was a positive feedback loop that floated all boats.
Chapters 2-5 detail, as mentioned, the change in focus from productivity to profitability but without really explaining how this change came about. It isn't until the sixth and final chapter that Reich begins to lay out his vision of what happened.
The mid-'70s saw the first cracks in the American juggernaut, with the Arab Oil Embargo, the rise of Japanese electronics imports, increasing auto imports, the fall of the U.S. dollar and the strain of the Vietnam War. In response, industry began lobbying Congress for increased freedom from regulation, from union contracts, from environmental responsibilities and from restrictions on overseas outsourcing. By the time Ronald Reagan washed into office the stage was set for major re-ordering of priorities, with the stick-and-carrot of previous regulation-and-stimulus being replaced by carrots alone. Big business took off running, and an unholy alliance of politics and big business suddenly got cozier -- to the point where consumers, citizens & taxpayers are no longer Congress's main constituents.
Reich's solutions to these systemic problems depend, as he admits, on a culture change inside the Washington beltway, and this is unlikely to occur without some sort of intervention to break the dependency on lobbyist dollars. His recommendations on pages 210-211 are:
* publicly finance election campaigns for all major offices
* require broadcasters who use the public airwaves to contribute free campaign advertising to candidates in a general election
* prohibit lobbyists from soliciting and bundling big-check donations from their business clients
* ban gifts to lawmakers from corporations or executives
* prohibit privately financed junkets for legislators and aides
* ban parties staged to "honor" politicians with corporate contributions
* prohibit former legislators and public officials from lobbying for at least five years after they leave office
* require lobbyists to disclose all lobbying expenditures
* mandate that all expert witnesses in legislative and regulatory hearings disclose financial relationships with economically interested parties
I might add term limits would also be helpful. Decoupling legislative elections from lobbyist contributions would help Congress begin to serve the electorate again, and weed out career politicians whose only loyalty is to their own benefit.
To return to Reich's radio recommendations, they have to do with eliminating the fiction that corporations are individuals, with rights and responsibilities. He recommends essentially making all corporations S-type corporations, where all profits and losses are funneled straight through to the shareholders and taxed on the shareholders themselves, rather than waiting for capital gains taxes. This eliminates the tax advantage to corporations to make capital investments (i.e. buy competitors) rather than pay dividends to shareholders. He also recommends that corporate malfeasance, and any fines levied, be charged to corporate officers directly rather than coming out of business profits. Corporations must not be used as proxy people, especially when publicly-held corporations are using shareholder money to enrich the officers of the company without returning an appropriate portion back to the real owners.
In all, I still respect Robert Reich as one of the smartest men in politics, and if he were to run for office I'd vote for him in a heartbeat. Unfortunately (for us) he's probably way too smart to do that.
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Supercapitalism; human progress or demise?
This is a very good, clearly written and authoritative book. It is of particular interest to me for it explains why capitalism has developed to be instrumental in the present world crisis for civilisation. The author does not claim this but if one extrapolates supercapitalism's explosion of lobbying and influence to remove impediments to profit, which have demolished many of the social attributes of capitalism, it follows that environmental regulation and law will continue to suffer most from the attention of market forces. There are no affluent companies to lobby on behalf of the retention of ecological services, in effect the life support services of humanity, or to lobby on behalf of the urgent action to curtail greenhouse emissions which have an increasingly visible impact on the earth's physical and biological systems, or to make representations that capitalism must not extend its exploitation of natural resources to use capital as well as interest. These representations are made by dint of the small donations of concerned citizens and are rarely heard.
For these reasons, I would recommend the book to all those concerned with the future health and wellbeing of humanity and therefore students of environmentalism for it explains the fundamental problem that must be solved if democracy is to survive to address the present crisis. This orientation is in contrast with the many reviewers who see the book as economically focussed.
By any scientific calculation, world natural resources and damage to the planet, the accelerating economic growth conferred by supercapitalism is not sustainable. Reich does not address this and the omission reflects the reductionism that separates economics and science. His observations on the demise of democracy are however incisive. In "The Climate Change Challenge and the Failure of Democracy" by David Shearman and Joseph Wayne Smith published at the same time as "Supercapitalism", our conclusion agrees with that of Reich--that democracy must be reformed by separating government from capitalism. We describe a fusion of capitalism and liberal democracy as a root cause of our problems and state that it must be ruptured.
The mechanisms whereby reform can be enacted amount to wishful thinking by Reich. This statement is not intended to be dismissive for it is difficult to visualise how to proceed. As a physician and therefore student of human nature, I recognise both the potency of unleashed human greed and the capacity for self delusion in the face of severe illness! Western democracy is wallowing in both. It would be good if the intellectual giants of public policy, such as Robert Reich and the environmental scientists applied their lateral thinking together.
A final thought. The statement "Capitalism is almost certainly a precondition for democracy" can surely be contested, perhaps not in US liberal democracy but certainly in the ancient Greek origins and operation of democracy.
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Reich is persuasive and explains himself very well ( dlw272 )
Robert Reich writes extremely well. In this book, he has some particular points to make. He sticks to the point, and develops his argument very clearly and cleanly. What he's saying is tremendously important to anyone who lives in, or wants to understand, the USA. The way we have traded off gains in our roles as consumers and shareholders, at the expense of our roles as citizens, is a huge change in our society that affects us all. Even if you are a "conservative", you'll find that you can read this book and appreciate what he's saying; it's not based on "liberal pieties", and he's not taking sides. As with many public policy books, he's much stronger on analyzing the problem than proposing solutions, but he is quite up-front about this. His goal is to persuade you to agree that the phenomenon he describes is a real one, and that we should think carefully about the degree to which we like or dislike this tradeoff. The writing style is utterly lucid, and no special knowledge is required to understand everything he says. I have not heard these points made anywhere else; this is truly something new. If you want to understand a lot about how politics works in the USA and its direct effects on you, read this book!
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