Wednesday, September 10, 2008

The Most Important Book I've Ever Read

I read books for a living. It's not a very good living...but that's another story. Still--I am paid to read, so I don't throw around words like "MOST IMPORTANT BOOK I'VE EVER READ" without some serious consideration. Those words need a qualifier, of course; I should have said that Supercapitalism is the "most important book I've ever read not written by God," but the title seemed snappier and more weighty without the qualifier. Even with the qualifier this is a heavy statement. To emphasize the importance of this book in another way: I don't think you should be allowed to vote if you haven't read this book. I don't want to disenfranchise anyone, but I don't want you voting unless you understand what Robert B. Reich has to say either. (Incidentally, Reich's book strives to remain non-partisan, and he skewers both parties regularly. Supercapitalism isn't politics as usual; it's a striking illumination of the nation's largest problem.) If you don't agree with him, that's another matter, but willful ignorance is a woeful excuse.

If all of this hasn't whetted your curiosity sufficiently, at least read my admittedly reductive attempt at summarizing Reich's main points.

Summary of Supercapitalism

1) America is no longer a society based on democratic capitalism.

"Since the late 1970s, a fundamental change has occurred in democratic capitalism in America [...] Capitalism has triumphed, and not simply as an ideology. [...] Democratic capitalism has been replaced by supercapitalism." (50)

2) The forces of capitalism and the sheer amount of money invested in big business has wrested decisions that used to be made by citizens into the hands of investors and consumers. In other words, our dollars are currently voting more effectively than our ballots. For example, even though most Americans might agree that Wal-Mart's practices as an employer are distasteful and in need of alteration, we continue to shop at Wal-Mart, voting with our dollars for practices that we would never vote for if they were actually on a ballot.

"If most people are of two minds about supercapitalism, why does the consumer-investor side almost always win out? The answer is that markets have become hugely efficient at responding to individual desires for better deals, but are quite bad at responding to [civic] goals we would like to achieve together. While Wal-Mart and Wall Street aggregate consumer and investor demands into formidable power blocs, the institutions that used to aggregate citizen values have declined. [...] no longer do local voluntary associations [National Legion, etc.] have much effect on legislators; no longer do regulatory agencies with broad reach define the public interest" (126)

3) Washington politics and legislation are the product of business, even when the laws debated seem to be about issues. Although lobbyists for various business interests are driving the agenda on Capitol Hill for both parties, legislation is presented to the public as though it were a question of morality or efficiency without disclosing the real interests driving policy. For example:

"In October 2006, Congress passed legislation barring credit card payments for Internet betting--which as a practical matter placed a ban on all online gambling. The ostensible purpose of the legislation was to reduce the public's vulnerability to what is considered an immoral or addictive activity. But the initiative was actually spearheaded by gambling casinos--of whcih there are more than nine hundred in the United States--which saw the huge growth in online gambling as a potential threat to their profits but wanted their own operations to remain unrestricted. [...] It seems doubtful that the legislation will have any effect on the amount of gambling Americans engage in. That was a subterfuge. Its real purpose was to increase the profits on certain kinds of gambling, thereby reducing profits associated with other kinds." (149-50).

4) Because citizen voices no longer carry the day in Washington, they frequently try to force companies to act virtuously and in the interest of citizens by publicly shaming them or boycotting them, but this is ineffective, whereas the interests of consumers/investors are vigorously guarded by companies.

"As an investor, I know exactly how to express my displeasure with Microsoft or any other company. I simply sell off shares of its stock. It's exactly what I do as a consumer to express displeasure in a company--just stop dealing with it and go to a competitor that offers a better deal. Wall Street and Wal-Mart have enhanced my power in both regards by giving me an easy means of aggregating my preferences with those of others." (166)

As a citizen, "Vivid displays of corporate goodness can mask problems a democracy should grapple with--would grapple with--if the public understaood their true dimensions. And because public attention spans are short, such temporary displays can preempt permanent solutions. [...] In light of rumblings from the Federal Communications Commission and from conservative legislators concerned about sex and violence cable companies were pumping out to their subscribers, cable operators in early 2006 announced plans to offer packages of family-friendly channels so parents could shield their children. 'There's no need for legislation now,' said Senator Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, after being reassured of the cable companies' plans. 'We have to give it a chance to work.' But cable companies had made similar promises before that had never been fulfilled. Presumably, cable companies will continue to pump out sex and violence until Congress or the FCC stops them, because sex and violence make money." (190-91).

5) Legislators who publicly shame companies without passing legislation to prevent future shameful behavior may seem like they're serving the public interest, but they are really protecting the companies they shame, because public outrage potentially restricting bad behavior will soon fade, but legislation would actually force change.

"When B[ritish] P[etroleum]'s carelessness on the North Slope led to the temporary shut-down of the nation's largest oilfield, in August 2006, Congress demanded BP executives appear in person to be held accountable. At the ensuing hearing, members from both sides of the aisl accused the executives of crass negligence. [...] Committee members then grilled the BP executives about why the company had failed for as long as fourteen years to do the sort of internal inspection and maintenance on its pipelines that was performed every two weeks on the Trans-Alaska Pipeline, into which the BP pipelines feed. The BP executives solemnly promised to be more careful in the future. But neither the members of Congress nor the BP executives focused on the most pertinent fact: Frequent inspections of the Trans-Alaska Pipeline were required by law, but no similar inspections were required on feeder pipelines such as those owned by BP. If the panel was serious about getting BP to change its ways it would have introduced legislation to close this loophole. [...] The panel did not introduce such legislation because the hearings were for show." (196-97)

End of Summary

Now, the most important point here is that these are not isolated cases but illustrations of a larger truth: Washington no longer legislates for the social good; it legislates for the corporate good. While this is good for you and me as consumers and investors, it is bad for you and me as citizens. Whether you agree or disagree with the legislation banning online gambling or other legislation is irrelevant. The point is that we're not really making these decisions--lobbyists and gobs of corporate money are making them for us, because enough money can (almost) always buy public opinion, especially when the money runs through Congressional coffers--but we should be.

To give you an idea of how solidly Supercapitalism is in place, let me borrow from some of Barrack Obama's speech when he accepted the Democratic nomination for President. Describing the American dream, he said: "It's a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, look out for American workers, and play by the rules of the road."

Now here's the problem with that promise--it places governmental responsibilities toward the social body (American job growth, labor benefits) on corporate entities. I'm not interested in advancing partisan politics or in trying to criticize Obama (Reich was an economic advisor to Clinton, so advocating his book certainly isn't pushing Republican rhetoric), and I'm sure that McCain has said something similar (just not in a speech that I've heard, and I haven't gone searching)--but when a major political candidate can say on national television that businesses should perform what we have traditionally thought of as the responsibilities of government without a major outcry, you can be sure that supercapitalism has replaced democratic capitalism. Businesses have no responsibilities except to make money for investors and to satisfy consumers. If we, as citizens wish businesses to act virtuously, then we must force them to do it with legislation--they will not voluntarily change their ways unless behaving virtuously will improve the bottom line. It is the responsibility of government to make sure that businesses act virtuously so that we will experience greater social well-being.

Reich has numerous suggestions of how we might make Washington more responsive to our desires as citizens and to restore some sense of balance between democracy and capitalism, but if you care enough to work towards those goals, you'll read the book. At the very least, I hope that this small summary of "THE MOST IMPORTANT BOOK I'VE EVER READ" shows you what is wrong with Washington and hints at how we might fix it. I personally hope that you will prioritize the removal of business from politics as you evaluate presidential candidates this fall--whether that means voting for Obama, McCain or some nobody third party candidate, because I can't think of a single issue more important than this one.

I don't customarily encourage you to forward things that I write, lest I appear overly enthralled with my own self-importance, but I do think that this message is something every person (and especially every voter) needs to get loud and clear--so forward it if you think fit.


Aaron H. said...

WHO can turn down an offer on a free book? Especially one that seems worth investigating the weight you give it. If I were employed I'd buy my own copy; but I'm not, so buy me one!

Becky said...

My birthday is coming up...(hint,hint);) By the way...your most negligent sister totally forgot to get a hold of you on your most important day and I will forever be in your debt. Can you EVER forgive me? I love you and wish you a most awesome belated birthday.

Mormon Paleo said...

As a Ron Paulite, I completely agree with the problems of corporatism in America. Big business and government interests have had unholy alliances for decades, as witnessed by the military-industrial and burgeoning medical-industrial and energy-industrial complexes.

But these are government-business alliances. What would happen if the government got out of the way? (Is capitalism fundamentally exploitative?)

It is no coincidence that as the federal budget increases, so do corporate interests.

The problem is not that the corporations have too many social responsibilities: it's that the government has taken too much responsibility from private individuals, and put it in the hands of these unholy alliances.

With a government that has never been bigger and spent more, it's difficult to say that "supercapitalism" has triumphed. "Supercorporatism" or "superfascim," possibly.

The Mormon Monk said...

Mormon Paleo,

I think Reich would say (and I would agree) that capitalism IS fundamentally exploitative--its sole concern is efficiency, and if that means sweatshops, child labor and slavery, so be it. Capitalism is a very useful tool, in that it makes life and markets more efficient, but our sole concern (presumably) is not efficiency, so there does have to be some sort of regulation to temper the all-out search for efficiency. I'm quite sympathetic to the need for smaller government, but I don't think that can happen unless you first kick business out of government.

Mormon Paleo said...

I am completely in agreement that business should leave government. This would be trivial, however, if government never left business (also a laudable goal, but one with tremendous inertia to oppose; consider the military-industrial complex, for instance). You can't have one without the other.

Are private property rights fundamentally exploitative?

Capitalism (a system of individuals freely economizing and exchanging) is the natural outgrowth of a system based on private property rights. Capitalism's efficiency is the aggregate of individual economizing, exchanging, and efficiency.

How can a system based on voluntary exchange and private property rights be considered exploitative, while a system of compulsory taxation and expansive, monopolistic regulation is not?

How do we know government regulation better meets our individual needs than capitalism, especially when we consider the huge number of government economic interventions in the recent and distant past, and their costs, both direct and indirect?