Monday, June 09, 2008

Supercapitalism: the Transformation of Business, Democracy, and Everyday Life

In his excellent book, Robert Reich traces the evolution of the American economy from "democratic capitalism" of the post WWII era to the "supercapitalism" of today. The following appear among his concluding thoughts (p. 213-215).

"...beware of any politician or advocate who blames corporations and corporate executives for the negative consequences of supercapitalism, whether it be low or declining wages and benefits, job losses, widening inequality, loss of community, global warming, indecent products, or any other of the community voiced complaints. Corporate executives are responsible for obeying the laws, and should be held accountable for any illegality. But they cannot and should not be expected to do anything more. Their job is to satisfy their customers and thereby make money for their investors. If they fail to do this as well if not better than their rivals they will be penalized by consumers and investors who take their money elsewhere.

"Corporate executives are not engaged in a diabolical plot. The negative social consequences are the logical consequence of intensifying competition to give consumers and investors better and better deals. Those deals may require moving jobs abroad where they can be done at lower wages, substituting computers and software for people, or resisting unions. Or the deals may come at the expense of small retailers on Main Street who can't sell items at prices nearly as low, or at the expense of entire communities that lose a major employer who has to outsource abroad to remain competitive. The deals may may require the talents of celebrity CEOs who are paid like baseball stars. Or they may be at the expense of the earth's atmosphere. Good deals may depend on filling the air with gunk, filling the airwaves with sex and violence, or filling our stomachs with junk food. The deals may involve trampling human rights abroad or putting young children to work in Southeast Asia. As long as the deals are legal, and as long as they satisfy consumers and investors, corporations and their executives will pursue them.

"This doesn't make it right, but the only way to make it wrong - the only way to stop companies from giving consumers and investors good deals that depend on such moves - is to make them illegal. It is illogical to criticize companies for playing by the current rules of the game; if we want them to play differently, we have to change the rules.

"Companies are not interested in the public good. It is not their responsibility to be good. They may do good things to improve their brand image, so as to increase sales and profits. They will do profitable things that may happen to have socially beneficial side effects. But they will not do good things because they are considered to be good.

"Likewise, when corporate executives or their lobbyists and lawyers fight for certain political or judicial outcomes, do not believe a word they, their spokesmen, or their "experts" say about why the outcome they seek is in the public interest. Their only legitimate motive, again, is to satisfy consumers in order to make profits that will satisfy investors. The only reason they have for advocating a particular political or judicial outcome is to advance or protect their competitive position. The sole reason they have for claiming an outcome is in the public's interest is to gain public support for it as a means of increasing their political leverage to achieve it.

"I hope I've made it clear that you should also be skeptical of any politician who claims the public can rely on "voluntary" cooperation of the private sector to achieve some public purpose or goal. Corporations and their executives have no license to use shareholder money to accomplish public purposes. (Emphasis added.) They may "voluntarily" agree to donate money to a worthy cause, or to forbear from polluting the atmosphere, or to bring more jobs to a particular area - but only if the action is profitable, or if in so doing they burnish their public image and thus improve their bottom lines, or to forestall some new law or regulation that might impose a greater burden. But in the latter instances, such "voluntary" good deeds are likely to be limited and temporary, extending only insofar as the conditions that made such "voluntary" action pay off continue. In all such circumstances, you should ask why, if the public goal is so worthy, the politician is not seeking a law requiring the private sector to achieve it.

"In general, corporate responsibilities to the public are better addressed in the democratic process than inside corporate boardrooms. Reformers should focus on laws or regulations they seek to change, and mobilize the public around changing them."

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