In defence of capitalism

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: Robert Reich’s ideology has always been hard to pin down. It is not as if he fits easily into pre-prepared slots: he is not a shrill liberal railing against corporate power, nor is he a cynical pragmatist advising us to make the best of a bad situation. He is not a simplistic populist insisting that control is slipping out of the grasp of the middle class, nor is he one of those clamouring for a return to a simpler, more stable time. There are aspects of all these stands in Supercapitalism, but the whole is considerably more than the sum of its parts, and satisfyingly nuanced.

Reich has never been an enemy of the market. Even as labour secretary during President Clinton’s first term, when he expanded government programmes and supported organised labour, he was notable for arguing against strict protectionism, and suggesting instead an expansion of re-training mechanisms to allow the American workforce to adjust to freer trade. More recently, he was one of the harshest critics of the bloated farm subsidy bill passed by the US Congress last year that helped to derail the Doha round of trade talks. In this book, even as he worries about the effect that corporate power has on democratic politics, he frames it explicitly as a defence of capitalism as he sees it.

The central question, according to Reich, is how the comfortable consensus that existed in the 1950s and 1960s in America — and, indeed, the rest of the Western world — managed to disintegrate. Throughout those happy postwar decades the economy expanded and the middle class grew in size and wealth; underpinning this were powerful trade unions, oligopolistic control of large markets, and regulators overseeing firm behaviour. “Democratic capitalism”, as Reich calls it, required industry associations and boards that would set targets and codes of behaviour across entire industries, including topics related to employee welfare. Senior executives saw themselves as “corporate statesmen”, and their stated duty was to balance the interests of stockholders, employees, and consumers. Their self-confidence was justified by the near-universal public approval of their actions in doing so.