12-29-07, 12:32 pm

Robert Reich served under President Clinton as his Secretary of Labor and is proud of the fact that he served what he calls 'one of the most pro-business administrations in American history.' It's hard to think of any administration that wasn't pro-business. Reich has a new book out: Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Tony Judt the historian (author of 'Postwar') has written an essay about Reich's book: 'The Wrecking Ball of Innovation (The New York Review of Books, 12-6-2007). The following is a review of Judt's essay. The 'wrecking' is of the regulatory state. The capitalist version of 'smash the state.'

Reich is quoted as saying, 'While Europeans set up cartels and fussed with democratic socialism, America went right to the heart of the matter -- creating democratic capitalism as a planned economy, run by business.' This post war situation [post WW2 that is, we are always in some war or another] was reflected by a 'stable and comfortable equilibrium' (Judt explains) which gave to the American economy, and people, a sense of security and progress.

But the technological innovations and developments, starting in the 70s, which have led to globalization and increased international competition have forced unpleasant adjustments on the American economy; most notably a drive to deregulate American business to make it more competitive globally.


According to Reich this new economic paradigm has shunted democratic values aside in pursuit of corporate profit. 'Supercapitalism,' Reich says, has spilled over into politics, and engulfed democracy.' Ideals based on the common good and common citizenship have been shunted aside.

Judt says this is how Reich sees our current reality. 'But what is to be done?' From Judt's point of view it looks like 'an incipient collapse of the core values and institutions of the republic.' Congress and the Administration as well as the Courts have become creatures of the military industrial complex and a rich elite and regular citizens are left to fend for themselves. Should we organize to fight these forces?

Evidently not, as, Judt says, Reich does not want us draw such conclusions. He thinks no one is to blame for what is happening. 'As citizens,' he says, 'we may feel that inequality on this scale [i.e., 1% reaping 21.2% of national income] cannot possibly be good for a democracy.' Nevertheless, ' the super-rich are not at fault.' Reich says there is no evidence, according to Judt, to think corporations or CEOs have become more greedy or irresponsible.

It is true that business, especially big corporations are not acting in the common interest, but that is not their function, As Judt puts it, 'Economics isn't about ethics.' Corporations exist to make money, and consumers want the best deals. That is just the way it is.

Judt thinks that 'Reich is a technological determinist. New 'technologies have empowered consumers and investors to get better and better deals.' These deals have 'sucked ... social values ... out of the system .... The story of what transpired has no heroes or villains.'

Judt doesn't buy this explanation. He doesn't like the way Reich pigeon holes Americans into 'consumers,' 'investors,' and 'citizens.' Reich: 'As citizens [we] are sincerely concerned about global warming; as consumers and investors [we] are actively turning up the heat.' This doesn't explain the anti-globalization movement nor why people in other countries are more active than we are in trying to solve social problems.

Judt agrees we are living in an age of globalization dominated by international capitalism and that we are constantly told 'as Margaret Thatcher once summarized it: There Is No Alternative.' This is the master narrative of Reich's 'Supercapitalism.'

But Judt, rightly I think, questions, the conclusion, that this all natural and there is nothing we can do, or should do, to try and alter the situation. Reich's formulation leaves politics and democratic choice out of the equation. Four factors seem to be powering our response to globalization, namely PRIVATIZATION, WELFARE REFORM, DEREGULATION, and TECHNOLOGICAL REVOLUTION. What these four factors thrive on is the limitation of the power of the state.

As the state shrinks so does the ability of regular people to exercise democratic control over the masters of industry and the private sector. 'If modern democracies [he means capitalist democracies] are to survive the shock of Reich's 'supercapitalism,'' Judt writes, 'they need to be bound by something more than the pursuit of private economic advantage....'

This is a problem, I think, especially from a Marxist point of view. Morally we may think that globalization, privatization, the lust after money and profit is 'essentially repulsive (Mill)' but that is just how capitalism works. Judt doesn't think the present system can long endure. He thinks the insecurity that globalization and privatization brings to the masses will have political repercussions, such as nationalism and a return to more state power in the form of protectionism. This could lead to nasty consequences.

While, Judt says, 'it may be true that globalization and 'supercapitalism' reduce differences between countries, they typically amplify inequality within them -- in China, for instance, or the US -- with disruptive political implications.'

Judt thinks we may have to reconsider a return to the 20th century regulatory state in order to maintain bourgeois democracy because 'in a world increasingly polarized between insecure individuals and unregulated global forces, the legitimate authority of the democratic state may be the best kind of intermediate institution we can devise.'

But I don't think a return to the past is a good answer. The bourgeois democratic state has failed to protect the interests of the masses of working and middle class people, and indeed even of the physical environment. This has been, as well, the case (with a few exceptions) of the authoritarian workers states of the past century.

The state as an 'intermediate institution', as a referee between the classes, has failed in the past because it was a creature of one of the classes, the corporate classes and to return to this model would be fruitless. The struggle of this century is to build a working people's politics based on a socialist solution eventuating in the abolition of privatization with respect to the major industrial and financial institutions fueling globalization. Only then will dreams of a harmonious society begin to make sense.

--Thomas Riggins is the book review editor of Political Affairs and can be reached at