I picked up this book because I wanted to see what a very intelligent person, Robert B. Reich (former Secretary of Labor to Bill Clinton), had to say about saving a system I feel very deeply is too intrinsically flawed to be savable. Reich is a big supporter of Bernie Sanders so I thought he would have some valid ideas about how to “fix” capitalism, to the extent it can be.
Reich’s first fix is a more linguistically accurate—or, honest—debate on the issue of “more” or “less” government. I’m not convinced. Reich accurately classifies the interminable debate between “free market” (less government) and “regulation” (more government) as nothing but a cheap trick of language. The “free market” folks aren’t arguing for a return to the Hobbesian state of nature. They are arguing for different government that regulates certain aspects of life (contracts, patents, monopolies, the enforcement of all these things) differently than a government of “high regulation.” The Milton Friedman types don’t want no government, they want a government that protects their interests over the interests of the common person. The only people actually arguing for less government in that sense are some of the more-deranged libertarian types. Reich doesn’t really prove his point, however. He doesn’t point to any evidence that the average person would support “more” government if they knew what “less” government really was. I suspect Reich mostly just wants Republicans to stop abusing the English language. Buddy, you and me both.
Reich then goes on to intelligently and clearly describe the systematic problems of capitalism and capitalism in America. He paints a dire picture that shows a deeply flawed governmental and economic system at work in this country. He makes no bones about the fact that these problems are fairly well ingrained in the capitalist model—at least the capitalist model that America has adopted.
He lists as problems, among others, that the current system of school funding is wired the reverse that it should be (more money to better students); that the myth of an American meritocracy is a true and utter fiction; and most importantly, that the people rigging the game in their favor—the 1%—have done nothing other than behave in their own rational self interest.
Let me elaborate greater on that last point because it is the key point in why I disagree with Reich that capitalism can be saved. Reich notes that he
[does] not mean to suggest that those at the top who are shaping the rules are intentionally malevolent. They are acting out of the same self-interest that has been thought to guide the theoretical “free market” toward efficient, and therefore publicly beneficial, outcomes.
Here Reich strikes on an important point: the people who make the rules that have destroyed the American middle class—and more—were only doing exactly as they should have to preserve their own interests within the existing system, namely, capitalism.
Reich is clearly familiar with Marx, using Marxist phrases, and he’d have to be a lousy economist to at least not be familiar with Marx’s thought. But somehow he fails to equate “acting in one’s own self interest” with a core tenet of Marxism: that these people—the 1% rigging it for themselves—have to do this. They have no choice. The pressures of competition mean that if they don’t, someone else will. And when someone else does, those who didn’t will go out of business. Profit or die is the core principle of capitalism. Capital is the coyote. Profit is the roadrunner.
And herein lies the problem with Reich’s solution, extensive and wide reaching reforms.
As an aside, let me be perfectly clear. The long list of reforms that Reich proposes are excellent steps in the right direction. They would vastly improve the life of 90-99% of the American public and I think that, in the short term, they should be pursued.
Reich argues for reforms of the finance system to penalize high frequency traders via a transaction fee; he argues for a school funding system more akin to European systems, wherein lower-performing schools get more than higher performing schools and where the federal government funds about 40% of the school; he argues for a higher estate tax with a lower threshold for taxation; higher tax rates on the rich; more effective limits on CEO pay through the use of taxation incentives. All of his reforms are, basically, what New Deal/Bernie Sanders Democrats have been arguing for and will continue to argue for going forward.
The problem with reform, however, is that these clawbacks are detrimental to capital. They cut into the bottom-line profits of capital. Yet, it is capital that must seek profit and without profit is destined to be crushed by the competition. In a world irreversibly globalized, pressure from foreign corporations means that American capital has to argue against reforms that cut into its profits but that would help the average American.
In essence, American capital is forced to operate the way it does, at the expense of the 99%, and reforms would only lead inevitably to its destruction. Once again, capital has proved to be its own gravedigger.
Among Reich’s long list of reforms is his conclusion with a call for a Universal Basic Income. A UBI would be a truly wonderful reform! I wholeheartedly support a UBI. If we must exist within the capitalist system there is perhaps no better reform than the Universal Basic Income. It is perhaps the only place where I agree with Richard Nixon. There exists one problem with the UBI. And Reich has already shown the problem.
Reich talks at length about the power that capital has over the political sphere. He describes it as a vicious cycle: capital leads to political power, which leads to changing the rules to create more capital for the already-wealthy and politcally powerful, which leads again to more political power yet, and so on ad infinitum.
The Universal Basic Income would not change this dynamic. Reich posits the UBI as a solution for when “the robots [full automation] take over” and the world is separated into two categories: those who own the robots which do everything for us and everyone else. But what, exactly, is to stop the owners of these all-doing robots from changing the system? They will undoubtedly view the UBI as a drain on their “rightly earned” (a point Reich debates briefly but clearly doesn’t want to spend too much time on) income by people who do nothing and add nothing to the economy. Think, if you will, of the average Republican or centrist Democrat response to the idea of welfare. To think that the response to a UBI will be any different is absurd. And therein lies the problem: the owners of the means of production will yet again want to wrest these reforms away from the underclass. And because they are the controllers of political power, via their control of capital, they will win.
I’m somewhat surprised Reich doesn’t find anything terribly cruel about his world where the owners of the robot production facilities basically subsidize everyone else, and I don’t mean cruel towards the future robo-bourgeoisie.
The world, in that scenario (Reich’s future world of a UBI in a world of full automation), would be separated into two classes. Wealthy bourgeois owners of the means of production in the form of the “robots” (an extremely small group) and literally everyone else. The robo-bourgeoisie would be fabulously wealthy and everyone else would do fine enough (assuming the robo-bourgeoisie didn’t try and hack away at the universal basic income). There would, presumably, still be service people (doctors, lawyers, law enforcement, firefighters, teachers, etc.) unless the do-everything robot replaces them too.
But on what basis would the robo-bourgeoisie be wealthy? At some point the original inventors of these do-everything robots would die and it would be the heirs of the inventors who couldn’t even stake a claim to having put any work in towards the betterment of society. And yet they would still remain fabulously wealthy by dint of having been born into the right family. Further, as Reich himself notes, to what degree do the rich really deserve their wealth? To what degree have they literally manufactured this wealth for themselves and to what degree have others helped?
Of course there would at some point be literally no hope of entrance into the robo-bourgeoisie. Eventually when the last robot is invented—the one that can do everything—nothing is left to invent. The result then is a static class of the fabulously wealthy and, then, the rest of us to just go on existing while we watch the upper class from afar enjoy the spoils of their ancestors’ labor. The aforementioned UBI makes that a more tolerable society than what we have now, but how just is it? Not at all. It is its own reductio ad absurdum.
This whole scenario is a very strange work-around of the labor theory of value. As Ernest Mandel points out in An Introduction to Marxist Economic Theory, normally, when labor time equals zero, that is, in a world of full automation, commerce as we know it should halt. No one should have an income in a world where labor time is zero in the capitalist system where the proletariat are forced to sell their labor. Further, under the labor theory of value, commodities produced with a labor time of zero should, theoretically, be valueless. What, exactly, would determine the value of the commodities? The robot that produces everything could produce more robots that produce everything so you can’t even have amortization of the equipment as a cost! It would only be through a perverse gaming of the system (a UBI in world of full automation) that value would continue to exist at all, and accordingly commerce along with it.
The world would be completely turned upside down by the do-everything robot. The purpose of capitalism, to enrich some at the expense of others, would be moot. Eventually there would be rich people and everyone else and it would stay that way. But Reich still remains committed to capitalism in this world! To paraphrase Robespierre, Reich is proposing socialism without socialism and it is a truly strange world. How Reich can argue this world is somehow more fanciful than actual socialism is beyond me.
The short-term solution to the problems with American capitalism are indeed Reich’s reforms. When I say short-term I don’t mean a week or a month or even a year. Enacting these reforms might well create a period of prosperity equal to post-WW2 America for an equal period of time. And perhaps that prosperity would even be shared more equally to include ethnic minorities. But a time would come when some new-age Milton Friedman would get up and proclaim to the world that the economy is not working efficiently because of all the restrictions on business and capital and that we need “less government.” And a political party, with dollar signs in their eyes, would take up his call and lead the country back again through the slog of free market economics and yet again into a place where the average American loses at the expense of the incomprehensibly wealthy.
The solution—the long-term solution—is not the reforms Reich proposes. The long-term solution is working class control of the means of production and state control of the economy. The long-term solution is governance by workers’ councils. The long-term solution is socialism.