Labor economist Robert Reich argues Americans are split between wanting low prices and opposing the corporate behaviors that make them possible.
Feeling schizophrenic, yet?
Former Secretary of Labor Robert Reich believes we are all suffering from this split agenda — as consumers we want low prices, while as citizens we may oppose corporate behaviors that make them possible. And he believes — at least on a national scale — our citizen selves are losing.
Shoppers are elbowing citizens out of the public arena. The last three decades have seen the emergence of a supercharged capitalism fueled by open markets and cutthroat competitiveness. According to Reich, “supercapitalism” is overwhelming government with lobbyists and money, while citizens are dazzled by the promise of previously unimaginable riches and consumer choices.
In his new book, Supercapitalism, Reich tackles the big question: Can democracy survive in this environment?
Professor of public policy at the University of California, Berkeley, Reich served in three national administrations, most recently as secretary of labor under President Bill Clinton. He is co-founding editor of the American Prospect, and his weekly commentaries on public radio’s “Marketplace” are heard by nearly 5 million people. He is the author of eleven books, including The Work of Nations, The Future of Success and his latest, Supercapitalism.
Terrence McNally: In Supercapitalism, you describe the almost golden age of the ’50s and ’60s. What are some things you value from that period that your sons will never experience?
Robert Reich: Well, stable jobs. My father was a retail merchant. He had a little store that catered to factory workers and their families, and those factory jobs were pretty stable. People typically stayed with the same company for 40 years. I’m not sure we should or can go back to those days, but job stability was a value that people held very dear. These days nobody knows whether they’re going to be working for the same company next week, next year or tomorrow.
There’s the issue of inequality. In the ’50s and ’60s, the “almost golden age,” we had less inequality of income and wealth than at any time before or since. I’m not saying everybody’s income necessarily has to be the same, but inequality is bad for society and bad for democracy.
TM: You’re not in any way saying that we can return to that age?
RR: No, and I don’t think we should. I call it “the not quite golden age,” because a lot of things were wrong with our society. African-Americans were still relegated to second-class citizenship. We passed a civil rights act and a voting rights act, but we still had a long way to go. Women were blocked from most professional careers. The environment was more polluted. We passed the Environmental Protection Act of 1975 and made progress on that. Joe McCarthy and the communist witch hunt of the 1950s scarred American politics. The CIA was up to no good abroad. I don’t want to paint this era as a wonderful place we should necessarily go back to, but it’s important to understand that our democracy, although far from perfect, was trying to grapple with all of those problems.
When people were asked in opinion polls, “Do you think that our system is working in your interest and in the interest of things you believe in?” the vast majority of Americans between 1945 and 1975, said “Yes.” These days it’s just the reverse. In most polls, when asked that same question, “Do you think that the democratic system is working in the interests of average Americans like you?” anywhere from 68 to 75 percent of Americans say, “No, it’s working for the big guys.”
TM: In his recent book, Deep Economy, Bill McKibben looks at whether our gains in material possessions since the ’50s and ’60s have made us happier. According to polling, people are not as happy now as they were then, and he believes it’s because they’ve paid too high a price in the loss of community.
RR: As consumers and investors, we’ve made great progress over the last 30 years — if you put quotation marks around the word “progress.” We have access to a much greater range of choices. We get better products, more gadgets, more bells and whistles. We comparison shop like mad on the internet. We’re getting great deals, and those great deals have become progressively better. But as citizens, we are doing arguably worse and worse, because we have fewer and fewer ways of expressing the values and goals we share with other people.
TM: There were two surprises for me in this book. First, despite the title, it seemed to me the subject of this book is democracy. Second, you seem to say that campaigning for social and environmental responsibility from corporations is either a distraction or a failed strategy.
RR: Yes on both counts. Let me explain briefly.
I don’t think we can separate capitalism from democracy. If capitalism is working well and democracy is working poorly, democracy is working poorly in part because capitalism is working so vibrantly. Capitalism has overrun democracy. In the 1940s, ’50s and ’60s, we talked about “democratic capitalism” with a small “d.” We talked about it very proudly — to ourselves and to the world — as the alternative to Soviet communism.
Secondly, your point about corporate social responsibility — a very important theme in the book is that corporations are not people. They are just contracts, they are just pieces of paper. And it’s a fallacy to treat them as people, whether it’s giving them constitutional rights or the right to engage in our political process, or treating them as people in terms of requiring or assuming that they can be moral.
It’s kind of an anthropomorphic fallacy, and it’s very dangerous. Corporate social responsibility is a nice idea, but corporations will not be socially responsible, if by socially responsible we are suggesting that they sacrifice consumer deals and investor returns. They won’t.
TM: Though they may do things that can be described as socially or environmentally responsible, we should not expect them to do these things unless they are also profitable …
RR: Exactly. It’s a distraction from politics to push companies to be socially responsible when it runs counter to their bottom line.
For example, I dislike Wal-Mart’s hiring practices very strongly, and I dislike that Wal-Mart pays rock bottom wages. I could go on against Wal-Mart for a long period of time.
I’m sympathetic with people who are climbing on the anti-Wal-Mart bandwagon, but it seems to me the one productive thing we can do is to make things so hot for Wal-Mart that they have to recognize a union.
Don’t expect Wal-Mart to suddenly become more moral. Wal-Mart is a piece of paper, it’s a contract. Wal-Mart has consumers who love the good deals they can get, and it has investors who want the highest possible return. Wal-Mart is not going to do anything that hurts its bottom line.
TM: It seems to me we’re talking about two big problems in this book. One is the power and influence of corporate money on politics. The other is the social and environmental consequences of corporate behavior. It looks to me like we can’t hope to solve the second till we solve the first.
RR: People may disagree on what the problem is. I’ve talked to a lot of conservatives who say the biggest problem we face with our market economy is the coarsening of our culture, the spewing forth of sex and violence from the media. I don’t want to get into a debate about what is the biggest problem. Let’s just all agree that companies are not going to change their ways because we are yelling at them to do so. They spew out sex and violence because there are consumers who love sex and violence, and investors make a high return on sex and violence. So the real issue is, what kind of laws and regulations do we have to constrain the market?
In the first decades of the 20th century, we enacted laws against child labor and laws that said the 40-hour work week will be the norm and above that is overtime. We’ve since enacted laws with regard to workers’ safety, laws against discrimination at work. So if we’re unhappy about the social consequences of our current supercapitalist economy, then we’ve got to work through politics and pass legislation. To do that, we’ve got to rescue democracy from the supercapitalism that is now overwhelming it.
TM: How are we going to pass needed regulations when the corporate dominance of democracy makes passing such legislation harder than ever?
RR: We need to wall off democracy. We say highly competitive supercapitalism, that’s fine for the private sector where we’re going to be consumers and investors. We recognize the cognitive dissonance between the part of our heads that’s a consumer and an investor and the part that may be a citizen. We’re going to wall all of that off — in order to address the trade-offs and have a democracy that is not going to be engulfed by the lobbyists and money coming from supercapitalism.
How are we going to ever get to that point and rescue democracy? The system is not going to reform itself from the inside.
Stop trying to get corporations to be socially responsible. Stop trying to achieve any particular social objective like global warming or a national healthcare system … Put all of our efforts into a citizen’s movement for democracy. That would include the public financing of campaigns and would require any network, any broadcaster using the public airwaves to provide advertising for all candidates.
We have a long list of what we all know democracy needs in order to be shielded from supercapitalism. I actually offer one additional idea to that list that I think is important and useful.
Each candidate sets up a blind trust that receives all political contributions, so that no candidate can ever know who contributed what. Once all political contributions become anonymous, I would predict a substantial drop in contributions, because there can no longer be any quid pro quo.
T: You may still be inclined to give a candidate money based on past record or on current promises, but the candidate won’t know it, so no strict quid pro quo would happen.
You say corporations are just pieces of paper, that you can’t expect them to serve anyone but shareholders. Is this as true in other cultures?
I’ve heard that in Germany, for instance, the customer is rated higher than in America and that in some of the European countries, the employee’s rated higher. Is that true, and is it becoming less true?
RR: It used to be true. In large companies Germany still has a separate board that’s supposed to represent other stakeholders, including employees. Japan has until quite recently had a fairly egalitarian pay structure, but that’s being eroded by the power of American supercapitalism.
Money is now global. Investors are now demanding high returns wherever they are around the world. These days if a company in Germany wants to sacrifice shareholder returns for the sake of employee benefits, global capitalists say, “No, you can’t do that.” There’s an irony here — there are people inside our pension plans trying to get the highest return for us by putting pressure on Germany and other countries to reduce the extent to which those companies cater to employees or other stakeholders.
TM: In the U.S., has the shareholder always been in the paramount position with any other stakeholder a distant second?
RR: Yes, but look again at what I talk about as the not quite golden age, the period 1945 to 1975, when 35 percent of Americans were unionized in the work force — you had industrywide bargaining, you had pluralist interest groups and regulatory agencies. You had political parties that were not just sump pumps for campaign financing but were political organizations that reached down to the community level. In those days corporate investors were not kings, consumers were not kings. The power was divided in a way that gave us much more say as citizens.
TM: At the time, even if a corporation wanted to focus on shareholder return, they couldn’t ignore the power of the unions.
RR: Exactly.
TM: I’ve been saying since the 2004 election that we need a Restore Democracy Trifecta: media reform for a more informed democracy — stop (and reverse if possible) media consolidation, offer less false balance (i.e., global warming skeptics are equal to global warming scientists) and more statements of fact. Campaign reform — public financing, free TV time. Election reform — transparent, accurate, inclusive and verifiable.
If all progressives got together, campaigned for those three things and succeeded to a meaningful extent, only then would they have a realistic chance to get environmental, healthcare, education, civil liberties or whatever legislation passed. Is that basically in sync with what you’re saying?
RR: Absolutely. I keep telling progressives who have particular issues they want to advance [that] nothing is going to happen on your issue or any other progressive issue unless you get together with everybody else who wants change and rescue democracy first.
TM: In some sense you’re saying we could nibble at the problem, we could hit a few singles, steal a base, sacrifice — or we could go for the home run. The home run is to restore democracy, and let the chips fall where they may.
How is that going to happen? In working on this book, you must have talked to Public Campaign, Common Cause, the League of Women Voters, etc. Do you feel there is the energy, the interest, the passion in an election year for people to actually go there?
RR: There are three steps.
Step No. 1: Buy my book.
Step No. 2: Don’t be cynical. I think cynicism about politics and our democracy is one of the most corrosive things that we have to deal with. A lot of people use cynicism as an excuse for not taking action. They say nothing will change, the big guys are in charge, I’m not going to get into politics, I’m going to look at my own little community and work there. That’s fine. I respect that. But if people are motivated by cynicism to not roll up their sleeves and do something that rescues democracy, then we are all in deep trouble.
Step No. 3: This is the most important. We have had in America social movements that have produced tremendous change. I’m thinking of the suffragettes and others in the first decades of the 20th century, all the way through civil rights and the environmental movement. The anti-war movement during Vietnam. These were successful movements. Now why can we not have a citizens’ movement to rescue democracy?
TM: It seems to me when people look at Katrina, when they look at the healthcare issue, when they look at education … I’m talking about everyone in America who has an impulse to take action — Boy Scouts, PTAs, seniors … Why not take this on with no regard for the particular partisan policy that might follow, but just go for democracy?
RR: And the beauty of this is, it transcends ideological lines. I mean, we all believe in democracy. Regardless of what we want democracy to accomplish, we want democracy to work.
