Notes on Robert Reich's Supercapitalism

I recently finished Robert Reich's Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Throughout the book, he describes the way in which capitalism evolved from the "Not Quite Golden Age" of the mid-20th century to today's "Supercapitalism."

Reich describes the "Not Quite Golden Age" as follows:

"The central features of of American democratic capitalism during the Not Quite Golden Age fit together in a remarkably coherent system, merging economics and politics. America's largest corporations would plan and implement the production of a large volume of goods, gaining significant economies of scale, and thereby reducing the cost of producing each unit. By coordinating explicitly or implicitly with the handful of other giant companies in the same industry, they could set prices high enough to ensure substantial profits....Democratic capitalism of this era involved a complex and continuous set of negotiations - sometimes directly between key players, like big business and big labor; sometimes indirectly within regulatory agencies and legislatures. There were several important consequences:  first, large economies of scale, generating high productivity and hence significant profits; second, tens of millions of steady jobs; third, a wide distribution of profits (downward to the blue-collar workers and outward to smaller communities, farmers, and other constituents); fourth, millions of consumers who used this largesse to purchase the goods and services produced in ever larger quantities, thereby stabilizing the economy for large-scale production. The result was a large and growing middle class across the country that stabilized the political system. It was full circle" (46-47).

During this period, innovation and efficiency were both lacking, and stockholders were "passive and functionless figures," according to economist John Kenneth Galbraith. As Reich's title for the era suggests, not everything was "golden." The US government put down communist rebellions in places where American corporations had a stake, and inequality and oppression were still rampant.

Our system began changing as the Cold War progressed.

"The road to supercapitalism began with technologies that emerged from the Cold War - containers, cargo ships and planes, fiber-optics cables, and satellite communications systems. They allowed the creation of global supply chains. They also spurred the commercial development of computers and software that could produce items at a low cost without large scale, and eventually distributive services over the Internet. All this shattered the old system of large-scale production and dramatically increased competition" (86-87).

Ultimately, because of military research undertaken to keep the United States ahead in the Cold War, technologies and innovations made the economy more global. Because of the new demands and new markets that emerged, more corporations sprung up and competition intensified.

Reich goes on to describe that most of us are "of two minds" in regard to the consequences of this. We are excited about the successes of the economy, the inventions and innovations it has created, and the growth of the stock market. However, we are also weary of the widening inequality, job instability, destruction of the environment, and disregard for human rights in the production of many products. Reich says that we are of these two irreconcilable viewpoints because we have two roles in society: we are consumers and investors, who praise supercapitalism, and we are citizens, who are dissatisfied with it. In the Not Quite Golden Age, the balance achieved between these two sides heavily favored the citizen in us, but now, there is no balance:

"Our desires as consumers and investors usually win out because our values as citizens have virtually no effective means of expression - other than in heated rhetoric directed at the wrong targets" (89).

He uses the example of Wal-Mart to illustrate this: Wal-Mart is notorious for guaranteeing extremely low prices for its consumers. It pressures its suppliers to sell goods for less, and because Wal-Mart has so much bargaining power, the suppliers will listen because Wal-Mart will just get its goods from somewhere else if they don't. Because of this, suppliers "squeeze the wages and benefits of the millions of people who work for them in the United States and abroad" (91). Wal-Mart does the same to keep prices low. As consumers and investors, we're okay with this because we enjoy paying lower prices for the same goods, and the returns on Wal-Mart's stock are good. (Because of the huge amount of competition - a feature central to supercapitalism - Wal-Mart has to keep its prices low and returns high, otherwise consumers and investors would go elsewhere.) However, as citizens, we are less enthusiastic about this because of the negative impact it has on the workforce and communities.

The only reason for this is because we are complicit.

"[The] issues of economic security, social security, community, our shared environment, and common decency were central to democratic capitalism as we knew it in the Not Quite Golden Age. They were - and still are - concerns to us in our capacity as citizens. But as power has shifted to us as consumers and investors, these issues have been eclipsed. We've entered into a Faustian bargain. Today's economy can give us great deals largely because it punishes us in other ways. We blame big corporations, but we've mostly made this bargain with ourselves" (99).

He later continues

"The main culprit has not been corporate greed or CEO insensitivity but rather the increasing pressure on companies from consumers like you and me who want better deals, and from investors like us who want better returns" (103).

The consumer-investor side has continued to win because markets are able to respond efficiently to individual desires but fail at helping to achieve collective goals. We are at fault as citizens because we have allowed the negative practices of corporations to proliferate. We have failed to pressure lawmakers to pass laws limiting corporations significantly (as Reich later points out, politicians make statements condemning the practices of corporations all the time, but these are seldom followed by policy changes). Not only that, but we have lost faith in our democracy because of the massive influence corporations have (which we have also allowed to take hold). Americans have lost their confidence in our democracy, which Reich sees as the result of the influence of money in politics.

"Money is a by-product of the very feature of supercapitalism that has led to its economic triumph - intensifying competition among firms for consumers and investors" (131).

The competition of the business world has spilled over into our democracy as corporations hope to gain a competitive advantage through public policy. Instead of catering to the demands of citizens, lawmakers are responsive to corporations who spend large amounts of money (to them, a tiny portion of their total revenue) on influencing these politicians through campaign financing and lobbying. The voice of the citizen has been drowned out by the wallet of the corporation. Legal battles and partisan issues in Congress are not fought in the name of citizen interest groups, but corporate competitive advantage. "The result," Reich says, "is a broader form of corruption - the corruption of knowledge" (158). For example, the food industry financed researchers to debunk prior research which concluded that childhood obesity leads to adult health problems, and that weight gain has a direct relationship to the consumption of sugar and fatty foods. Exxon "distributed $2.9 million to thirty-nine interest groups that would raise doubts about climate change" (160), which, according to the British Royal Society, created a "false sense... that there is a two-sided debate going on in the scientific community" about the issue.

Though we have an immense say as consumers and investors, our voices as citizens are drowned out.

"Supercapitalism has spilled over into politics and engulfed democracy" (164).

"The major parties are too dependent on corporate funding to risk offending any significant number of companies on Wall Street" (165).

Reich is hopeful about our ability to fashion a system that is more democratic, in which corporations are truly held responsible for their actions. He makes the distinction between today's illusion of "corporate social responsibility" and true responsibility, stating that corporations do not have moral obligations - only individuals do. Furthermore, any "corporate social responsibility", which comes in the form of employing more humane practices to slaughter meat or produce clothing, signing codes of conduct promising good behavior, being more environmentally friendly, etc., is only done as a public relations gimmick to respond to consumer demands, increase revenues, and gain a competitive edge. For example, when General Mills started using whole grains in their cereals, it was not "because these firms became more socially virtuous but because consumers had become more conscious about their own health" (172). Although corporations may sometimes pursue altruistic or moral goals, these are ultimately in response to investors and customers, not to its employees, communities, or society as a whole, and are unlikely to establish new norms of corporate conduct. Reich sums this up by saying:

"Corporations do some good deeds but corporate thank-you rituals mislead the public into believing companies do these things out of selflessness - indeed, that there is a 'self' there deserving of commendation in the first place. But there is no corporate selflessness, and there is no corporate self. In supercapitalism, companies exist only to serve consumers and thereby make money for investors. This is how they serve the public" (207).

The book is concluded by Reich's urging political reforms demanded by all citizens. This should come from understanding truths about our current economic system (the current rules of the game). He states that "if we want [corporations] to play differently, we have to change the rules" (214). The only social responsibility of corporations should be keeping our democracy intact. Additionally, he argues that people need to learn that corporations are not people. Corporations should not have to pay income taxes; only shareholders should. Corporations should not be held liable for the actions of their CEOs, as this hurts innocent workers. Consumers, investors, executives, and workers have a right to advance their interest in a democracy - corporations don't. The last line of the book echoes the necessity of awareness of these truths: "The first step, which is often the hardest, is to get our thinking straight" (225).

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I see everything Reich writes about as a snowball. Because people are not thinking straight, as he writes in the last line of the book, and are even corrupted into believing that corporations are people, they allow corporations to influence politics and expect them to uphold some moral code (the fulfillment of a "corporate social responsibility" is seen as having such a code). Because of the dwindling citizen in us individually, and also because of the exorbitant amounts of money corporations have, we allow corporations to fulfill the duties of citizens and have an active role in our democracy. It is not only that there is a lack of balance between the consumer/investor and the citizen in us; the consumer/investor has all but taken over.

Reich himself admits that "political reforms cannot be achieved as long as public officials and legislators are dependent on the very corporations whose influence is to be limited. The system cannot repair itself from the inside" (211). Because of this, I doubt that radical political reforms are even plausible - let alone enough to change the role of corporations in our democracy and our lives. I dare to say that we have reached a point of no return, and the only way to create meaningful change is not via regulation, but fundamentally changing the system itself.

A Delayed Reaction to Chick-fil-A's Anti-Gay Stance: The Absurdity of Using Dollars to Vote

Since the beginning of the summer, most of the people I interact with or follow via social media - both friends and public figures - have acknowledged Chick-fil-A's controversial anti-gay donations in one way or another. Dan Cathy's assertion that his company has backed groups which support the traditional view of marriage as the union of a man and a woman with Baptist Press created ripples throughout the media. These ripples then created a movement on Facebook and Twitter in which people would profess their disgust with the corporation, promise never to buy from there again, or - on the other side of things - post photos of themselves with chicken sandwiches from the chain. While Chick-fil-A is the most controversial, it is not the only corporation which has taken a stance on gay marriage. In late June, Kraft released a photo of a rainbow-creme Oreo in celebration of the Pride festivals many cities had at the time. Today, August 7th, is said to be Starbucks Appreciation Day. Consumers are encouraged to purchase Starbucks products to "support those that support equal rights," to quote a graphic going around on Facebook. 

What is most disappointing is not - as many jump to point out - the stance these companies have and what they do with their money. Nor is the commoditization of sexuality. What is truly disappointing is that the public reaction is to the particular stance held by the companies, not to the fact that corporations have enough power that they can hold a political or social stance and act upon it in in a way that provokes such a reaction. Ultimately, the Chick-fil-A controversy is representative of the way in which the role of the corporation has changed, as Robert Reich proposes in his book Supercapitalism. CEOs no longer act as "corporate statesmen;" instead, they control a business that has become a political entity itself. Furthermore, this has led to the degradation of our democracy and civic duty. By allowing companies to have these stances and reacting to them by altering our consumption habits, we have begun to cast votes at the checkout counter instead of the ballot box. As a society, we have allowed our political ideology to be defined by where we shop instead of what we vote for or protest against. We have come to live in a society where our means of expressing our ideas is buying a certain type of product. Because of this, we have lost our citizenship and gained our consumership. The only way to correct this in our current social structure is to redefine the way we value products. Instead of seeing them as a political statement, they should be seen as nothing more than a way to fulfill a need or desire. We should not alter our spending habits the way many have because of Chick-fil-A's or Kraft's stances on marriage. We should not protest in front of Chick-fil-A because they don't support marriage equality, we should protest against all of these corporations for taking our citizenship away.

Argentine Workers' Cooperatives: The Successes of Horizontal Organization and What it Means

Last night, I watched The Take (the first of nine parts above), a documentary on Argentinean workers' cooperatives by Avi Lewis and Naomi Klein. The documentary focused on the struggle of workers at the Forja auto plant in their fight for legal recognition and permission to take collective ownership of their plant. It also described the economic collapse of Argentina, which lead to widespread worker control of factories after many companies halted production or laid off their workers. The history of these cooperatives is important to be aware of, especially in the context of today's über-capitalism and its corresponding exaggerated vertical organization structure.

1. Argentina in the 21st Century

As narrated in the first few moments of the film, Carlos Menem, elected president in 1989, had promised to rebuild industry and grow Argentina's economy in his campaign. This trend had begun in the 1950s under Juan Peron, who built Argentina's factory economy and created an extremely strong middle class. Once elected, however, Menem sold many of the country's previously public assets, downsized, and engaged in corporate lending mainly due to prodding from the IMF. Currency markets became deregulated while unemployment soared from 6% to 18% as many companies responded to privatization. Public debt piled up and the IMF continued to lend, as Menem was appeasing their demands and meeting lending conditions. The IMF reported that Argentina would "enter the new century in a very, very solid basis," but in 2001, two years after Menem's term expired, the economy collapsed. Half the country slipped below the poverty line and many were without work. Money was free to travel when Argentina's currency began to drop: $40 billion dollars in cash was taken from Argentina land in the dead of night. In response, the government froze all bank accounts. The rich had saved their fortunes, but the poor were trapped in the downward spiral. Angry Argentines took to the streets and rioted, chanting "Que se vayan todos" ("All of them must go"). The country soon declared bankruptcy and, as Avi Lewis's narration tells, "refus[ed] to pay its debts; banks lock[ed] people out of their own accounts. The basic rules of capitalism were being broken by the system itself." Angry citizens rejected the entire system and took to the streets. While their protesting expressed dissatisfaction with the system, the occupied factories expressed an alternative to it. Hundreds of factories that otherwise would have been shut down were being run by their workers after abandoned by their owners. The two most successful were Zanon, a ceramics factory, and Brukman, a garment factory.

FaSinPat, also known as Zanon, is one of the most
well-known and successful workers' cooperatives in
Argentina. The factory was first taken over by its workers
in October 2001 and remains in worker control today.

Zanon Ceramics, referred to by Lewis as the "granddaddy of the [occupied factories] movement" survived near shut-down when the workers refused to accept the owner's proclamation that the factory was no longer profitable. Workers took over the factory, claiming that it belonged to the public because of its massive debts (despite having received millions in corporate welfare from Menem's regime) and subsidies. The factory operated at the time the documentary was made with 300 workers which formed a decision-making assembly. Each worker had one vote - equal say in the company's management. Workers are paid identical salaries, and the factory has immense support from their community. One man interviewed in the documentary stated that, "[Zanon] works better than under the former owners... At least people are working. The tiles are cheaper and the future is brighter than it was under the owners. All they did was get subsidies from the state - nothing else. And they kept the money for themselves." Brukman, another factory under worker control, operates in a similar fashion. Workers gather and discuss their personal financial situations to decide upon fair salaries for one another. Many other Argentinean businesses - health clinics, private schools, and more - operate under worker control. With community support, the only force threatening the success of these horizontally-managed cooperatives is the state. Zanon, now known as FaSinPat (short for a Spanish phrase which translates to "Factory without a Boss"), won an important legal battle in 2009 stating that the factory legally belongs to the people. The workers of Brukman won their rights to the factory after eviction and police violence in 2003. 

2. What We Can Take from the Argentine Model, and Why a Similar Phenomenon Has Not Occurred Elsewhere

The story of the oppressed worker is all too common in today's economic system. The Argentine workers' cooperatives show that the solution to this problem is not only possible, but also stable, supported, and profitable. While the popular conservative rebuttal to left philosophy is that in practice it hasn't worked, I challenge those of any political affiliation or ideology to find a business model more democratic than that of the occupied factories in Argentina. Not only does the horizontal model work, but it has more support and stability than any traditional Western business structure. As remarked by a member of the Patagonia community in which the Zanon factory operates, the owners of the factory are not stealing anything or killing anymore, as the previous bosses had. Instead, the worker-owners are producing to feed their families and provide for the community. 

This model shows more than the fact that an alternative economic system is realistic, if not more beneficial than the current one. It also sheds light on the conditions necessary for such a system, and a paradoxical issue in community organizing. First, widespread economic catastrophe coupled with the threat of a closing workplace (or worse, the reality of being unemployed for years) is what inspired the groups of workers to organize and take the factories as their own. While not to the same magnitude, the economic crisis of 2008 would have been a prime opportunity for something similar to occur in the United States. Extreme economic conditions are most certainly notorious for inspiring groups to take action, be it through demonstration or, as in Argentina, claiming their workplaces as their own. But what has continued to perplex me is how Americans can face their own extreme instances of injustice and inequality and neglect to react in the same way as those in Argentina, Greece, Spain and elsewhere have reacted to their economic conditions. The reason for this is similar to what caused the protests in the Arab World in 2011: in those countries, the governments would either give the people the illusion of freedoms, or the ability to provide for themselves in terms of food, clothing, and the other bare necessities, in order to keep them complacent. When they failed to provide either of these, the people revolted, and the rest is history. 

I see a similar trade-off occurring in the late-capitalist democracies of the Western world that keeps people complacent and prevents protest and the seizing of the workplace. People wear two hats - they are both workers and consumers. Both the worker and the consumer are given the illusion of being able to organize - either to form labor unions or gather in peaceful protest. The consumer is given the illusion of quality products and freedom of choice in buying (while they really don't), and the workers have the "American Dream" in mind without realizing that they have already hit their glass ceiling - or have come close to it. Furthermore, the people in these Western democracies are kept comfortable and have attitudes that are fundamentally different from those in Argentina, for example, and other developing countries. Because of the history of prosperity and the level of comfort in which we are kept, we are less willing to part with, or lose, what we have. The citizen of a Western democracy is more stubborn and more competitive, as they have been taught in school and the job market. The sense of having some power or say in the government - and being entitled to this - is also a typical characteristic of these systems. The takeover of businesses and factories has not occurred in the United States or elsewhere in the Western world because of these characteristics and the attitude of entitlement and competition possessed by people in these countries. As many testified in The Take, one becomes desensitized to losing in a direct democracy. Furthermore, many of the workers in the Brukman factory felt powerless prior to taking it as their own. While Americans and others are faced with the economic condition of extreme inequality, the collective need to take a stand against management is not felt because of this complacency, and their attitudes otherwise, coupled with the other aforementioned conditions. I could see the workers' cooperatives as an option in the future for a rich late-capitalist democracy if these conditions and attitudes are altered, or if economic hardships become more dire and collapse is imminent.

The National Movement of Recovered Businesses, a federation of recovered factories, operated under the following slogan: Occupy, Resist, and Produce. I hope that this slogan is taken to heart in the near future, regardless of the surrounding conditions, and more create horizontally-structured cooperatives like those in Argentina. Despite the likelihood of this, there is still a lesson to be learned from the successes of these cooperatives.

After a considerable period of inactivity...

The intent of this blog was to outline and flesh out my views for myself, primarily, and others. Long spells of laziness and intermittent schoolwork have prevented me from doing so over the past two and a half months or so. I am going to try to post on this blog with my ideological musings, thoughts, etc. more regularly, especially once the summer begins.
I recently finished Saul Alinsky's Rules for Radicals and I'm currently working my way through Slavoj Zizek's Iraq: The Borrowed Kettle, both of which are fantastic. I will post my thoughts on the books here when I get a chance. I've made a pretty long reading list for myself this summer and will hopefully do the same consistently for anything I read that happens to be ideologically charged in an effort to offer my commentary and achieve the goal I had in mind when creating this page.

Thoughts on Cornel West and Frances Fox Piven (Left Forum)

Today I went to Left Forum with a friend of mine and heard Cornel West and Frances Fox Piven (both of the Democratic Socialists of America) speak. A few quotes I found captivating:

"We need to build the build the spirit of defiance that marks a protest movement." -Piven

Indeed we do, yet I feel that apathy plays such a huge part in the ineffectiveness (a harsh term but the most accurate at this point) of the movement. After leaving Left Forum and walking around in New York City I could barely cope with the difference in atmosphere: everyone at Left Forum was engaged, aware, and willing to change things. Yet on the streets of New York - the birthplace of the Occupy movement - people aren't talking about mobilization. People aren't protesting McDonald's and Bank of America. People are complacent and apathetic, and will not care until the problems of capitalism come nakedly knocking on their door. More awareness needs to be brought to the movement and to the global injustices of our economic system - then we will have the spirit of defiance necessary to create meaningful, lasting changes.

"The Occupy movement was able to courageously and in a visionary way step forward and gain the attention of our fellow citizens and those around the world." -West

"Poverty is not just an economic issue. It is not just a matter of economic calculus. It is not just a matter of survival of the democratic experiment, even though it is. It is a state of emergency, it is a matter of national security." -West  

"[The Occupy Movement is] making a connection between the social misery of poverty and the greed of the oligarchy, and radically calling into question what we need to do in this nation. In our society, we have social conformity in which persons feel as if it is fashionable to feel well-adjusted to injustice, in which everybody's up for sale and everything is up for sale......open to the highest bidder, that's why you end up with a culture of social conformity inseparable from the indifference to the suffering of poor working people." -West

I have and always will believe that wealth inequality is just as much a cultural issue as it is an economic issue. The culture of complacency and conformity is a huge part of the reason the inequalities of the world have been perpetuated.

"Once you 'otherize' poor people and then it gets tied into the 'otherizing' of people of color, it's gonna be very difficult to generate the kind of connection, generosity, kind of bonds, to recognize they are us and we are them." -West

In a different panel, we had heard about the manipulation of the media and though this is not necessarily an issue with the press, on which the first panel had focused, the isolation of different groups is a true issue of cultural hegemony. The oligarchs and plutocrats have used their power to prevent the minorities and those with the true power from organizing; something I find frightening, yet reversible. Such 'otherizing' of groups we as individuals are unfamiliar with is counterproductive to any sort of powerful mobilization, and we must overcome the differences imbued within us by the top of the hierarchy to come together and change things.

This was horribly raw but I hope to post something more detailed soon.