Book Review: Supercapitalism by Robert B. Reich
Over the last couple of decades I’ve accumulated a library of books that I always intended to read, but never quite got around to. Many of those books have taken on a lot more relevance since the 2016 election.
Take for example Supercapitalism, by Robert Reich. Copyrighted in 2007, it turns out that Reich’s analysis has a lot to say about the predicament we find ourselves in today, 10 years later. And although Reich is all over the social media feeds as a committed anti-Trump crusader, his insights into the relationship between capitalism and democracy are relevant no matter which side of the political abyss you might find yourself standing.
Reich’s basic argument is this: as human beings we are consumers, investors and citizens. Free market capitalism is an incredibly powerful tool for satisfying our desires as consumers and investors, but is incapable of addressing our needs as citizens. For example, as consumers we want to get the lowest prices for goods and services, but as citizens we want to see our friends and neighbors employed in steady, well-paying jobs. Companies move jobs offshore to save money that they pass on to us as consumers. But they also shutter factories that employ our fellow citizens.
Companies that keep jobs in America will produce goods that cost more than companies that don’t. “Made In America” campaigns notwithstanding, consumers will buy the cheaper goods from other companies, driving up their profits and attracting investors away from the company producing in America. This is in fact capitalism’s genius: the forces of supply and demand inexorably drive prices and production to the level that best satisfies society’s economic needs.
Even though those two sides of our needs as humans are in competition, there’s an idea that corporations should play a role in deciding the questions that concern us as citizens. It’s a holdover from the middle of the last century, when technology favored companies with large, predictable supply chains and when capital was slow to move. Those inefficiencies made room for corporations to defy the pressures of the market.
Computers, standardized shipping containers, advances in supply chain management and a flurry of other technological innovations have removed those market inefficiencies. Corporations that try to act as citizens at the expense of their bottom line will be outcompeted by those who don’t, as Reich’s numerous examples show.
The only way to ensure that our society develops in accordance with our desires as citizens, when doing so conflicts with market pressures, is to modify the market as a whole through government action. But the voice of citizens in government is drowned out by the tumult of corporate competition.
Our laws enable corporations to influence politicians through professional lobbying and campaign contributions. Corporations who don’t compete in government put themselves at a competitive disadvantage when corporations that do win favorable legislation.
Our laws that govern how money can be spent in elections make money an effective substitute for legislative virtue. So politicians, too, are exposed to competitive pressures that disadvantage those who might otherwise express the voice of the citizen.
As Reich says when he turns from analysis to remedy, “Without a democracy that will implement them, policy ideas about ‘what should be done’ are beside the point. A more fundamental question, therefore, is how to make democracy work better.” He tries to answer that question, but with a lot less detail than he provides in his historical analysis. He believes that before we can figure out the next step, we need to admit that our civic desires are often in competition with our economic needs, and that the conflation of the two spheres necessarily advantages the economic.
I had a number of, “ah ha!” moments reading this book. Although Reich doesn’t outline a clear blueprint for reform, I found his framing of the problem space useful, highly relevant 10 years on, and at times prescient. I recommend it.
