May 24, 2013
Benjamin Barber on ‘Supercapitalism’
Posted on Dec 13, 2007
According to Bill Clinton’s own labor secretary, his administration was “one of the most pro-business administrations in American history.” That labor secretary was Robert Reich, an old friend of the Clintons who was too controversial and radical a critic of business to be very influential in Clinton’s two-term presidency, dominated as it was by the Democratic Leadership Council, Robert Rubin, Lawrence Summers and other business luminaries. Clinton’s presidency embraced market capitalism so ardently that “market democracy” became a synonym for the administration’s stance on big business. The book Reich wrote about his experience as labor secretary with the telling title “Locked in the Cabinet” displayed more spleen than political savvy, but it was a revealing and acute exposition of how much less progressive the administration was in its policies and practices than in its rhetoric.
Supercapitalism: The Transformation of Business, Democracy, and Everyday Life
By Robert B. Reich
Knopf, 288 pages
Today, back in the more comfortable setting of academia (and having moved to UC Berkeley from Brandeis), Reich has reconsidered the relationship between government and the market and produced a new book, called “Supercapitalism: The Transformation of Business, Democracy and Everyday Life.” It too is controversial and radical, but Reich has evolved and the new work’s radicalism lies in its tolerant recognition of capitalism’s essential nature as a system driven by the interests of shareholders and thus by profit; and hence in Reich’s insistence on the civic limits of “corporate responsibility” and on the inadequacy of civil society and private-sector reform as surrogates for government regulation and oversight.
“Supercapitalism” may have more impact than Reich’s earlier, more conventional anti-business perspective because in it he cedes to the market its “natural” and necessary selfishness, and expects democracy rather than capitalism to do the actual work of providing equality and ensuring social justice. By recognizing the entailments of capitalism in its new hyper-competitive global form (hence the somewhat overheated term supercapitalism), Reich builds a case for democracy on premises that traditional market liberals and neoliberals can accept. Robert Rubin would not make the argument quite the way Reich does, but he might well accept it. A Financial Times review by Clive Crook grudgingly allows as how “much of what Reich now says is even correct.”
Reich’s argument unfolds as an intriguing story about capitalism’s modern history. He first describes an earlier “Not Quite Golden Age” of capitalism where ostensible competition within national states was trumped by the reality of monopoly. Think Standard Oil or Bethlehem Steel. In that earlier age of cartels, Reich argues, government played the corrective role of trust buster and fairness guarantor. For capitalist competition to flourish, the democratic oversight of a judicious umpire state was required.
According to Reich, this earlier stage of capitalism gave way to a second stage in which globalization opened up markets and forged a new and ferocious competitiveness that made monopoly less feasible, and forced would-be corporate monopolists to seek the assistance of government in securing their privileged positions. Superheated and hyper-competitive, capitalism emerged in the new global marketplace as supercapitalism:
“The central institutions of democratic capitalism in the Not Quite Golden Age—big oligopolisitic companies, big labor unions organized by industry, and government representing communities and local interests through regulatory agencies—came undone. ... Power shifted to consumers and investors. Supercapitalism replaced democratic capitalism.”
Key to these changes was a new privatized role for government. Rather than acting as a tool of the common good imposing public interests on private-market outcomes (mandating real competition, creating social safety nets), government became a tool of private interests hoping to repress or circumvent market competition. Companies that once resisted all government intervention now jockeyed for position to assure that it would favor their interests rather than those of their competitors. To take a recent example: Netscape was glad to see the Justice Department go after Microsoft not because it was interested in fairness but because it didn’t want to be pushed out of business by Microsoft’s software and hardware bundling practices.
The massive role of lobbying today, along with the corrosive role of ex-members of Congress as lobbyists, signals this new inverted relationship between government and the market. You may have thought that the effort to secure a legislative ban on offshore oil drilling in California was the work of public-interest environmentalists. Certainly environmental groups supported the proposed ban while the oil industry opposed it, but, writes Reich, “their views did not carry much weight.” The crucial opposition to the oil industry came from a rival private-market sector, the tourist industry, whose aim was to limit drilling to sites that would not adversely affect tourism.
Similarly, in October 2006 when Congress passed legislation barring credit card payments for Internet gambling, the real lobby at work was not citizens against sin but the real-world casino industry, which didn’t want virtual casinos competing with them on the Internet. Again and again, battles which under the rules of traditional democratic capitalism might have been contests between public and private interests turn out under supercapitalism to “boil down to a competitive contest between companies that would be affected differently by whatever rules emerged” from government intercession.
Hence the remarkable power of the new lobbying industry, constituted largely by retirees from the executive and legislative branches of government—by women and men able to use their access to the commonwealth to pursue the interests of private wealth. Reich reminds us that “upon leaving office, more than half of the senior officials of the Clinton administration became corporate lobbyists.” And whereas in 1970 only 3 percent of retiring members of Congress became lobbyists, 35 years later 30 percent were doing so. It is not hard to see how under these conditions democracy is “overwhelmed” and politics is “diverted” from the public to the private sector.
Today firms are urged to pursue corporate responsibility and consumers are pushed to use their private spending (or withhold spending) to underwrite public purposes. In something of a surprise, Reich embraces the late Milton Friedman’s argument that “the business of business is to make a profit, not to engage in socially beneficial acts.” Friedman’s point, writes Reich approvingly, is that companies “should not seek to accomplish social ends because companies are not the appropriate vehicles for social benevolence.” Consumers may like the idea of social responsibility but, Reich observes, are unwilling to pay for it. They may regret trade with countries whose human-rights records are dubious, like China’s, and they may criticize companies whose labor practices are less than savory, like Wal-Mart’s, but they will nonetheless purchase China’s and Wal-Mart’s cheap goods. Thus, argues Reich, we cannot and should not rely on producers or consumers to create the public goods and public regulations that are the provenance of democratic institutions. That is the task of citizens and must be done by them.
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