Reading Robert Reich

Robert Reich: ‘Supercapitalism: the transformation of business, democracy and everyday life' Scribe Publications, Australia 2008.

Robert Reich is best known for his role as secretary of labour under the first Clinton administration. These days he is professor of public policy at the University of California's Berkley campus. He has won many accolades for his work.

As a thinker, Reich is often regarded as a left liberal, a characterization that is only partially correct. Reich is often a critic of American left liberalism (an ideology that should not be -but often is- confused with Socialism) and he is not a socialist economist. He is a well informed and thoughtful critic of American neo-liberalism, an ideology that is thankfully past its apogee. His critiques of Neoliberalism and Globalisation are worth a ‘considered appropriation' by socialists (i.e. we can learn something from them).

One of Reich's great strengths is his ability to write and communicate in plain language. This book and his occasional commentaries are accessible to the educated reader. He also has a sense of humour, an ability that is very useful for a popular economist.

Despite the generic tile ‘supercapitalism', this work is mostly about US capitalism. The book falls into three major sections. First he discusses the social and economic system that emerged in the US following the watershed of World War Two, focusing on the social and economic compromises that took shape among social interest groups, principally organised labour and capital. The era of the ‘long boom' was one where a large section of the American working class enjoyed significant prosperity and a steadily improved standard of living. It was also a time when production and profitability were at historically high levels.

‘Supercapitalism' (my preferred descriptive phrase of this era is ‘Late Capitalism') has gone on to completely dominate the early 21^st century: ruthless, unequal, uncompromising and destructive. It manages -as Marx often said it would- to continuously dissolve many of the social bonds that allowed organised interests (e.g. the labour movement) to influence policy. This is an unresolved problem for those in radical left who believe in mass mobilisation and mass party strategies.

Reich's central thesis is concerned with how supercapitalism is threatening to overwhelm the democratic process. Corporations are faced with increasing competition as markets and financial networks are increasingly globalised. They are pouring vast amounts of money and other resources into the political processes of states. Moreover, these resources are also being poured into social networks, organizations and interest groups who may have common interests with these corporations. The overall effect of this is to significantly distort the political processes.

Chapter four (‘Democracy Overwhelmed') discuss the impact that vast amounts of corporate money is having on U.S. Politics. Reich argues that the main reason for the surge in corporate lobbying and money has to do with the intensification of competition among business interests. With corporations globalising their production and distribution systems, they are coming up against more rivals who are threatening their markets and profits. A capacity to influence politics and political decision making has become a central feature of corporate survival. However, democratic politics is paying a price. The scale of corporate influence threatens modern democracy.

The capacity of a citizen to engage in politics and make informed decisions is being drowned out by the financial power of big business. Big business interests do more than try to influence the elected representative. They will use their financial power to distort the sources of information the citizen uses to make decisions. They will even actively mobilise citizen groups in an effort to influence the decisions of politicians.

An interesting discussion follows in Chapter five ‘Politics Diverted'. This section was -from my vantage point- more controversial and thought provoking. Many would agree that ‘capitalism has invaded democracy', to the detriment of the latter. However, Reich takes issue with the way in which sections of the polity, principally left liberals, have responded to this. The strategy many left liberals have adopted is ‘if corporations have invaded politics, then politics should invade corporations'.

Reich takes issue with some of the strategies used by NGOs; consumer groups and citizen's action groups to influence corporate behaviours and policies. He makes the point that corporations are not charities and their principal and legitimate function is to make profits for its shareholders. In Reich's view, these campaigns divert from the principal activity of politics- to influence government policies that in turn regulate the behaviour of corporations. Corporations cannot be blamed for doing what they are legally entitled to do. If citizens want to change corporate behaviour then they should demand that governments change the legal and regulatory frameworks that corporations operate under.

I have some sympathy for Reich's view and his criticisms of left-liberal strategies. Politics should not be diverted from its primary focus on the state. There are limits to the effectiveness of campaigns that directly target corporations and shareholders.

However, there are some problems with this view. Corporations are multinational, and, in recent years, increasingly ‘decentred'. In the past, there were more clearly defined structures and locations for corporate headquarters. An official corporate headquarters might be Detroit, but major decisions (for example, where to place production facilities or decisions to use productive processes that are environmentally damaging) might be made in Munich or Shanghai. A state, even one as powerful as the US, might not be able to regulate anti-social or environmentally destructive investments in other countries. In such circumstances (and many others) campaigns directly targeting the corporation and its worldwide practises are essential. One example of campaigns directly targeting corporations and shareholders would be the case of the Freemont Mining Corporation, which operates a huge open cut gold mine in Papua. New York City Public employees' pension fund owned US$ 37 million in stock in a mine that was destroying a pristine river system and polluting the food sources of many communities who lived along the river. Moreover, this company was also participating in corrupt practices through bribes to corrupt Indonesian military and police officers. California public employee's pension funds were used to force cutbacks in wages and conditions of large numbers of workers in France.

None of this necessarily negates Reich's arguments. His strategic view of focusing attention on the state is right. But his argument stops at the door of conventional bourgeois ‘parliamentarist' politics. A radical left politics looks beyond parliamentarism and incorporates social struggles and struggles in representative assemblies. Of course, there is always a danger of parliamentary elites establishing hegemony over social struggles (an example in Australia are the Greens). It is a strong and democratic radical left mass party that can play a central role in stopping that from happening.

 Friday, 29 August 2008