Central Thesis of Reich’s Supercapitalism
Robert B. Reich is a well respected scholar on political economy matters. He has curved his name as an author, professor in various universities and as a political commentator. His stint as the secretary of labor during Clinton’s era is termed as a successive one. In 2007, Reich authored the controversial book, Supercapitalism. Just like any other outspoken author, Reich’s super-capitalism has attracted criticism and praises in equal measure. It is imperative to know the central thesis exposed in super-capitalism that has attracted this mixed views.
The central thesis in super-capitalism is the role of the corporations in the declining American democracy. How the corporate interest has permeated the politics is a mystery that Reich seeks to unravel. Reich begins by giving the reader a background of the American economy. In what he calls as the “Not Quite So Golden Age” of the late 1940s and the early 1940s, Reich argues that “America in those years achieved its highest degree of income equality” (Reich 2007:5). During this time the government exerted regulation of some industries as monopolies while other industries regulated themselves (Mazenauer 2008: 4). The benefits of corporations were shared by all stakeholders (Bowles and Gintis 1987: 15). American nation reaped maximally from these corporations. Employees enjoyed better wages and other benefits. Shareholders were not so concerned with the profit. During that time there was a balance between capitalism and democracy (Larns 2009:3).
But what happened after the “Not Quite So Golden Age”? The introduction of technology made companies increasingly competitive. Consumers started demanding quality products at low prices. This turn event has forced corporation to look in ways of cutting cost and maximize profit. Employees have become the victim. The general good of the society has been sacrificed in the pursuit of large returns for investors (Mazenauer 2008: 4). Corporations won the ear of the government at the expense of the citizens. Reich argues that the diminished power of the citizens over their government is as a result of super-capitalism.
The word super-capitalism is used to denote the increase in corporation competition. It is in this light that Reich discusses the role of corporation to democracy.Central Thesis of Reich’s Supercapitalism As the competition increased, companies had to find ways to withstand super-capitalism. By all means, businesses had to find ways to keep the prices low and at the same time ensure higher returns for the investor (Larns 2009:3). One of the ways to do this is to win the ear of politician’s in order to win such favors as favorable legislations for corporations. As result, corporations have to fund political campaigns and more often ensure donations to political parties and legislators. This is how democracy has taken a nose dive in America (Gilbert 2010: 8).
Reich rightly exposes the connection between the declining democracy and the cut throat competition among companies. Although there are benefits accruing from the competition, at sometimes, as Reich argues, we must ask ourselves, benefit at what expense? Through competition and advanced technology, as consumers we are able to access variety at cheap prices. Investors are also able to reap maximum from reduced cost (Mazenauer 2008: 4). But what about the benefits that accrues to the citizen who is also the “consumer/investor”? What has been sacrificed by the competitive corporate is the democracy and the will to pursue the nation good.
As we enjoy the benefits of this competition, we must also ask, what will happen to issues of national benefit like global worming and transparency? The lobbying and the arm twisting of the government by corporations amount to corruption. The argument presented by Reich is so real. There is nothing that confirms this argument more than the 2007/2009 economic recession. Most of the American corporations have been pursuing high returns in America (Butts 2003: 14). Unemployment and the sinking wages in America wages confirm the argument. Owners of capital in American corporation have an insatiable desire for wealth creation at the expense of common good.
The inequality gap continues to widen. In contrary to the ““Not Quite So Golden Age” when the American society was quite equal, the super-capitalism period has created an extremely unequal society (Reich 2010: 112). The wealth of the nation is concentrated into the hands of a few people. The middle class continue to shrink. These are some of the reason that there are now movements such as ‘occupy the wall-street movement’.
From a business point of view, Reich must be congratulated for treating business as it is. He even goes further to agree with Milton Friedman assertion that the business of business is business (Reich 2009: 41). In this view I couldn’t agree more with Reich when he observes that in a competitive environment, business will leave to offer low prices to consumers and highest returns to investors.
There critical argument to the effect that the period that Reich refers to as “Not Quite So Golden Age”, had some painful inequalities.Central Thesis of Reich’s Supercapitalism It is true that blacks and women were discriminated upon. Some black Americans and women may argue that is super-capitalism era there are more equal in American society than the period 1945-1970 (Reich 2009: 41).
In right of the current events in America, super-capitalism book is on time. The growing inequality, the recession occasioned partly by these corporation and the need for restoring the American dream are some of the issues that the book will help every American in looking at. The book also raises issues of critical concern (Thompson 2007: 77). How far should the government allow free trade? How far should the government regulate companies? As the American seek to control advancement of corporation for the sake of national good, how it will be done to ensure that they are not disadvantaged to compete with other global corporations in a new liberal economy. Reich book is in a position to open these conversations.
List of References
Bowles, S. & Gintis, H. (1987) Democracy and Capitalism: Property, Community, And The Contradiction Of Modern Social Thought. Washington: Basic Books, 46-144.
Butts, D. (2003) How Corporations Hurt Us All: Saving Our Rights, Democracy, Institutions, And Our Future. Washington: Trafford Publishing., 200- 214
Gilbert, D. (2010) The American Class Structure In an Age of Growing Inequality. Ney York: Pine Forge Press, 221-234.
Larns, R. (2009) “Robert Reich’s Supercapitalism”. A review: The Economist Populist, 41(5): 1-6
Mazenauer, B. (2008) “Robert Reich’s super-capitalism: how the economy undermines democracy”. Miami independent media center. May 07, 2008.
Reich, R. (2010) Aftershock: The Next Economy and Americas’ Future. New York: Knopf Books, 6-34
Reich, R. (2009) Super-Capitalism: The Battle for Democracy in an Age of Big Businesses. New York: Icon Books, 19-288
Reinch, R. (2008) Supercapitalism. The transformation of business, Democracy, and Every day Life New York: Vintage Books, 22-288
Thompson, M. (2007) The Politics of Inequality: A Political History of the Idea of Economic Inequality In America. San Francisco: Columbia University Press, 6-17.