Sacrifice disguised as democracy

Supercapitalism is about a fundamental schism in contemporary society. Robert Reich, a professor at Berkeley and labor secretary under President Bill Clinton, argues that big business is increasingly undermining democracy. Although people have benefited enormously as consumers and investors from this trend, they are losing out in their capacity as citizens, he says. His understated conclusion is that people should be pushed into accepting a fall in their living standards in return for greater democracy.

Reich’s critique of contemporary capitalism is more sophisticated than many. He eschews explanations that simply attack human greed or slate conservative politicians. He also acknowledges that the recent era of big business has brought some substantial benefits.

But his confusion of basic categories leads him to serious errors and damaging political conclusions. The key development to understand is the demise of the role of humans as producers rather than the rise of consumption. To the extent that consumption has become more important, it is largely by default. The striking trend of the past 30 years is in the reduction of the importance attached to humanity’s productive role.

This productive side of humanity should not be understood simply in terms of making widgets. It needs to be put more broadly in the context of what might be called ‘the human subject’: the capacity of people to make and remake the world around them. The diminished sense of human subjectivity, rather than the rise in the importance of consumption, is the key to understanding the trends identified by Reich.

Reich’s notion of ‘supercapitalism’ has to be set against what he calls the ‘not-quite golden age’ of 1945 to 1975. That period embodied many of the values that he holds dear: it was an era of relative equality, job security and trust. There was also a compact between labour unions and big business. Yet Reich is balanced enough to acknowledge that it was far from perfect. For example, women and minorities suffered severe discrimination.

For Reich, this set-up began to break down in the second half of the 1970s. New technology increased competition between corporations. This in turn led to a new era of globalisation, new production techniques and deregulation.He acknowledges that the new era has brought enormous benefits. Thanks largely to innovations in medical science, the average American lives almost 15 years longer than in 1950. Americans are also richer and have a far wider range of consumer choices than they did in the 1970s. Other countries, too, have benefited from similar developments.

However, many of the positive features of the ‘not-quite golden age’ have also disappeared. Societies have become more unequal, job security has diminished and trust in politicians is gone. Corporations, through their incessant lobbying, have, in Reich’s view, undermined the democratic process.

Against those who argue that conservative politicians, such as Ronald Reagan in America or Margaret Thatcher in Britain, are to blame for this shift, Reich rightly insists that the shift predates their time in office. Reagan was president of the US from 1981 to 1989 and Thatcher was prime minister of Britain from 1979 to 1990, yet the shift started in the 1970s. Both leaders simply intensified an attack on the consensus that followed the Second World War, particularly in relation to unions – an attack that had started before their time in office.

However, in relation to this point Reich seems to be suffering from a temporary memory lapse. The attack on the consensus in America started in earnest under the presidency of Jimmy Carter (1977 to 1981). And it was under Carter’s presidency that Reich himself was a political appointee at the Federal Trade Commission. Reich does not deny his position, but is shy of drawing any conclusions about the role of the Democrats in breaking the consensus. In Britain, the Labour government of 1974 to 1979 played a similar role in launching an assault on unions and destroying postwar political institutions.

More broadly the way to understand this shift is as a response to the end of the postwar boom. After the Second World War, the world economy, particularly in the developed countries, grew at record rates. But by the early 1970s, signs of economic crisis were clear. This led governments on both sides of the Atlantic to launch an assault on the unions and give much freer rein to business.

This trend in turn meant that ordinary people had less of a stake in political debate. Politics was no longer about competing camps or differing visions of how to organise society. Instead the era of ‘Tina’ – as Thatcher put it ‘There Is No Alternative’ – came to the fore. The focus of what passed for politics switched to regulating individual behaviour – including such areas as drinking, smoking and even eating – rather than battling over how to organise society.

This is a much more convincing explanation for the shifts that Reich identifies than his focus on technology. Although Reich denies being a technological determinist, his explanation exaggerates the role of technology and understates the role of political defeat in creating the current climate.

His outlook also leads to some deeply conservative conclusions despite his reluctance to spell them out in detail. He is in favour of ‘new rules of the game’ – read: regulation – particularly in relation to corporate lobbying. Reich seems to lack confidence in the capacity of others to counter the arguments of corporations.

More worryingly, he advocates ‘sacrifice’ by ordinary people, by which he seems to mean an acceptance of lower living standards. He appears to take the peculiar view that reducing living standards will somehow bolster democracy.

Reich argues that sacrifices would be justified in return for such measures as making it easier for employees to join unions, requiring companies to provide health insurance and pensions, and raising the minimum wage: ‘Personally, I’d be willing to sacrifice some of the benefits I get as a consumer and investor in order to achieve these social goals – as long as I knew everyone else was too.’ (p13)

He makes a similar point in relation to his support for stricter environmental laws. ‘The material wellbeing of consumers or investors should not be the sole criterion. A dramatic cut in greenhouse gases seems worth the economic sacrifice if it’s necessary to save the planet.’ (p128)

If it really were a choice between cuts in living standards and annihilation of the world, no doubt virtually everyone would prefer the former. But at no point does Reich justify such a sweeping assertion. If he really thought it was true that the planet needed to be ‘saved’, then it would make sense to have it as a central point in his argument.

Instead, Reich seems a past master at doing what most politicians do nowadays: talking down expectations about economic growth without attacking it directly. He knows that most people are, for completely rational reasons, unlikely to welcome cuts in their living standards. So instead he resorts to attacking popular prosperity indirectly and through innuendo.

Not only are such reductions in living standards undesirable in themselves; they are also unlikely to be achieved by democratic means. If people are given a choice they are likely to resist the chance to make themselves poorer. That is why politicians and pundits constantly snipe at the benefits of mass affluence in the hope of sapping its support. But ultimately, any reductions in living standards are always likely to involve a degree of coercion. It is no coincidence that the mobilisation of societies for wars, most notably the Second World War, tends to involve the imposition of austerity at home.

In this sense, Reich supports a highly limited form of democracy. He is not in favour of government by the people in the true sense of the term. He simply supports procedural democracy – the empty shell of formally democratic institutions – with the ‘rules of the game’ not tilted too far in favour of business. His case is for new forms of regulation, including curbs on corporate lobbying, rather than for democracy in its truest sense.

In reality, democracy can only be achieved by a revival of politics in the proper sense of the term. This means relaunching a battle of ideas over competing visions of how to organise society. It involves a struggle that is entirely consistent with raising rather than lowering the living standards of the bulk of the population. It is Reich’s demand for sacrifice that is the antithesis of democracy.

Daniel Ben-Ami is a journalist and author based in London. Visit his website here. An earlier version of this review appeared in Fund Strategy magazine.

Supercapitalism: The Battle for Democracy in an Age of Big Business, by Robert B. Reich, is published by Icon Books Ltd. (Buy this book from Amazon(UK).)