Robert Reich Nails It

Book reviews

saving capitalism

Saving Capitalism: For the Many, Not the Few (2015)

I’ve read tons of books on politics and the economy over the last thirty years, and this is the easily one of best of the lot. Not only is it clear enough to recommend to lay people, finally I’ve found a book I fully agree with. (What higher endorsement is there than that?)

The author, Robert Reich, was Labor Secretary during the first Clinton administration, only to see the “Putting People First” agenda he signed on for being cast overboard to please bond traders. He left before the second Clinton term and has continued to write and speak out on economic issues since then, recently endorsing Senator Bernie Sanders for President.

Reich’s view on the declining fortunes of most Americans and the rising fortunes of the wealthiest fraction of them can be simply stated: globalization and technological change have destroyed jobs even as political decisions have shifted the rewards of economic growth more and more toward the wealthy. I concur.

His view on contemporary political debates can also be stated succinctly: the government vs. market debate is totally beside the point, because the real issue is the fundamental political structure of the economy. He hammers home the reality that there is no such thing as a “natural” market economy, because a market is the creation of laws. I emphatically concur.

The underlying structure of our market economy is where the most consequential political decisions have been made since the 1980s. Reich identifies five key arenas:

Definitions of property rights. Intellectual property is the big issue here. The length of copyright ownership has been extended, ownership of software variations and genetic structures permitted, pharmaceutical patents extended—all to the benefit of big corporations.

The degree of monopoly power allowed. Antitrust laws have been interpreted to permit banks, agricultural companies, health care institutions, internet services providers, social media platforms, and internet marketplaces to consolidate market power to an unprecedented degree.

Contract terms. Contracts between users of services, consumers, and small business owners on one side and titanic corporations on the other have become increasingly coercive in favor of the latter, and free trade agreements have superseded domestic policies and labor negotiations.

Bankruptcy laws. Bankruptcy law has become more permissive for the big fish, such as allowing companies shuck pension obligations, and more stringent for the minnows, such as making student loans or credit card debt more difficult to escape.

Enforcement of the rules of the economy. Government enforcement agencies have been subjected to staff and budget cuts, and prosecutors have faced armies of high-priced lawyers, weakening the enforcement of laws on corporate violators.

These changes have continued under both Republican and Democratic administrations, invisible beneath all the political rhetoric about big government, private enterprise, taxes and deficits. The political structure of the market has been skewing the initial distribution of new wealth toward the already wealthy, and can be expected to continue to do so despite any redistributive programs that try to bail out water from the leaky ship of our economy.

Reich outlines the requisite policy prescriptions to address these skewed rules, but even more importantly he faces the problem of how any of this can be accomplished politically. I give him credit for this, because most books on the topic seem to rest content with stating what the government should do without offering any insight in how to get it to do that.

(He also addresses the problem of robots rapidly replacing human labor, which has been also often neglected in political discourse and books on political economy.)

As a political strategist, though, he comes up a little short. (No pun on his height intended.) Essentially he says we need to rebuild “countervailing power”—an organized force of the majority to counter the political power of the very few—which is true enough, and that political parties are the best vehicles through which to do this, which I also agree with.

He sees two paths that can be taken: taking over one of the two dominant parties or building up a third party. He indicates that he sees the former as more viable than the latter, but that’s where he ends it. No advice on how to progress on either path, although you can see in his endorsement of Sanders which path he is treading.

But I think this is a false choice, as these two paths can be complementary rather than mutually exclusive. We need both insider and outsider strategies, people working to reform a dominant party within and to pressure them from a third party outside. (More specifically, from within the Democratic Party and from outside by the Green Party.)

The key to making this work is changing electoral rules to solve the “splitting the vote” and “spoiler” dynamic under our current plurality rules. In my opinion, this would best be accomplished by instituting ranked choice voting, and so that should be a primary focus of efforts to move an agenda like Reich’s forward.

That said, I do highly recommend this book to all interested readers. Reich presents his case in short, easy to read chapters, and like a good teacher reinforces the main points over and over so you don’t lose sight of them. If you only read one book on the subject, make it this one.

–Alan F. Zundel

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