Jandos Rothstein
Back in 2001, John Hoerr penned an article in The American Prospect on an IBM plant in Dutchess County, New York, which “surplused” (read: fired) 7,700 workers in a single day. He detailed the rise and fall of International Business Machines in the postwar era, along with the crippling effects of mass layoffs in a county where the company employed 70 percent of all manufacturing workers. In a particularly striking detail, Hoerr noted that local officials asked gun shops to close temporarily, fearing that the newly jobless would retaliate out of bitterness and resentment.
Hoerr’s article is now dated, the trends he references less so. It is only fitting, then, that Robert Reich’s Saving Capitalism echoes Hoerr’s caution more than a decade later, arguing against the relatively unregulated market that has persevered since the turn of the century. After all, it was Reich who co-founded the Prospect, and his book even addresses the perverse incentives at IBM that caused layoffs in the first place. But while Reich accurately tackles the problems of the modern American economy, his proposed solution comes up short.
Saving Capitalism: For the Many, Not the Few, by Robert B. Reich
Reich opens with a five-dimensional model for capitalist economies, those five dimensions being property, monopolies, contracts, bankruptcy, and enforcement. In his scathing Sanders-esque critique, Reich lambastes airlines, pharmaceutical companies, and banks for their failures to serve the American people. Here, the facts are indisputable; we are on the road to what Lenin might call state monopoly capitalism. The vicious cycle that Reich describes, with political and economic power each supporting the other, is in fact a whirlpool, and ordinary Americans are being sucked down.
In Part II, Reich’s advocacy, once rock-solid, begins to show cracks. Of the rich and powerful, Reich is far too forgiving. He writes that “we can criticize them for being selfish and greedy, but they are no more selfish or greedy than are most other people.” From that same sentence, I draw a different conclusion: The wrong people are in power. Why settle for selfish and greedy leaders when there exist unselfish people ready to lead? I will concede that those at the top are not “malevolent”; their end goal is not to harm others. But if they justify harming others as a means to an end, they are equally as guilty as any other evildoer.
Another glaring issue in Reich’s analysis is his cursory attitude toward the role of gender and race in the economic equation. As UC Irvine professor Mehrsa Baradaran puts it in her 2017 book The Color of Money, Black Americans, at the conclusion of the Civil War, owned 0.5 percent of America’s collective wealth. This makes sense: The vast majority were slaves at the time. But despite 150 years of “progress,” that number has remained shockingly stagnant. Today, Black Americans hold a measly 1 percent of America’s capital. I do not doubt Reich’s commitment to racial and gender equity—his advocacy for both is admirable—but in a book ostensibly about economic inequality, his color blindness is puzzling at best. For instance, Reich at one point cites the trustbusters of the Progressive Era as evidence that change is both possible and precedented. However, as Princeton historian Thomas Leonard explains in his 2016 book Illiberal Reformers, that overhaul was rooted in the ideas of social Darwinism and eugenics, leaving Blacks, women, immigrants, Catholics, and Jews behind. For instance, Progressives pushed for a minimum wage under the guise of supporting workers. Anglo-Saxon workers saw benefits, while immigrants had to prove they had a job paying the minimum wage to enter the country. Meanwhile, the implementation of poll taxes and literacy tests, supposedly to curb corruption, were weaponized in the Jim Crow South.
In the same vein, Reich himself admits that Jacksonian reforms excluded Native Americans and African Americans. It was not just “unwarranted privileges that had to be removed before average citizens [read: poor whites] could gain ground”; it was Creeks, Cherokees, and Seminoles as well. The New Deal, another favorite of Reich’s, was equally prejudiced. Recovery legislation systematically excluded Black workers, while women were underpaid and underappreciated. Likewise, the GI Bill, hailed by Reich as a model for community engagement in the legislative process, shut out 1.2 million African American veterans who served in segregated units and, of course, women, who were not allowed to serve. Indeed, many women have yet to escape the patriarchal bonds that confine them to domestic work. Among Fortune 500 CEOs, there are more men named James than there are women, and at current rates, the gender wage gap will not close until 2093.
Simply put, the market was always rigged. Racial and gender minorities never had countervailing power, and providing it to them is no easy task. Reich would do well to take a page from Michelle Alexander’s magnum opus The New Jim Crow. No, not literally—that would be plagiarism. Rather, he should realize that identity and economy are two linked issues and that any attempt to divorce them leaves one’s analysis incomplete. The War on Drugs, for example, devastated both inner-city African American communities and the financial standing of Black families. By logical extension, any solution must be equally holistic, addressing not only class-based inequality, but also gender and racial disparities.
In recognition of this yawning divide, I suggest not new rules, but a new game altogether. Capitalism ought not be saved; rather, it should be reinvented. From a historical and moral perspective, any economic system founded by bludgeoning Black bodies and undervaluing domestic work has no place in an equitable society. From a pragmatic one, no number of timid reforms can fix a market that is so fundamentally broken. After Jacksonian, Progressive, and New Deal–era reforms, corporations still found new ways to circumvent regulations in the decades that followed. In this way, Reich’s advocacy leads to a never-ending struggle in which benevolent populists repeatedly take action to restore countervailing power, but the rich and powerful repeatedly undermine it by concealing their actions behind technological change. In fact, many of Reich’s proposals have been implemented before! As he himself noted, the McCain-Feingold Act, which sought to limit campaign contributions from corporations, was struck down in Citizens United because of the very political influence it sought to prevent.
One could argue that as a general trend, life has gotten better for ordinary Americans because of this cyclical change. After all, child labor is gone and isn’t coming back anytime soon (except for the 500,000 legal child farmworkers still toiling today), people enjoy modern technological comforts (except for the 19 million Americans who lack access to broadband), and at the very least, slavery is long abolished (except for the estimated 60,000 slaves in the U.S. today and the hundreds of thousands in the prison labor system). But by the same token, other metrics, namely on the environment, have begun to appear progressively worse because of the market’s flip-flopping. And even if we accept at face value that the world is improving, another question arises: Why not accelerate that progress by skipping the oscillations altogether? If we know what is right—human rights for all, more power for workers, and increased transparency in politics, why not build a more enduring system that doesn’t collapse every century or so? Why not fight for change that can last?
Think of it this way: Reich describes a long staircase on which America must take a step back for every two forward. I propose taking the elevator all the way to the top.
Of course, I don’t discount the validity of Reich’s proposals, and I am especially interested in universal basic income, antitrust laws, campaign finance reform, and codetermination. However, Reich’s preferred policies lack the ambition and gumption to prevent the cycle of power from continuing.
Instead, policymakers should ensure that money never concentrates in the hands of the few with a maximum liquid wealth. Just as a salary cap on a sports team limits the amount any one player can earn, a maximum liquid wealth would place a ceiling on the individual value of any one person’s assets. The rationale for this rule is quite simple. Money is power, and when individuals have less power over the political process, rules reflect the needs of the many, not the few. A hard cap on liquid assets (adjusted for inflation) would by default prevent gross inequality because it would become impossible to accumulate wealth beyond a certain point. In turn, the rich and powerful are forced to spend, sharing their (originally plundered) wealth with the poor and powerless. Corporate profits do not go away, but by limiting the perverse incentives that lead to buybacks and bankruptcies, those profits are reinvested where they are needed the most.
Most importantly, any radical reform ought to be cognizant of current racial and gender inequality, factoring in historical injustices and ongoing discrimination. In the case of a universal basic income, funding should favor African Americans, Native Americans, and Hispanic Americans, much as affirmative action already does. With reform on company board makeup should come requirements that women and people of color are represented.
Perhaps it is my teenage naïveté that leads me to believe that meaningful change is possible, especially given the gridlock on Capitol Hill and the Tammany-esque influence of corporations. All the same, I find hope in the aspirations of generations of voices before me: Jackson, Roosevelt, other Roosevelt, and now Reich, all of whom fought for a more equitable and just system. By learning from and expanding on their ambition, America can build an enduring egalitarianism, for the many, not the few.
