Words&Dirt

In 1922, American philosopher John Dewey published Human Nature and Conduct, wherein he elucidated the relationship between freedom and knowledge. “The road to freedom,” he wrote, “may be found in that knowledge of facts which enables us to employ them in connection with desires and aims” (303). Dewey understood that human liberty and progress are always dependent on actionable assessments of present conditions. Without good information, the possibility of freedom evaporates.

Nearly a century later, Robert Reich’s Saving Capitalism: For the Many, Not the Few has reformulated Dewey’s observation. “Freedom has little meaning without reference to power,” Reich writes. “Those who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America and other advanced economies are not in fact on the side of freedom. They are on the side of those with the power” (15). Seeking to equip readers with the practical knowledge necessary for positive change, Reich brings us a step closer to understanding how the concepts of freedom and power operate in 21st-century America. Saving Capitalism is a rousing and expedient text that diagnoses our economic weaknesses and proposes concrete remedies.

Reich’s first priority is to sidestep dichotomies that have muddied the waters of American political rhetoric; framing the argument as a matter of “left vs. right” or “government vs. free market” is antithetical to his goals. Instead, Reich urges us to examine how economic rules are formed, and by whom:

A market––any market––requires that government make and enforce rules of the game…Government doesn’t “intrude” on the “free market.” It creates the market. The rules are neither neutral nor universal, and they are not permanent…The rules partly mirror a society’s evolving norms and values but also reflect who in society has the most power to make or influence them. Yet the interminable debate over whether the “free market” is better than “government” makes it impossible for us to examine who exercises this power, how they benefit from doing so, and whether such rules need to be altered so that more people benefit from them. (5)

The most important sets of rules––Reich’s “Five Building Blocks of Capitalism”––are those governing property, monopoly, contract, bankruptcy, and enforcement (8). Each topic gets a chapter, and Reich explains how, starting in the late 1970s, large corporations and wealthy individuals gained disproportionate influence in designing the economic playing field. This imbalance isn’t unusual from a historical standpoint, but it was a significant shift away from the postwar decades, when the worst excesses of capitalism were checked by the combined influence of labor unions, citizens’ organizations, high wages, and strong government regulation supported by robust and progressive taxation.

Contrary to the neoliberal narrative that blames the pressures of globalization and government excess for recent trends, Reich argues that unions, wages, and reasonable regulation have lost sway primarily due to crafty recalibrations of economic rules designed by corporate and financial elites. Consequently, power and wealth have increasingly consolidated at the top, leading to today’s grotesque levels of socioeconomic inequality.

Reich’s second goal is to do away with the spurious association between economic rewards and moral worth:

People are “worth” what they’re paid in the market in the trivial sense that if the market rewards them a certain amount of money they must be. Some confuse this tautology for a moral claim that people deserve what they are paid…But a moment’s thought reveals many factors other than individual merit that play a role in determining earnings––financial inheritance, personal connections, discrimination in favor of or against someone because of how they look, luck, marriage, and perhaps most significantly, the society one inhabits. (91)

Reich effectively argues that the “meritocratic myth” is nothing more than a comforting story we tell ourselves to justify the prosperity of some and explain away the poverty of others. This narrative has been a comfort to the wealthy and persuaded many poor people that they deserve their fates. It also veils the plethora of “predistributions” designed to operate “inside the market mechanism itself” (154). These predistributions––tax loopholes, subsidies, structural discrimination, and inheritance laws––tend to favor the wealthy, and are the hallmarks of an economic order that has hollowed out the middle class, increased the number of working poor, and filled out the ranks of the nonworking rich. We will need a new outlook in order to shape an economy that distributes prosperity fairly to all citizens.

Finally, Reich predicts that a new “countervailing power” will soon arise to restore balance to the 21st-century American economy. The wishlist of liberal reforms is not unfamiliar: get big money out of politics, provide public funding for elections, ban gerrymandering, restrict the revolving door between public offices and private lobbying firms, and disclose funding sources for “experts” who testify for or against public policies (191-2). And that’s just a start. Eventually, a guaranteed basic income (or some equivalent program) would be implemented to return purchasing power to consumers and counteract the very real problem of technological unemployment. The ultimate goal, as Reich sees it, is to design an economy that “generates what most people would consider a fair distribution [of wealth]” (219).

I agree with Reich’s agenda, but it’s worth noting some important factors that are left out. There is no mention of biological and/or cultural proclivities that might hinder or help the transition toward a fairer form of capitalism, nor of the psychological reality that humans are not rational actors in the traditional sense. Reich doesn’t address humanity’s inherent tribalism, which often makes it difficult to sympathize with those perceived to be outside of one’s particular in-group(s). The possible economic consequences of climate change are nowhere to be found. And most glaringly, America’s history of slavery and racial discrimination against African Americans and other minorities is almost completely absent from this text. Given past sins and present tensions, it’s hard to imagine Reich’s reforms having perfectly equitable results for all individuals and communities across America, but he is silent on how we might deal with this problem.

I realize that addressing these issues isn’t Reich’s primary goal, and that each is complex enough to fill its own book, but it was hard to finish Saving Capitalism––by no means a cumbersome book––without wondering if it focused overmuch on being strictly economic in a world that is anything but.

When it comes to what can be found in Reich’s argument, the rise of his “countervailing power” is the fuzziest element. It’s unclear exactly how we can transition from today’s gridlocked government to a situation where groups of common citizens can wrest power away from those who have so fastidiously amassed it. “No one should expect this to occur smoothly or easily,” Reich admits, but in the same paragraph he also claims that the resurgence of a countervailing power is “inevitable” (191). He appeals to American history, reminding us of the many times that economic influence has been similarly skewed before a combination of government and people power restored balance (The Gilded Age and the New Deal are good examples).

There are surely precedents for our current situation, but history is not always an accurate predictor of the future. I don’t think Reich takes seriously enough the possibility that we could be witnessing the end of American democracy and the birth of something else. Never before in history has so much wealth been concentrated in so few hands, and the global elite are not properly restrained by national or international law. Perhaps Reich is correct that “capitalism as we know it will not survive” if current trends go unchallenged, but it’s much less clear whether that outcome would be catastrophic, utopian, or simply different (217). It’s also important to question the notion that the American economy has ever been truly “balanced” in favor of working folks––even in the postwar years for which Reich is so nostalgic.

Never once does Reich confront the question rendered inescapable by his book’s title: Is capitalism worth saving? The reader is left wondering whether Reich views capitalism as the final form of human commerce, or if he thinks we will ultimately transition to a different type of distributive system. Should we accept Reich’s assertion that “The essential challenge is political rather than economic,” or is it possible that our problems stem from something rotten in the core of capitalism itself (168)? I’ve neither the expertise nor the wordcount to even begin to answer this question, but I believe it needs to be asked.

Despite its limitations, Saving Capitalism is a successful book that provided me with several new framing mechanisms with which to parse economic debates. Such improvements are in keeping with Reich’s mission to help people “understand what is happening and where their interests lie” (219). Like Dewey before him, Reich has surely shown that knowledge is the key to freedom and personal empowerment.

Rating: 8/10