A Response to Robert Reich

by Zoltanous

Introduction

Robert Reich, an acclaimed American economist, professor, author, and political commentator, was born on June 24, 1946. His service as the 22nd Secretary of Labor under President Bill Clinton, from 1993 to 1997, is a significant highlight of his career. As a labor secretary and a staunch member of the Democratic party, Reich has been at the forefront of advocating for fair labor practices, championing the cause for a higher minimum wage, and vocally opposing economic inequality. His prolific authorship in politics and economics complements his academic role at the University of California, Berkeley, where he dedicates himself to educating the next generation on public policy.

I am engaging with Reich's work from a critical standpoint, prompted particularly by a liberal progressive journalist's endorsement of Reich's solutions to America's economic issues as being more practical than my own views. After a thorough evaluation of his ideas, I have found them to be unexpectedly uninspiring. In the analysis that follows, I will outline his suggestions and provide a detailed account of why I perceive them as either flawed or lacking in the necessary radical change. Furthermore, his preoccupation with Donald Trump and the rhetoric of “Maga Fascism” strikes me as somewhat simplistic and uneducated.

Saving Capitalism Is a Scam

In his book Saving Capitalism, Robert Reich draws a comparison between the current state of economic disparity and a rebirth of the "Gilded Age," pointing out the severe inequalities and the misleading belief in constant economic growth. He calls on the technology sector, which is often confident in the ability of technology to solve societal issues, to understand the need for substantial policy shifts and a reevaluation of fundamental economic principles. Reich sees the tech industry as part of an ensemble of influential economic sectors — alongside finance, pharmaceuticals, and agriculture — that he considers the modern equivalents of monopolistic powers. He argues that a meaningful overhaul of our economic practices and the philosophy behind corporate behavior is crucial for capitalism to truly serve the common good.

Reich disputes the simplistic dichotomy between laissez-faire markets and heavy-handed government intervention. He promotes the idea of choosing a market intended for widespread wealth distribution as opposed to one that concentrates riches among a few. He details how the present rules of capitalism are designed to siphon wealth upwards through complex schemes employed by different sectors. The government's role, Reich insists, is not peripheral but integral to the markets, as it defines and upholds the rules that shape property rights, monopolies, contracts, and bankruptcy legislation. The government, according to Reich, should be the creator and caretaker of a fair market system, a role he sees as neglected in the current form of capitalism. He touches on how political financing, weakened corporate oversight, and persistent tax loopholes are skewed to benefit the affluent. Reich advocates for increased marginal tax rates for the wealthy, additional tax brackets, and a capital gains tax rate that matches the income tax rate. He proposes expanding the Earned Income Tax Credit to support the middle class more broadly and suggests a reduction in the workweek to 35 hours to allow for job creation without income loss. He also calls for limiting executive salaries and enhancing workers' shares in corporate profits, particularly through the Employee Free Choice Act.

He challenges the dominant belief that corporations should prioritize shareholder returns above all else, advocating for a business model that also embraces the interests of workers, consumers, and communities. Reich debunks the meritocracy myth, arguing that income is not a true measure of personal value or moral standing, and that low wages often reflect systemic issues rather than individual failings. Utilizing data, Reich illustrates how economic inequality is exacerbated by certain corporate behaviors. He points out, for instance, that the bonus pool for Wall Street executives in a single year could have substantially raised the earnings of all full-time minimum wage workers in the country. He remarks on the growing dominance of a few top websites in internet traffic and criticizes tech behemoths like Google and Apple for spending more on patent litigation than on research and development.

Reich highlights the extreme wealth gap where a tiny fraction of the population holds more resources than the lower half. He notes that public assistance is effectively subsidizing labor costs for certain industries, such as fast food, inflating the profits of large corporations. He insists on the need for universal healthcare through a system like Medicare for all, which would replace the current, inefficient system dominated by private insurance companies. Reich proposes measures like overturning the Citizens United decision, exploring a universal basic income, and revising intellectual property and patent laws to ensure that the proceeds from innovation serve the public good. He calls for a reimagining of the corporate structure to balance profit with broader social and economic well-being. Reich warns against the continuation of a system where the masses struggle while a select few reap disproportionate benefits, a path that threatens the economic and democratic foundations of the United States. He calls for strict regulation of Wall Street, including reinstating the Glass-Steagall Act and breaking up large banks to avoid reckless financial practices.

Reich fails to address modern capitalism, driven by neo-liberalism, it has evolved into an extreme form of crony capitalism. Reich's recommendations do not address the fundamental class disparities inherent in capitalism, nor do they tackle the principal injustices of such divisions. While Reich is concerned about growing income inequality and the decline of workers' rights, his reforms do not ensure these issues will be resolved. Reich's stance echoes the ideas of New Deal Social-Corporatism (Nordic Model/Social Democracy), which, in today's political climate, are erroneously viewed as extreme. Reich aims to soften capitalism's more severe impacts for those less fortunate, in pursuit of a fairer society. His analysis implies that meaningful economic mobility remains elusive for many. Today's progressives have much in common with early 20th-century reformers who sought to minimize class strife without drastically altering capitalism. These attempts are essentially reactionary, mitigating the harshness of capitalism while maintaining its foundational structure and attempting to preserve democracy by reducing class tensions without abolishing the systems that causes them.

The book, while commenting on wealth distribution, misses a deeper exploration into how wealth is fundamentally generated within capitalism, which relies on the exploitation of labor. Workers often produce more value than they receive in compensation, and without the means to own and sell their labor's product, they remain tied to this system. Reich does not examine the constraints faced by factory workers in terms of pay and working conditions, nor their lack of control over their work environment. The "free market" often presents them with poor choices, compounded by the threat of joblessness. The inherent lack of choice for most workers is a fundamental aspect of capitalism that prevents it from evolving into a system that truly benefits all, no matter the reforms.

While acknowledging the historical achievements attributable to presidents like Franklin D. Roosevelt and Lyndon B. Johnson, the book overlooks the pivotal role that unions and collective activism played in pushing for significant reforms such as Social Security and Medicare. Reich values the role of unions and grassroots activism as counterweights to the dominance of corporations and the elite, but he does not view them as catalysts for radical change. Historical labor movements aimed for lasting and fair societal structures, beyond merely balancing power. History shows that when these movements peaked, they hinted at the possibility of social control over production and wealth distribution. Nonetheless, the inherent conflict between socialism and capitalism often led to the suppression or dismantling of such movements, highlighting the perpetual struggle between capitalist frameworks and the socialist objectives many desire for a just society. When labor movements made significant gains, they sometimes led to substantial shifts, resulting in governments with socialist — leaning policies.

Reich has emphasized that to navigate the disarray of the marketplace, an interventionist industrial policy should aim to consolidate various government initiatives — including procurement, research and development, trade, antitrust measures, tax credits, and subsidies — into a cohesive and strategic framework. Italian corporatism during Mussolini's regime was based on the idea that government intervention in the economy should be deliberate and structured, orchestrated by a central authority rather than being random and piecemeal. Mussolini was critical of what he saw as the disorganized approach of government involvement in the economy and proposed fascism as a system to achieve clearly defined economic objectives through methodical organization. His advisor, Fausto Pitigliani, suggested that corporatist organization would bring a unified direction to the state's economic actions as determined by government planners, suggesting a shift away from a capitalist framework towards a more state-directed, socialist-oriented economy. Reich's tepid plea for a unified industrial strategy reflects an idea originally proposed by Pitigliani — a concept that has consistently been a central tenet among those advocating for a forward-thinking industrial policy.

Reich supports forming tripartite public-private partnerships that encompass government, business, and academia, aimed at establishing national objectives and allowing only those investments deemed "productive" by government to proceed. This idea of planning echoes the economic control seen in Mussolini's Italy, where businesses were corralled into government — mandated syndicates (guilds/unions/corporations), all under the strict regulation of a network of state planning agencies. The specific problem is that under Reich's model, the state and syndicates reach compromises with capitalists, thereby perpetuating bourgeois relationships and subjugating labor to capital.

Reich advocates for a synergy between public and private sectors to steer economic success through strategic collaboration. However, his approach is fundamentally different from Mussolini's corporatism; it seeks a tempered balance, engaging in dialogue and negotiation with capitalist entities. It is my assessment that Reich's tendency to label Republicans as fascists stems from a commitment to preserving neoliberal governance rather than advocating for laissez-faire reforms like his Republican counterparts. I believe he grasps the true nature of fascism, but he's more focused on targeting his political adversaries for the upcoming election due to his partisan stance. I would also contend that both parties essentially represent the same global financial capitalist dynamics. From my perspective of fascist socialism, Reich's policies should be seen as reinforcing capitalist oligarchy, rather than confronting it.

Reich, an adherent of Keynesian economics, should be aware that Keynes personally regarded the Nazi economic programs positively. In the preface to the German version of The General Theory, written on September 7, 1936, Keynes suggested that the implementation of his book's concepts might be more effectively achieved under an authoritarian government. Donald Moggridge has also noted that Keynes considered his theories suitable for authoritarian regimes, as mentioned in his German book preface. Compulsory cartels enforced business compliance, while the 1936 Four Year Plan under Hermann Goering further centralized economic control. The need for international trade, in the face of external protectionist measures, necessitated greater state management of trade, leading to a cycle of intervention described by Adam Tooze. Mussolini lauded Keynes's economic ideas, finding them aligned with Fascist economic principles despite. He even suggested that Keynes's work The End of Laissez-Faire could serve as an introduction to Fascist economics, with little to criticize and much to appreciate. Like Mussolini's view of Keynes, I too consider his and Reich’s economic concepts to be highly credible, although I believe they could be more radical.

The form of socialism seen in Nazi Germany, had business leaders acting as agents carrying out state mandates. The government controlled production specifics, pricing, buying, selling, job assignments, and salaries, thus undermining genuine market dynamics. Echoing this perspective, Reich has posited that substantial governmental intervention, potentially resembling short-term nationalization, could be required to manage economic downturns similar to the recession of 2008. In essence, if Reich truly understood the implications, he should advocate for a more State-centric approach akin to Mussolini or Hitler, but his affiliations with Nordic Model liberalism is preventing this.

Reich's viewpoint that widespread disapproval of capitalism is being ignored is just false. The dissatisfaction is indeed acknowledged, but it leads to different interpretations. Donald Trump's rise exemplifies a tactic that offers token acknowledgment to this discontent while actually reinforcing the established neo-liberal order. On the other hand, proposals such as Biden's infrastructure initiatives aim to tweak capitalism by responding to popular complaints, yet they leave the foundational errors intact. The discourse in the United States has now shifted beyond the salvageability of capitalism and the methods to preserve it. The critical issue has become questioning the justification for upholding a system that is inherently averse to fundamental changes, especially in the light of modern political demands.

Reich's concept of refining capitalism takes its cue from the days of President Roosevelt and the post-World War II era in the U.S. At that time, a few dominant nations controlled most of the world's wealth and production. The concurrent threats of fascism and communism motivated those in power to grant a larger portion of wealth to the working masses, which informs the current mindset advocating for reforms. Advocates for these incremental changes might inadvertently find themselves in agreement with the objectives of the elite, striving to maintain the status quo and prevent profound change. This approach, which favors stability and incrementalism over substantial overhaul, should be perceived as safeguarding the privileged from any significant upheaval. I would argue that this reactionary strategy for reform, one that Reich and others propose, acts more as a barrier to progressive aims, preserving existing structures instead of instigating radical proletarian transformation. Such a method of economic fine-tuning by Reich, must be compared to historical efforts to curb the natural progression of socialism: fascism and communism.