The Wrecking Ball of Innovation

Tony Judt – The New York Review of Books

Copyright The New York Review of Books
Supercapitalism is Robert Reich’s account of the way we live now. Its story is familiar, its diagnosis superficial. But there are two reasons for paying attention to it. The author was President Clinton’s first secretary of labor. Reich emphasizes this connection, adding that “the Clinton administration—of which I am proud to have been a part —was one of the most pro-business administrations in American history.” Indeed, this is a decidedly “Clintonesque” book, its shortcomings perhaps a foretaste of what to expect (and not expect) from another Clinton presidency. And Reich’s subject—economic life in today’s advanced capitalist economy and the price we are paying for it in the political and civic health of democracies—is important and even urgent, though the “fixes” that he proposes are unconvincing.
Reich’s theme goes as follows. During what he calls the “Not Quite Golden Age” of American capitalism, from the end of World War II through the 1970s, American economic life was stable and in comfortable equilibrium. A limited number of giant firms—like General Motors—dominated their predictable and secure markets; skilled workers had steady and (relatively) safe jobs. For all the lip service paid to competition and free markets, the American economy (in this respect comparable to the economies of Western Europe) depended heavily upon protection from foreign competition, as well as standardization, regulation, subsidies, price supports, and government guarantees. The natural inequities of capitalism were softened by the assurance of present well-being and future prosperity and a widespread sentiment, however illusory, of common interest. “While Europeans set up cartels and fussed with democratic socialism, America went right to the heart of the matter—creating democratic capitalism as a planned economy, run by business.”[1]
But since the mid-Seventies, and with increasing ferocity in recent years, the winds of change—”supercapitalism”— have blown all that away. Thanks to technologies initially supported by or spun off from cold-war research proj-ects—such as computers, fiber optics, satellites, and the Internet—commodities, communications, and information now travel at a vastly accelerated pace. Regulatory structures set in place over the course of a century or more were superseded or dismantled within a few years. In their place came increased competition both for global markets and for the cataract of international funds chasing lucrative investments. Wages and prices were driven down, profits up. Competition and innovation generated new opportunities for some and vast pools of wealth for a few; meanwhile they destroyed jobs, bankrupted firms, and impoverished communities.
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