Saving capitalism or getting rid of it?

April 7, 2016

What kind of change socialists should be fighting for? Danny Katch, author of Socialism... Seriously: A Brief Guide to Human Liberation, makes some proposals in his review of a book from a different part of the left: Saving Capitalism: For the Many, Not the Few, by former Labor Secretary and Bernie Sanders supporter Robert Reich.

LIKE MOST candidates, Bernie Sanders wrote an autobiography in time for his presidential campaign. But the book that might best serve as a manifesto for the Sanders phenomenon is Saving Capitalism by Robert Reich, an economics professor, former labor secretary under Bill Clinton--and one of the few prominent figures from the liberal wing of the Democratic Party to endorse Sanders.

It might seem odd that someone who wants to save capitalism would support a candidate who famously calls himself as a socialist. But the capitalism that Reich wants to rescue isn't our present system of spiraling inequality. He wants a more just and democratic version of it, summarized in the subtitle of Saving Capitalism: "For the Many, Not the Few."

Reich's vision of a "saved" capitalism is similar to Sanders' version of "democratic socialism," which he defined during his campaign as a program of reforms along the lines of Social Security, Medicare and the other great social welfare programs of the 20th century.

Sending a message against austerity in Athens

Sanders' proposals to fund paid family leave and free college education by taxing the rich have raised the political confidence and expectations of many working-class people--and pried open the locked gate of what's usually discussible in political campaigns under the two-party oligarchy.

Just as importantly, Sanders' campaign has added to the revival of interest in socialism that began with the financial crisis of 2008--and that isn't going to end when this election season is over.

For that reason, it's important to not just be happy that a major candidate is using the "s" word, but to also ask how we want socialism defined for a new generation. Is socialism simply a more humane version of capitalism? Or is it a fundamentally different kind of society, built on a foundation of democratic control and working people's power at the grassroots?


THERE ARE many valuable observations that make Saving Capitalism worth reading. In a passage arguing that low wages are bad for the economy overall, Reich summarizes the massive changes in American life over two generations in one impressive sentence:


Once the middle class exhausted all its methods for maintaining spending in the face of flat or declining wages--with wives and mothers surging into paid work in the 1970s and 1980s, everyone putting in longer hours in the 1990s, and households falling ever deeper into debt before 2008--the middle class as a whole was unable to spend more.

Reich's analysis of U.S. politics, probably written before Donald Trump even launched his campaign, is almost prophetic:

It is likely that in coming years, the major fault line in American politics will shift from Democrat versus Republican to anti-establishment versus establishment...By late 2014, big business and Wall Street Republicans were already signaling their preference for a Democratic establishment candidate over a Republican anti-establishment one.

But the most important insight, repeated throughout Saving Capitalism, is that the "free market" is not a god impartially ruling over humanity, but a creation of human society and something that should be altered as we see fit. Reich writes:

The "free market" does not exist in the wilds beyond the reach of civilization. Competition in the wild is a contest for survival in which the largest and strongest typically win. Civilization, by contrast, is defined by rules; rules create markets, and governments generate the rules...Government doesn't "intrude" on the "free market." It creates the market.

It is people, not the "free market," who have decided that corporations can use bankruptcy law as a means to cut workers' pensions, while homeowners can't use it to reduce their mortgage payments. But not all people--only a select few have a real say over those kind of questions.


ANYONE FOLLOWING the negotiations over the Trans-Pacific Partnership economic treaty can witness in real time the process of a new "free market" being created--on terms that are maximally favorable to business--U.S. business in particular. Reich shows that the same is true about capitalism as a whole.

Even a concept as seemingly self-explanatory as private property is actually the result of a series of laws and rules. Ownership, Reich explains, might seem as obvious as "I bought this" or "I created that," but most societies have decided that you can't own a nuclear bomb, a human being or a cooking recipe.

We could make a similar decision about life-saving drugs. But instead, the U.S. gives pharmaceutical companies longer patents than any other country, and our "free market" doesn't allow us to buy cheaper drugs abroad.

Just as Bernie Sanders has inspired millions by railing against inequality and putting forward substantial policy proposals to reduce it, Reich is animated by the optimism that "we need not be victims of impersonal 'market forces' over which we have no control."

The last section of Saving Capitalism is filled with proposals to make capitalism more equal, from raising the minimum wage and making it easier for workers to form unions, to forcing corporations to pay higher taxes if their ratio of CEO-to-worker pay is higher than others.

Reich's final proposal is something that many people would call socialist: a guaranteed income for all adults. Reich takes on the standard right-wing objection that this would lead to widespread laziness, insisting instead that it would enable people to pursue socially valuable work, and much more besides.

It's great to see a prominent economist putting forward hopeful and radical ideas. But there's a problem in Reich's guaranteed income plan: If all of us started out with enough money to meet our basic necessities, why would any of us subject ourselves to going to work for a boss?

This may seem at first like a quibble with Reich's final utopian vision and one that shouldn't affect the arguments in the rest of the book, but it's actually a loose thread that unravels much of Saving Capitalism once you pull on it.


CAPITALISM IS driven by the quest for profits--the extra money left over after a company has paid its employees and various other expenses. Profit is the result of exploitation--of workers overall producing more wealth than they are paid overall. Workers only enter this arrangement because they have to. They don't have the resources to control the product of their own labor and sell it to obtain other necessities.

Thus, economic systems have two spheres: production and distribution. Reich offers many insights into how capitalism distributes wealth under the rules of the "free market." But Saving Capitalism doesn't look at how wealth is produced in the first place.

In a chapter about contracts, for example, Reich explains the bogus "consent" given by Apple users when they click "I Accept" and sign away privacy rights in order to use the iCloud. "As a practical matter," Reich writes, "you didn't have a choice because every other service has the same terms."

But there is no similar chapter in Saving Capitalism about how the workers who make Apple products--like blue- and white-collar workers for other companies the world over--have little choice about accepting unfair pay and working conditions, and none at all about what is done with the product of their work. The "free market" has determined that they'll find the basically same raw deal everywhere else--and a worse one if they're unemployed.

This lack of choice for the working majority is necessary for the functioning of capitalism--which is why it can never be reformed into a system that works "for the many."

Just as human societies have decided the terms of private property regarding cooking recipes and 20-year drug patents, it's also possible for society to decide that the companies that produce and distribute wealth shouldn't be privately owned at all, but should instead be collectively run by their workers.

This is the heart of socialism: Not just that wealth should be fairly distributed, but also that those who create it should have democratic control--to start with, over what they do and how they do it.

Workers' control is vital to socialism not just because it's a nice idea, but because workers are the only force with the potential power to bring about socialism. But the question, of course, is how human beings can go about deciding on workers' control versus capitalist control.


SAVING CAPITALISM puts forward a vision of American history in which equality and justice have been advanced by progressive presidents like Franklin Roosevelt and Lyndon Johnson.

But in fact, it was the power of unions and strikes and civil rights organizations and mass protest that pressured those leaders into the creating programs like Social Security, Medicare and the other major reforms of the 20th century that they are now credited with establishing.

Reich supports unions and grassroots organizations not as potentially revolutionary forces, but instead as what he calls a "counterveiling power"--to balance out the self-serving interests of corporations and the 1 Percent.

But the people who bravely organized the strikes and sit-ins didn't risk everything and sacrifice so much because they wanted their children to have to fight the same battles as an eternal counterweight to the greed and ambition of an undeserving ruling class. Ultimately, they wanted to win a more just society for good--and many explicitly viewed that society as socialism.

At different points in the last 100 years, their efforts exploded into strikes and protests involving tens of millions, creating genuinely revolutionary moments when workers' control of production and democratic control over the distribution of wealth became real possibilities.

Because this type of socialism is fundamentally at odds with capitalism, these revolutions had to spread--or be defeated. Most were rolled back quickly. The most famous revolution of all, in Russia in 1917, saw millions of workers take power and create a new form of government, based on workers' councils, for a few years. But that revolution, too, was overturned, isolated by foreign invasion and destroyed by a new hierarchy led by Joseph Stalin.

There have been no workers' revolutions in recent decades, and even many of the reforms won in the past have been reversed as the 1 Percent has grown even more powerful and working-class organization weaker. In this setting, it's easy to conclude that socialism based on workers' control is unrealistic--and that it's better to focus on the reforms to make capitalism for livable for the many.

But we should recognize that in many ways, it's Reich and Sanders who have an unrealistic vision of bringing back the past.

Their vision of reforming capitalism is based on the model of the U.S. and Western Europe in the decades after the Second World War, a unique historical moment in which a few countries accounted for almost the entire production and wealth of the world, and the fear of communism pushed elites into sharing some of that wealth with their working classes.

Those few decades that are the model for Saving Capitalism are a stark exception to the overall tendency of capitalism--which, as Thomas Piketty showed in his bestselling book Capital in the 21st Century, has in all other times led to wealth becoming more concentrated in fewer hands.

Looking back to a period when the U.S. accounted for an unbelievable 50 percent of world economic output makes no sense in a world where capitalism only continues to be more evenly spread out, with China, Brazil, Turkey and dozens of other countries advancing. That, in turn, is leading to more and more ruthless international competition and global migration of workers.

Socialists don't draw a line between reform and revolution and stand only on one side of that line. We can embrace social reforms and are part of struggles to achieve them. We can make use of the ideas and analysis put forward by people like Sanders and Reich.

But at the same time, we aim to build a large socialist movement that understands that whatever reforms we win in the here and now, we will have to fight like hell to keep them from being rolled back in the future--and that the best way to make permanent change is not to save capitalism, but to get rid of it once and for all, and establish socialism.

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