Jandos Rothstein
In Saving Capitalism, Robert Reich argues that the free market does not operate independently of the government; rather, the market works in conjunction with the government in a way that favors large corporations and people who have already acquired economic and political power. He assesses that the rules of today’s economy disproportionately favor the wealthy, and he proposes a remedy—still under the capitalist system—wherein the public produces a “countervailing power” to transform the market into one where inequalities between groups are less pronounced.
Saving Capitalism: For the Many, Not the Few, by Robert B. Reich
In this essay, I argue that Reich’s assessment of markets and the rules of today’s economy is valid because it accurately reflects the nature of the market, which has no state of nature but rather is constructed and developed by humans. Leaving the market to continue operating by current regulations does not ensure that it is most conducive to social mobility; instead, inequalities built into the current system would be further enhanced and possibly expanded by new changes and developments. A society that provides incentive for innovation in the market yet also promotes financial mobility benefits from a form of capitalism that is regulated through the government by popular representation, where people are expected to make choices that suit their own best interests.
While Americans’ individual rights are mostly unrestricted in the current so-called “free market,” not all Americans are equally able to pursue their goals in the context of the current society. In other words, they have what is called the negative form of freedom that prevents their rights from being violated, but they do not have the positive form that encourages them to pursue their interests.
In order for the government to allow people both positive and negative freedom, it has to involve itself in the market and regulate corporations. Here, it is important to distinguish between an individual and a corporation: Corporations are made by individuals to support them in pursuing their self-interests. The government may place restrictions on corporations but not individuals by, for instance, treating commercial speech as different from regular speech. Even while the individuals who partake in the market may be free, the market cannot operate independently of governmental regulations. Regardless of what the government does, it is making changes that affect corporations, though the government is not necessarily going against people’s needs or wants. There are certain guidelines that the market should be operating by to ensure that people are able to work hard to succeed, but in its current state, it fails to accomplish that.
When corporations have too much power, they have excessive control over people’s lives, as a totalitarian government would. Holding the primary means of production, the market may control the people more than people are able to control the market. For instance, if a company decides that its products will be offered to consumers only if the consumers agree that the company will not be held responsible for any unexpected privacy breaches, then people might not have a real choice if they need to use the product. They get the product they need with no insurance if something goes wrong, or they do not get it at all. People can lose control over their information to a market where they have little say.
In the current system, the same primary people who control the market are the ones who control the government. When having economic power gives way to more political power (e.g., when large, influential companies donate to political campaigns) or vice versa, people who already have political and economic power are better able to gain more of it. The wealthy and powerful get more leverage to shape the system that gave them power in the first place, so they are better able to gain more power and wealth.
In order for us to achieve (or get as close as we can to achieving) the ideal of the American dream without sacrificing the focus on individual achievement, capitalism should be saved such that the market rewards individuals for their work but also operates by democratically decided principles. People should have private incentives to innovate; the problem with the current system is that companies value the money they earn from their shareholders more than what their stakeholders contribute to them. It is a couple of people who are coming up with big ideas that matter to the companies, so they are the ones who hold most of the power.
The market needs to encourage valuable contributions to society in the form of ideas but also needs to honor the people who may not necessarily be creating these ideas. At the same time, the market should value useful contributions to society. Allowing people to patent and market ideas and inventions is necessary, though not to the extent where monopolies can easily be created and prices are driven up. The government might choose to step in and regulate the patent system by not allowing trivial changes to a product to be patent-eligible. Yet the capitalist system would still be rewarding inventors with patents that distinguish their products, providing the inventors with a self-centered incentive to continue innovating.
Regarding my point that the market should operate by democratically decided principles, the principle of the “American dream” requires a new form of capitalism that is more public-oriented, as it is becoming less applicable as capitalism in its current state evolves. In the current system, people have internalized that they are paid what they are worth, ignoring the massive inequalities perpetuated by the current system and sacrificing the countervailing power they could have if they banded together to demand higher wages. As Reich argues, “[t]he only way back toward a democracy and economy that work for the majority is for the majority to become politically active once again, establishing a new countervailing power.” He adds that those of us other than the “moneyed interests” should use our representation in government to gain back control of the market. In other words, we might push for a market structure in which companies are regulated in a way that ensures us security and transparency. This kind of structure would allow consumers to enjoy a greater amount of reassurance regarding their market transactions and thus a greater capability to enjoy positive freedom. Thus, the government is the avenue through which people should be represented in the market, due to its democratic form.
As both human elements of society, the government and the market should be working together to keep each other in check. The market should not gain too much power by establishing services that come only if you agree to sacrifice some of your rights (e.g., a company might say that if you want to use this service, you have to agree to these terms of service, which hold you responsible if your privacy is compromised). With the government, we would want to have laws that protect our rights so that we can still pursue our goals without them, and most people would be interested in similar regulation for the market services that they use. The democratic participation associated with the government is necessary for producing the “countervailing power” that Reich claims that we need in order to undermine the current system favoring those at the very top.
In conclusion, I have argued that Reich provides an accurate assessment of today’s market, and in order to remedy the current economic system in the United States, capitalism should be redesigned so that the government serves to balance out rather than enhance the market’s power.
