Book Review | Robert Reich’s ‘Saving Capitalism’

By Jim Sullivan

This book is divided into three parts, each part having several sections as follows:

Table of Contents 

  • Part I: The free market. the prevailing view; the five building blocks of capitalism; freedom and power; the new property; the new monopoly; the new contract ; the new bankruptc ; the enforcement mechanism; summary: the market mechanism as a whole.
  • Part II: Work and worth. the meritocratic myth; the hidden mechanism of CEO pay; the subterfuge of Wall Street pay; the declining bargaining power of the middl ; the rise of the working poor; the rise of the non-working rich
  • Part III: Countervailing power. reprise; the threat to capitalism; the decline of countervailing power; restoring countervailing power; rounding upward pre-distributions; reinventing the corporation; when robots take over; the citizen’s bequest; new rules.

In this book Reich is basically addressing the problem of inequality in the American capitalist system.  He addresses the history of how enormous economic inequality came about in the U.S., and proposes solutions to reduce  it.  I like this book because Reich’s thinking is logical and he backs up his ideas with hard data.  Saving Capitalism does contain a fatal flaw, however:  Reich does not recognize that middle-class Americans do not feel the economic pinch of inequality in their personal lives enough to take action.  He adduces the secular parable of the boiling frog as a metaphorical warning for Americans (and he is right in this) about gradually increasing inequality.  Unfortunately most Americans are passive when the time comes to make political and economic changes to ward off future economic disaster, in this case increasing and widespread inequality.  Many if not most Americans need to be hit on the head with a symbolic 2×4 and blood must be streaming down their faces before they will waken from their passive political slumbers. 

Importantly, Reich argues that there is a feedback loop between political and market power.  Increasing wealth at the top buys political influence, and political influence is used to rewrite the rules of the market game, which increases economic inequality.  As a result of the influence of money in politics, since 2000 A.D. the share of national income going to worker compensation has declined and will decline further.

To my mind, the two most important problems facing America today are (1) the influence of money in politics through campaign contributions, lobbying and the revolving door between politics and business, and (2) corporate and political resistance against the scientifically proven idea of global warming.  The latter problem will not be solved anytime soon unless the former problem is solved first.

Jim Sullivan is a Citizen Journalist and retired  businessman with graduate degrees in political science and business.  He lives in Ventura with his wife Juliette and two family cats.

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