Criticizing capitalism

Dec 5, 2007 at 12:00 am

Supercapitalism: The Transformation of Business, Democracy and Everyday Life
by Robert Reich
HarperCollins, $25, 272 pp.

The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity
by Robert Kuttner
Alfred A. Knopf, $26.95, 339 pp.

The Shock Doctrine: The Rise of Disaster Capitalism
by Naomi Klein
Henry Holt and Company, $28, 576 pp.

In these high holidays for consumers, former Labor Secretary Robert Reich has a heartening perspective: We've never had it so good. For you investors out there — and in the era of the 401(k) and pension funds invested in the stock market, that's most of us, not just the high rollers — well, once again, these last 30-odd years have been great. Oh, but as citizens participating in the democratic process, and as wage earners, that's a different story. Welcome to what Reich calls "supercapitalism."

Reich dubs the era from the end of World War II to about 1970 as America's "Not Quite Golden Age." Back then, such corporations as the Big Three dominated their markets with little or no significant outside competition. Unionization was widespread, wages pretty high, the middle class relatively large. The rich were merely comfortable, with CEOs pulling 30 to 40 times the salary of their average employee. Political participation, north of the Cotton Curtain, at least, was widespread. The stock market was a sideshow.

Then, coinciding forces — new technologies, in particular, along with deregulation of industries, erosion of unions, globalization and free trade — converted the "Democratic capitalism" of the Not Quite Golden Age to today's supercapitalism.

This new capitalism is epitomized by the besieged Not-so-Big Three, massive layoffs, deep wage cuts and a shrinking middle class. The stock market is a center ring of the economy and the highest-paid CEOs rake in more than 900 times the wages of their average subordinates. But the corporations are more nimble and competitive than ever, supplying us with new products at lower costs (and rewards if we're stockholders). And when we buy and invest, we further undermine our positions as wage-earners and citizens.

Reich's prescriptions for change seem sketchy after his detailed diagnosis. He'd make it easier for unions to organize, tax stock trades, provide universal health care, etc.

But he says specifics aren't his point.

"The consumer-investor in you may strike a different balance with the citizen in you than my consumer-investor strikes with the citizen in me," Reich writes. "The problem is that as a nation we rarely have this sort of discussion."

Reich is hardly the only voice recently challenging the neocon, free market orthodoxy that has dominated American politics for generation and put us on the road to calamity.

Robert Kuttner, founder and co-editor of The American Prospect, offers a more focused analysis in The Squandering of America. While Reich focuses on how the vast majority of Americans retreated from the realm of functioning citizenship, Kuttner concentrates on how the wheelers and dealers moved in. He points to "a failure of our democratic politics to hold leaders and institutions accountable" for nothing less than "the steady dismantling of a balanced and managed form of capitalism by economic elites."

Kuttner emphasizes that business interests in Reich's Not Quite Golden Age were only temporarily held at bay and ascended again with a vengeance in the 1970s. He's detailed in his analysis of the corporate economy and the right's manipulation — given conflicted Democrats' tepid resistance — of the political conversation. (Against the backdrop of the Michigan budget imbroglio, his discussion of how both taxes and government came to be demonized is apt.)

But Kuttner's downright chilling when he ties our years of ineffectively regulated financial speculation not only to widening inequality and gradually eroding living standards, but to the risk of an economic crash. Recent headlines about the "unraveling" of credit markets, as it's being dubbed, make his forecast all the more alarming.

To note one more uncheery but timely option for holiday reading, there's Naomi Klein's The Shock Doctrine: The Rise of Disaster Capitalism, a detailed accounting of the devotees of Milton Freidman's free market policies swooping in to reshape economies and make a buck in times of chaos. Whether addressing Russia after the fall of communism, Sri Lanka after the tsunami, Iraq after "shock and awe" or New Orleans after Katrina, Klein bravely pulls the lid off a ruthless industry.