Opinion: ‘Saving Capitalism’
Former Labor Secretary Robert Reich heads to Santa Monica to discuss his compelling new book
By Bliss Bowen
“What do you think?”
That’s typically how former Labor Secretary Robert Reich signs off his blogs and Facebook posts, in which he offers facts, figures, media links and commentary on issues of the day, and through which he continually encourages citizen involvement. Actually, he insists on citizen involvement, describing it as the only meaningful redress to the “new gilded age of wealth and power” in which most working Americans are struggling to make ends meet.
Reich’s new book, “Saving Capitalism: For the Many, Not the Few,” is an engrossing treatise addressing prevailing economic inequality, which he perceives as an assault on not just our economic system but also on America’s democratic principles and governance. It continues the discussion animating Reich’s 2013 documentary “Inequality for All,” including his contention that the civic cost of noninvolvement could not be higher. What is needed, he argues, is for citizens to honestly recognize “where their interests lie.”
Thus, the book is Reich’s effort to empower readers with concise information and history. The UC Berkeley public policy professor unravels complexly knotted issues and presents individual strands in clear, comprehensible terms, thus making the book equally accessible to political economists and those who think Hobbes is a cartoon character or confuse John Maynard Keynes with that guy who wrote the national anthem. He is calmly articulate, not alarmist; yet a sense of urgency pulses through his unambiguous prose.
“In 2008, the debt bubble burst, just as a similar bubble had burst in 1929. It is not coincidental that 1928 and 2007 marked the two peaks of income concentration in America over the last hundred years, in which the richest 1% raked in more than 23% of total income. The economy cannot function without the purchasing power of a large and growing middle class.”
Chapters in the extensively footnoted book’s first section, “The Free Market,” are organized around “the building blocks of capitalism”: property, monopoly, contracts, bankruptcy and enforcement. At times it reads like a high-quality textbook, but it’s informative and necessary to ground Reich’s dissection of the false (and politically popular) conflict between the government and the so-called “free market” — a misnomer if ever there was one, as he explains in sometimes exasperated detail.
“This debate,” he writes, “hides a larger reality: the necessary role of government in designing, organizing and enforcing the market to begin with. It therefore obscures the myriad choices facing legislators, administrators and judges in carrying out this basic task.”
Capitalism, he takes pains to emphasize, is an economic engine, not a governmental system; one that, like democracy, requires maintenance of basic checks and balances to serve the broader populace. In the book’s second section, “Work and Worth,” he debunks the “meritocratic myth” that people are paid what they are “worth,” demonstrating how CEOs are not worth their enormous (and taxpayer-subsidized) exit packages.
The third section concerns “Countervailing Power”: unions, grassroots organizations (e.g., the American Legion), farm cooperatives, small retailers, and local and regional banks that collectively balanced corporate power in decades past. Reich explains how countervailing power has been eroded, making abundant references to court cases, Wall Street practices, cronyism and disturbing statistics about low voter turnout and high-dollar political campaign contributions. He also ponders a future “When Robots Take Over” (one of the most thought-provoking chapters), and considers the economic and social consequences when creators of blockbuster technology platforms with hundreds of millions of customers served by just dozens of employees are sold for colossal sums.
Reich’s personable style prevents the subject matter from getting too oppressively grim, although there’s no way to avoid feeling dispirited by the steady, subtle corruption of longstanding democratic norms. Not when you’re seeing how much more Big Pharma spends on lobbying than the military; or how Monsanto has systematically undermined agencies federally mandated to protect farmers and consumers; or how Donald Trump has reorganized debts with four bankruptcies while the law forbids the use of bankruptcy to reorganize mortgage or student loan debt; or how the chain store-supported repeal of state “fair trade” laws contributed to the closure of millions of locally owned community businesses. Reich reels off statistics (and at least one controversial remedy).
“The richest 400 Americans have more wealth than the bottom 50% of Americans put together; the wealthiest 1% own 42% of the nation’s private assets; and the share of wealth held by the lower half of households has fallen from 3% in 1989 to 1% today. One way to get your mind around this is to compare a household at the top with the average household. In 1978, the typical household in the wealthiest 0.01% was 220 times richer than the average household. By 2012, the household at the top was 1,120 times richer.”
Thomas Piketty has also identified the trends Reich examines and expressed doubt that they can be reversed, but Reich maintains that Piketty “disregards the political up-heavals and reforms that such wealth concentrations often inspire.” It is in history that Reich finds hope.
“Americans have always tended to choose pragmatism over ideology. When we have recognized a problem and understood the reason for it, our habit has been to get on with the messy job of solving it. Whenever capitalism has before reached points of crisis, we have not opted for communism or fascism or any other grand scheme. Again and again we have saved capitalism from its own excesses by making necessary corrections.”
Robert Reich appears in conversation with CNBC commentator Roger McNamee at 8 p.m. Wednesday, Oct. 21, at the New Roads School’s Ann and Jerry Moss Theatre, 3131 Olympic Blvd., Santa Monica. Tickets are $25 to $45, or $95 with admission to a 6:30 p.m. reception. Visit robertreich.org or livetalksla.org/events/reich.