Saving Capitalism: For the Many, Not the Few

by Robert B. Reich

From the author of Aftershock and The Work of Nations, his most important book to date--a passionate yet practical, sweeping yet minutely argued, myth-shattering breakdown of what's wrong with our political-economic system, and what it will take to fix it.

Perhaps no one is better acquainted with the intersection of finance and politics than Robert B. Reich, and now he reveals the cycles of power and influence that have perpetuated a new American oligarchy, a shrinking middle class, and the greatest income inequality and wealth disparity in eighty years. He makes clear how centrally problematic our veneration of the "free market" is, and how it has masked the power of the moneyed interests to tilt the market to their benefit. He exposes the falsehoods that have been bolstered by the corruption of our democracy by big corporations and the revolving door between Washington and Wall Street-- that all workers are paid what they're "worth," a higher minimum wage equals fewer jobs, corporations must serve shareholders before employees. Ever the pragmatist, Reich sees hope for reversing our slide toward inequality and diminished opportunity by shoring up the countervailing power of everyone else. Here is a revelatory indictment of our economic status quo and an empowering call to civic action.

Genres: Economics, Politics, Nonfiction, Business, Finance, History, Political Science

219 pages, Hardcover

First published January 1, 2004

About the author

Robert Bernard Reich is an American politician, academic, and political commentator. He served as Secretary of Labor under President Bill Clinton from 1993 to 1997. Reich is a former Harvard University professor and the former Maurice B. Hexter Professor of Social and Economic Policy at the Heller School for Social Policy and Management at Brandeis University. He is currently a professor at the University of California, Berkeley's Goldman School of Public Policy. Mr. Reich is also on the board of directors of Tutor.com. He is a trustee of the Economists for Peace and Security. He is an occasional political commentator, notably on Hardball with Chris Matthews, This Week with George Stephanopoulos and CNBC's Kudlow & Company.

Reviews

[Mal Warwick · Rating 5 out of 5]

If you’ve ever been exposed to Robert Reich’s “Wealth and Poverty” course at UC Berkeley, perhaps through the film Inequality for All, or heard him speak in public, you know that there are few people alive today who are his equal in the ability to explain complex economic and social issues so cogently and compellingly. And few indeed are as funny as he is, either: the man could make a go of a career with a standup act.

capitalismHowever, there’s not a lot of humor in Saving Capitalism, Reich’s fifteenth book. In this brilliant long essay, the former U.S. Secretary of Labor takes on the economic issues of the day from a perspective that rarely comes to light in public discourse: he rejects the widespread assumption that a “free market” exists independent of government.

“A market — any market — requires that government make and enforce the rules of the game,” Reich writes. The size of government, the preoccupation of the American Right for the past four decades, is a distraction from the reality that big corporations and the country’s wealthiest people have steadily rigged the rules that structure the economy — through lobbying, massive political contributions, and the courts. Society’s biggest challenge today, inequality in wealth and income, was the inevitable result of the steady shift of power to the “1%” from the rest of us, as Occupy Wall Street so famously pointed out. “The critical debate for the future is not about the size of government,” Reich adds; “it is about whom government is for.” This is a view of American society from 30,000 feet.

Reich cites a study by two scholars who set out to gauge “the relative influence . . . of economic elites, business groups, mass-based interest groups, and average citizens.” The study concluded, “The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” In other words, everything you ever feared about the influence of the 1% is true.

As Reich explains in a particularly enlightening chapter, “The Decline of Countervailing Power,” the principal reason why Wall Street, the corporations, and the superrich have managed to enrich themselves at the expense of the middle class and the working poor is that the counterweight to what we call the 1% today has steadily withered away since the 1970s. Reich refers to the “interest groups and membership organizations — clubs, associations, political parties, and trade unions — to which politicians were [once] responsive.”

The most potent of these factors was, of course, the labor movement. Following World War II, labor stood toe-to-toe with Big Business when it came to employees’ wages and working conditions and wielded huge influence in Washington. As we’re so painfully aware, that is far from the case today — but the decline of organized labor didn’t happen by accident. It was engineered beginning in the early 1970s by the U.S. Chamber of Commerce, the National Association of Manufacturers, and their Republican allies, working from the top down through the courts, the Congress, and state governments across the country. Reich doesn’t tell this story, perhaps because it’s so well known.

Saving Capitalism should be required reading for every American who wishes to understand the way our society works today. Unfortunately, though the book has already begun to climb on the bestseller lists, we can be sure that will never happen in an era when a megalomaniacal reality TV star is topping the polls in the Republican presidential primary competition.

Robert B. Reich served three presidents — Gerald Ford, Jimmy Carter, and Bill Clinton — in the course of a long and distinguished career in academia and government. Currently he is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley.

[R.K. Gold · Rating 5 out of 5]

This is a really quick read for the liberal looking to impress their friends and win a few internet debates about economics. Far from perfect, it substitutes in-depth analysis for readable theory making it the perfect introduction to the material. What makes this book a five-star read is that it's applicable. It uses plenty of real-world examples, explains their faults, then offers theoretical suggestions for improvements.
If you need to whip out a quick argument for a certain relative during Thanksgiving, this might be a helpful little book to keep by the dinner table.

[Caren · Rating 5 out of 5]

Reich's key point, and the one on which the rest of the book hangs, is that our political debate over preferring the "free market" on one hand to more government intervention on the other, is misguided: there is no disembodied market without rules made by government, that is, by humans. In our present culture, the rules strongly favor the people at the top---those with the most money---and that money buys power. He points out that this situation is not only not desirable but not sustainable in the long run. Reich is now a professor and the book is explained clearly, just as you'd expect from a good teacher. He says many people have become apathetic about politics, knowing instinctively that the system is rigged, but that political involvement is more important than ever. Here are Reich's words about how to proceed:
"The critical debate for the future is not about the size of government; it is about whom government is for. The central choice is not between the "free market" and government; it is between a market organized for broadly based prosperity and one designed to deliver almost all the gains to a few at the top. The pertinent issue is not how much is to be taxed away from the wealthy and redistributed to those who are not; it is how to design the rules of the market so that the economy generates what most people would consider a fair distribution on its own, without necessitating large redistributions after the fact. The vast majority of the nation's citizens do have the power to alter the rules of the market to meet their needs. But to exercise that power, they must understand what is happening and where their interests lie, and they must join together." (page 219)
Here is Reich speaking about his book:
http://www.marketplace.org/topics/eco...

You may also like to visit his website:
http://robertreich.org/

[Emma Sea · Rating 4 out of 5]

For the first 180 pages on why we're fucked, five stars. For the last 37 pages, which entirely fail to unpick how the hell we stop being fucked, 1 star.

[Bam cooks the books · Rating 4 out of 5]

"Those who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America and other advanced countries are not in fact on the side of freedom. They are on the side of those with the power."

It's no surprise to any American that the rich are getting richer and the poor poorer. Name it and the deck is stacked in their favor: from political campaigns financed by Dark Money, to Wall Street with banks 'too big to fail' rescued by taxpayer money, to lobbyists working in the interests of huge corporations. On and on. It's all so depressing!

One countervailing suggestion that Reich makes 'would be to provide all Americans, beginning the month they turn eighteen and continuing each month thereafter, a basic minimum income that enables them to be economically independent and self-sufficient.'

Or a return to stakeholder capitalism, with so-called 'benefit corporations, which take into account the interests of workers, the community and the environment, as well as shareholders.' Some examples of such companies are Market Basket, Patagonia and Seventh Generation.

Another would be to 'forgive the student debts of graduates who choose social work, child care, elder care, nursing, legal aid, and teaching'--those jobs that so important to our society but so woefully underpaid. Wouldn't that be terrific?

I recommend this book to help readers understand what forces have caused this shift in power to the wealthiest 1% of our country and to identify some ways we can try to change things. I think we are in big trouble if we don't. Things will only get worse.

I also recommend Robert Reich's Resistance Report which is available on Facebook most weekday evenings. He addresses what he sees as problems with the Trump administration's policies and urges everyone to become politically active--attend town hall meetings, call your senators and representatives, and educate yourself by reading: It Can't Happen Here, THE FUTURE OF DEMOCRACY: Lessons From the Past and Present To Guide us on our Path Forward, The Psychology of Dictatorship, 1984, The Origins of Totalitarianism and Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right to name a few.

[Ryan Boissonneault · Rating 5 out of 5]

This is a critically important book for a few reasons.

First, it exposes the meaninglessness of the “free market” vs. government intervention debate by showing that the market cannot exist in the first place without the laws, rules, contracts, and enforcement mechanisms that government creates. The relevant debate, therefore, is not “less government” or “more regulation” but who exactly stands to benefit or lose under the current arrangements.

The free market simply doesn’t exist; government and business are locked in a complex relationship full of tradeoffs. But we never get to debate the tradeoffs because anything the market does is seen as fair despite the fact that we decide how the market operates.

When capitalism is evaluated in this way, we see that the game is structured to favor the wealthy—leading to a concentration of wealth and political influence at the top. Reich offers a plethora of examples and statistics to demonstrate how our laws, regulations, contracts, and enforcement mechanisms disproportionately favor moneyed interests. This is all supported with statistics that clearly show a widening income gap, greater concentration of wealth in the top 1 percent, and CEO pay that has increased 930 percent since 1978—with some CEOs making 300 times the salary of the average worker.

The author presents several additional examples of pre-distributions of wealth from the bottom to the top. For example, the big banks get bailed out but homeowners burdened with mortgages and students loaded with debt cannot similarly utilize bankruptcy protection to offload their own debts.

I was also surprised to hear that how low the US ranks among advanced nations in the inequality of educational funding; in other words, rich kids get more money and better education while poor kids get drastically less. This is simply not the case in other parts of the world with different funding mechanisms that ensure a more equal educational experience for kids, irrespective of socioeconomic class, so as not to perpetuate poverty and class divisions.

While all of this is quite depressing and often infuriating, this is not a pessimistic book. The author is optimistic about our ability to save capitalism, as he cites several historical examples of how capitalism has been tested in the past and how we were able to implement corrective policies. For example, after the Great Depression, the New Deal established greater rights and protections for workers.

So how do we save capitalism from crippling inequality that reduces overall demand and consumer spending? The author mentions several ideas such as overturning the Citizens United decision, getting big money out of politics, universal basic income, maximum wages or limits on CEO pay, and reinventing the corporation as a for-benefit operation rather than as a for-profit (being accountable to all stakeholders, including employees, rather than solely to shareholders). Whether or not we take any of this advice remains to be seen.

[Alexa · Rating 4 out of 5]

There is a beautifully clear simplicity to this. Reich’s straightforward analysis is simply a pleasure to read. He simultaneously offers us a chilling look at the market realities in force today and an inspiring view of what we can do to improve things. He is clear-sighted, persuasive, and ultimately inspiring. This is the book that made it clear to me why some people could simultaneously support Donald Trump and Bernie Sanders.

His thesis is that “the threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern societies need for growth and stability.” Therefore “the growing insecurities and cumulative frustrations of average people who feel powerless in the face of economies (and market rules) that are not working for them are generating virulent nationalist movements, sometimes harboring racist and anti-immigrant sentiments, as well as political instability.”

He goes on to tell us that government doesn’t intrude on the free market, rather it creates the market. The myth of the free market keeps us from examining rule changes and who they benefit. The way government organizes the market determines who will win and who will lose. Economic dominance feeds political power, and political power further enlarges economic dominance – widening inequality is baked in.

Here’s a fun fact for you: since charitable deductions are the equivalent of government subsidies, the US government is currently subsidizing Princeton, through tax write-offs, at the rate of $54,000 per student, while public universities, where 70% of US students attend, are subsidized at the rate of $6,000 per student. Or how about this definition: public assistance, a subsidy the rest of American taxpayers pay the fast-food industry for the industry’s failure to pay its workers enough to live on.

“When capitalism ceases to deliver economic gains to the majority, it eventually stops delivering them at all.” The rules must be adapted toward creating a more inclusive economy. The critical debate for the future is not about the size of government; it is about whom government is for. Do we want a market organized for broadly based prosperity or one designed to deliver almost all the gains to a few at the top? We need to ask how to design the rules of the market so that the economy generates what most people would consider a fair distribution. And he gives us quite practical sensible suggestions for how that can be done. This is a magnificent work!

[Miles · Rating 4 out of 5]

In 1922, American philosopher John Dewey published Human Nature and Conduct, wherein he elucidated the relationship between freedom and knowledge. “The road to freedom,” he wrote, “may be found in that knowledge of facts which enables us to employ them in connection with desires and aims” (303). Dewey understood that human liberty and progress are always dependent on actionable assessments of present conditions. Without good information, the possibility of freedom evaporates.

Nearly a century later, Robert Reich’s Saving Capitalism: For the Many, Not the Few has reformulated Dewey’s observation. “Freedom has little meaning without reference to power,” Reich writes. “Those who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America and other advanced economies are not in fact on the side of freedom. They are on the side of those with the power” (15). Seeking to equip readers with the practical knowledge necessary for positive change, Reich brings us a step closer to understanding how the concepts of freedom and power operate in 21st-century America. Saving Capitalism is a rousing and expedient text that diagnoses our economic weaknesses and proposes concrete remedies.

Reich’s first priority is to sidestep dichotomies that have muddied the waters of American political rhetoric; framing the argument as a matter of “left vs. right” or “government vs. free market” is antithetical to his goals. Instead, Reich urges us to examine how economic rules are formed, and by whom:

"A market––any market––requires that government make and enforce rules of the game…Government doesn’t 'intrude' on the 'free market.' It creates the market. The rules are neither neutral nor universal, and they are not permanent…The rules partly mirror a society’s evolving norms and values but also reflect who in society has the most power to make or influence them. Yet the interminable debate over whether the 'free market' is better than 'government' makes it impossible for us to examine who exercises this power, how they benefit from doing so, and whether such rules need to be altered so that more people benefit from them." (5)

The most important sets of rules––Reich’s “Five Building Blocks of Capitalism”––are those governing property, monopoly, contract, bankruptcy, and enforcement (8). Each topic gets a chapter, and Reich explains how, starting in the late 1970s, large corporations and wealthy individuals gained disproportionate influence in designing the economic playing field. This imbalance isn’t unusual from a historical standpoint, but it was a significant shift away from the postwar decades, when the worst excesses of capitalism were checked by the combined influence of labor unions, citizens’ organizations, high wages, and strong government regulation supported by robust and progressive taxation.

Contrary to the neoliberal narrative that blames the pressures of globalization and government excess for recent trends, Reich argues that unions, wages, and reasonable regulation have lost sway primarily due to crafty recalibrations of economic rules designed by corporate and financial elites. Consequently, power and wealth have increasingly consolidated at the top, leading to today’s grotesque levels of socioeconomic inequality.

Reich’s second goal is to do away with the spurious association between economic rewards and moral worth:

"People are 'worth' what they’re paid in the market in the trivial sense that if the market rewards them a certain amount of money they must be. Some confuse this tautology for a moral claim that people deserve what they are paid…But a moment’s thought reveals many factors other than individual merit that play a role in determining earnings––financial inheritance, personal connections, discrimination in favor of or against someone because of how they look, luck, marriage, and perhaps most significantly, the society one inhabits." (91)

Reich effectively argues that the “meritocratic myth” is nothing more than a comforting story we tell ourselves to justify the prosperity of some and explain away the poverty of others. This narrative has been a comfort to the wealthy and persuaded many poor people that they deserve their fates. It also veils the plethora of “predistributions” designed to operate “inside the market mechanism itself” (154). These predistributions––tax loopholes, subsidies, structural discrimination, and inheritance laws––tend to favor the wealthy, and are the hallmarks of an economic order that has hollowed out the middle class, increased the number of working poor, and filled out the ranks of the nonworking rich. We will need a new outlook in order to shape an economy that distributes prosperity fairly to all citizens.

Finally, Reich predicts that a new “countervailing power” will soon arise to restore balance to the 21st-century American economy. The wishlist of liberal reforms is not unfamiliar: get big money out of politics, provide public funding for elections, ban gerrymandering, restrict the revolving door between public offices and private lobbying firms, and disclose funding sources for “experts” who testify for or against public policies (191-2). And that’s just a start. Eventually, a guaranteed basic income (or some equivalent program) would be implemented to return purchasing power to consumers and counteract the very real problem of technological unemployment. The ultimate goal, as Reich sees it, is to design an economy that “generates what most people would consider a fair distribution [of wealth]” (219).

I agree with Reich’s agenda, but it’s worth noting some important factors that are left out. There is no mention of biological and/or cultural proclivities that might hinder or help the transition toward a fairer form of capitalism, nor of the psychological reality that humans are not rational actors in the traditional sense. Reich doesn’t address humanity’s inherent tribalism, which often makes it difficult to sympathize with those perceived to be outside of one’s particular in-group(s). The possible economic consequences of climate change are nowhere to be found. And most glaringly, America’s history of slavery and racial discrimination against African Americans and other minorities is almost completely absent from this text. Given past sins and present tensions, it’s hard to imagine Reich’s reforms having perfectly equitable results for all individuals and communities across America, but he is silent on how we might deal with this problem.

I realize that addressing these issues isn’t Reich’s primary goal, and that each is complex enough to fill its own book, but it was hard to finish Saving Capitalism––by no means a cumbersome book––without wondering if it focused overmuch on being strictly economic in a world that is anything but.

When it comes to what can be found in Reich’s argument, the rise of his “countervailing power” is the fuzziest element. It’s unclear exactly how we can transition from today’s gridlocked government to a situation where groups of common citizens can wrest power away from those who have so fastidiously amassed it. “No one should expect this to occur smoothly or easily,” Reich admits, but in the same paragraph he also claims that the resurgence of a countervailing power is “inevitable” (191). He appeals to American history, reminding us of the many times that economic influence has been similarly skewed before a combination of government and people power restored balance (The Gilded Age and the New Deal are good examples).

There are surely precedents for our current situation, but history is not always an accurate predictor of the future. I don’t think Reich takes seriously enough the possibility that we could be witnessing the end of American democracy and the birth of something else. Never before in history has so much wealth been concentrated in so few hands, and the global elite are not properly restrained by national or international law. Perhaps Reich is correct that “capitalism as we know it will not survive” if current trends go unchallenged, but it’s much less clear whether that outcome would be catastrophic, utopian, or simply different (217). It’s also important to question the notion that the American economy has ever been truly “balanced” in favor of working folks––even in the postwar years for which Reich is so nostalgic.

Never once does Reich confront the question rendered inescapable by his book’s title: Is capitalism worth saving? The reader is left wondering whether Reich views capitalism as the final form of human commerce, or if he thinks we will ultimately transition to a different type of distributive system. Should we accept Reich’s assertion that “The essential challenge is political rather than economic,” or is it possible that our problems stem from something rotten in the core of capitalism itself (168)? I’ve neither the expertise nor the wordcount to even begin to answer this question, but I believe it needs to be asked.

Despite its limitations, Saving Capitalism is a successful book that provided me with several new framing mechanisms with which to parse economic debates. Such improvements are in keeping with Reich’s mission to help people “understand what is happening and where their interests lie” (219). Like Dewey before him, Reich has surely shown that knowledge is the key to freedom and personal empowerment.

This review was originally published on my blog, words&dirt.

[Rahul · Rating 4 out of 5]

Took a little bit of time to finish but glad I did. Belonging to the middle class family (general category) of a developing nation I understand it very well how me and my family and billion other people wishes and decisions are everyday moulded by our stagnated and tumbling financial situation, not what we really wish to have at all most every point be it the necessities, higher education , lifestyle , entertainment etc . Although the book is written from American perspective and its society , the truths mention in it about the capitalist society , the rich and their influence and how hard it is for a middle class and poor to make a mark , a big positive change in his/her life , to get out from the endless loop of we running for 💰 and money running more faster away from us. In India also the gulf between rich and the poor is increasing whether it is social economical political etc. Capitalism should be one that work for the masses and not for the few else the future is deep dark and humiliating for the masses . We can have democracy or we can have massive wealth in the hands of few people but we can't have both.

[CS · Rating 5 out of 5]

Bullet Review:

Absolutely fascinating - I learned so much about the US's economy, it's history, as well as how Donald Trump got elected. I think Robert B. Reich makes a fantastic audiobook narrator. And sure, this is "Economics Lite for People with Short Attention Spans", but it certainly gave ME a better appreciation for what's going on - and why siding with one party or the other isn't good.

Some people may wonder if this is a hippy dippy liberal book, and I really don't get that feeling whatsoever. I honestly feel there's a lot that both Republicans and Democrats can agree on.

[Cami · Rating 3 out of 5]

Moneyed interests do not want the curtain of the “free market” lifted because that would expose their influence over the rules of the capitalist game and reveal potential alliances that could countervail that power. They would prefer the bottom 90 percent continue to preoccupy themselves with tendentious battles over government’s size (or that it war over non-economic issues such as same-sex marriage, abortion, guns, race, and religion) than find common economic cause.

My rating was not based on my agreement/disagreement with Reich’s premise, but on the fact that I think this was a missed opportunity to lay out implementable solutions. I estimate that 85% of the book is describing the problem, which is important. But that becomes repetitive. Instead, I was hoping for a detailing of what can be done.

[Matt Messinger · Rating 4 out of 5]

This is one of those books I read because I enjoy reading authors with whom I agree. That said, I’d be curious to see a data-based refutation of what Reich argues; I think his argument would hold up under objective scrutiny.

In short, Reich’s thesis is the “free market” vs. “big government” debate is a distraction. The Invisible Hand of Adam Smith does not exist. In fact humans create the “market” via contracts, laws and policies. Those people with the most money define these components of the market through political influence. This political influence ensures the already-wealthy get more wealthy, facilitating a cycle where more and more wealth concentrates in the hands of fewer and fewer people.

As a solution to this Reich recommends instituting “countervailing” powers. These would include:
• Reinstituting the Glass-Steagall act which would prohibit banks to co-mingle commercial and investment banking operations. Now, as long as banks meet certain reserve requirements from the FDIC they can use their capital to make risky bets via proprietary trading. If these trading bets go well, the banks get the benefit. If they go poorly, the government bails them out.
• Creating a third party to represent the majority for whom capitalism is not working.
• Reversing the decisions on the Citizens United (corporations are people to whom the first amendment applies) and McCutcheon (increasing the limits on individual contributions to $1.2 for presidential and $2.4 for the House Speaker).
• Public financing of elections.
• Limit the revolving door between Government and the private entities they regulate.
• Shorten patent and copyright protection periods.
• Put more resources in antitrust and securities enforcement.
• Prohibit forced arbitration in lieu of class action suits.
• Ability to declare bankruptcy on student debt.
• Offer wage insurance for the mast majority of workers who live paycheck to paycheck.
• Limit the ratio of CEO pay to median-worked pay.

The real debate is not free market vs. government or Republican vs. Democratic it is between the haves and the have nots. Everyone deserves a chance to succeed, regardless of the zip code of their birth. Our country is a long way from this vision.

[Kressel Housman · Rating 5 out of 5]

Regular viewers of Robert Reich’s “Resistance Report” will find the arguments in this book very familiar, but it was written before the 2016 election, which only goes to prove how prescient Robert Reich is. He argues that because of the anti-regulatory business environment that has taken hold since the 1980’s, the influence of money in politics, made all the worse by Citizens United, and the automation and disappearance of more and more of our jobs, the American capitalist system has become so top-heavy that it will collapse if we don’t regulate it to share more of the wealth. Luckily, Reich takes the optimistic point of view, showing times in American history when we chose democracy over runaway capitalism, trimming away at the excesses that concentrate wealth into the hands of the few. If that sounds too socialistic for you, consider some of Reich’s more pessimistic statements: 1) there is no unemployment under slavery and 2) in the medieval era, there was no middle class. The entire economy survived for centuries, benefitting only a small wealthy class.

Do you want to go back to slavery or feudalism? A modern version of it may be evolving as the middle class disappears. So to all my libertarian-leaning friends: all this fear of “big government” interfering with the “free market” is unfounded. The people in big business are using government to benefit themselves, and the best thing we can do for democracy is to make government responsive to our needs.

[Cissa · Rating 5 out of 5]

This is an important and thorough look at the economic aspect of what is wrong in America today- and since many of our other ills spring from the economics, it speaks to areas not explicitly addressed as well.

If you are at all interested in how we got into this mess- and some similar historical situations- read this.

In brief: it is not the "free market" vs the "government"; the market would not even exist without the legal enforcement of the government. The problem is that as wealth is accumulated by an ever-shrinking number of people, they are thus able to disproportionately affect the laws that cover the market... and so can rig it so that they keep siphoning off more and more.

Now, this is not sustainable in the long run- but they don't care, and the rest of us have little ability to affect these matters.

Reich tries to offer some hope...but I don't really see it, at least not until things collapse in a devastating way, which is inevitable unless things change.

[Chris · Rating 5 out of 5]

Reich's book goes a long way in helping to make sense of the current economic state of our country. The wage gap between the lowest earners and highest earners in this country has been increasing over the last few decades and the middle class is slowly shrinking. Reich explains some of the factors that have caused this to occur. In the last 30 years, corporations have gained more and more political influence which, at this stage of the game, is drowning out the voices of individual voters and their concerns. One huge victory for corporations was the 2010 Citizens United Supreme Court case which ruled that it was unconstitutional to prohibit organizations from contributing to political campaigns. This has opened the flood-gates to corporate campaign donations, which in-turn, is causing politicians to be more favorable to pass legislation beneficial to corporations. This is just one example of the current cycle in which corporations and their top executives are accumulating more and more wealth and in-turn, are able to use their wealth to influence politicians. Reich has an informal and very accessible writing style and does an excellent job explaining economic concepts. I would highly recommend this book for those interested understanding the current economic situation our country is in.

[Eli Mandel · Rating 4 out of 5]

After casting the winning vote for Bush in Ohio (I'm sorry, America) and then voting for McCain (I'm really sorry, America) I started warming up to liberal policies during the Obamacare debate.
Sure, I had college debt and I had read Generation Debt (which I had discovered while listening to Brian Lehrer, so I'm not entirely a rube) and I finally had a job that provided health insurance, but even with my wife and I both working full-time we were still struggling. I could never see earning enough to buy a house or have a car with less than 150k miles on it.
And really, while it was nice that my employer chose to provide insurance at 75%, I couldn't afford the 25% they didn't cover, not with all the copays, deductibles as well as vision and dental.
So I was paying close attention when Obama laid out his plans for single-payer health insurance and national coverage. Then I watched Inequality for All and The High Cost of Low Price. I read The Big Short. I started to understand why I would never have the pension that my older relatives retired on.

It's been a few years since I've started leaning solidly left in my politics but I've never taken the time to examine closely some of the fundamental ideas introduced by Big Business and taught as American Gospel about the nature of "free market", "capitalism", "unions", "government intervention". This book was a great primer.
This is no dispassionate school textbook. Reich has been in this fight for over twenty years and he's passionate about it.
It is also a timely book. Read it and see the current presidential election in light of the ideas presented in it.

[marshponds · Rating 2 out of 5]

I was not at all persuaded. This book was somewhat frustrating to read because of all of Reich's glaring omissions and leaps in logic. He omitted discussion of salient free market counterpoints to his arguments and mainly attacked strawmen. This makes me think this book is directed to those who already agree with him rather than people who are reading it more critically. He seemed to just "tell" you things are the way he says they are rather than "show" how they are. When he did try to show his evidence falls far short. For example, why is he citing Wisconsin Supreme Court cases to show the supposed original purpose of antitrust law? The evidence he cites to show that corporate directors once thought they owed a duty to employees, the community, the environment, was weak as well.

I wanted to throw the book across the room when, toward the end, he proposed that the government pay every individual a monthly wage (just for existing, not for working or doing any else of value). "The basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby also enabling society to enjoy the fruits of such artistry or voluntary effort. It seems doubtful that the vast majority would choose idleness over physical and mental activity." Are you kidding me?

I do agree with him though that money has too much influence in politics.

[Mehrsa · Rating 5 out of 5]

Because this is my field, there was nothing in here that I didn't already know, but this is a must-read for all Americans. Reich has a gift for clear thinking and exposition. I found a few of his assertions to be overreaching and the book is certainly more polemic than history or theory, but it is an accurate condemnation of our current political system. Though Reich's analysis reveals a grim reality, his predictions are optimistic. Americans will lead the way for reform as they have done in the past and that movement has already sprung to action. He doesn't offer too many practical solutions, but I think with this sort of problem, the first step is recognizing the problem. And no one does better at illuminating the problem than Reich.

[Book Riot Community]

Reich explains how political changes in the last three decades is accelerating wealth inequality. This is a book that any Bernie Sanders supporter would love. Reich is a great explainer, and entertaining writer. This is not dry economics. Anyone hoping to save the middle class will want to read Reich’s ideas about how to save capitalism.

— James Wallace Harris


from The Best Books We Read In July 2016: http://bookriot.com/2016/08/01/riot-r...

[Kyle · Rating 4 out of 5]

With calls for socialism on the left and an almost religious devotion to capitalism on the right, this book was a refreshing read.

In short, Reich's argument is that the "free market" VS "government intervention" debate is a distraction. Complex economies require governments play a role creating the definitions and rules by which the economy operates, but the power to shape those rules has largely shifted into the hands of corporations and the wealthy.

Most of the book is examples explaining how this happened, and a short portion at the end addresses what we ought to do about it. The chapter I wish he included is "Why is capitalism worth saving?". Unfortunately, I don't think you can assume all readers come prepared with an understanding of how capitalism has benefited society. I'm remembering the Netflix documentary as doing a better job with that.

*Library
*Audiobook

[Daniel · Rating 5 out of 5]

We have all been duped into the wrong debate.

It has never been small vs big government, or free market vs government-centric economy. It is how capitalism is designed, and for whom the benefits are. The current capitalism, where only a small minority keeps getting richer but the majority gets ever poorer, is clearly broken.

The author proposed many ways to fix the system, such as Germany style company boards where workers sit together with other CEOs, closing tax loopholes holes, increasing tax for the rich, disallowing public servants from immediately working for private companies at least for 5 years after they have left, a minimum wage and a basic income.

After reading this book, one gets a much better understanding about the anger that is prevalent in Britain (resulting in Brexit), America (Trump being the Republican candidate), and the rise of other populist parties. The 99% are now so fed up that they are willing to vote for political outsiders and punish the elites even if they know they will suffer alongside them!

Maybe a revolution is coming to reset capitalism!

[Jesse · Rating 1 out of 5]

I did not like this book. I purchased it hoping for economic arguments outlining the benefits of capitalism. Instead the Reich's basic premise is that the classic debate between the free market and government regulation is a irrelevant because the government and those in power define the market. Reich uses this definition to spend the whole book campaigning for "socialist" political policies. My offense isn't with the content of these arguments, but rather with the character, the emotional nature of how Reich ties together unrelated facts. Overall I found the book extremely difficult to finish and lacking in academic stature.  

[Hana · Rating 3 out of 5]

"There are two modes of invading private property; the first, by which the poor plunder the rich...sudden and violent; the second, by which the rich plunder the poor, slow and legal" --- John Taylor, And Inquiry into the Principles and Policy of the Government of the United States (1814)

I love the quote with which Reich opens his book!

New font is killing my eyes.

[Laura · Rating 3 out of 5]

This was a fascinating look at the current state of economics in the US. Robert Reich is clearly experience and knowledgable, I'm just not as hopeful as he that we can find the will as a nation to do the right things to save ourselves.

[Jessica · Rating 4 out of 5]

It's really preaching to the Liberal choir, but this is definitely one I wish more people would read. This book truly puts into clear perspective what is wrong with our political and economic system today, and could inspire revolution if only more of the 99% would tune in.

[Athan Tolis · Rating 5 out of 5]

Capitalism most definitely is at a crossroads. To claim otherwise is, at best, denial.

What’s more worrying is that that there is next to no debate on the relevant issues.

I disagree with, dunno, four out of five conclusions Robert Reich draws in “Saving Capitalism,” but it is regardless the best book I’ve read in years because it defines the terms of the debate.

You read that right. I consider this left-wing book by a former Clinton (wash my mouth) Labor Secretary one of the best I can remember reading. I’m buying copies for my whole family.

The first major issue he tackles is the false debate that pits “free markets” versus “the government,” and this he does straight from the Mancur Olson playbook: spontaneous free markets exist everywhere. A visitor to the former Soviet Union would be confronted with tons of black markets that of necessity sprung up in the absence of official ones, same way a visitor to Marrakesh can walk into the suk where he can find practically anything. (My favorite such market is the former Soviet market for dead lightbulbs you could then bring to work to screw into the fixture left open by the functioning light bulb you’d pilfer from work to bring back to your apartment)

But here’s the deal:

A bunch of rules must be in place for orderly markets that go beyond the flea market. If you want free markets to thrive, then you need an institution that comes up with and enforces the rules for:

1. What am I allowed to own? Can I own other people? Can I own my beachfront? (In Greece, for example, you don’t, the beach is everybody’s). How about ideas? If I can’t own them, will I bother having them? If I own a life-saving idea is it OK for me to own it? Who is allowed to buy me out of a house that’s blocking a new highway and what must he pay?

2. If I own something, can I sell it? Where does the statute trump the contract? Californian women can sell their womb, but they can’t sell their blood. Dutch people can own cannabis, but, to quote from Pulp Fiction, to sell it they need a license. And here in the west you can’t sell your children (or yourself) to strangers, period.

3. When is it fine to run a monopoly? In pretty much all countries the military is up to the government. The police, not entirely. It is illegal to sell protection, of course, but it is becoming legal to hire security. Most governments are busy giving up the monopoly on mail. Nobody cares that one company in America sells pretty much all chewing gum. Overall, the decision on market power is not trivial.

4. What if I can’t pay for something I bought? What recourse should my seller have? Can he seize my property? My family’s property? What am I allowed to contract into offering as security?

The institution that (i) decides and (ii) enforces these rules has a name. We call it our government.

No government, no market. Just flea markets.

The discussion that pits “free markets” versus “government” is dust in our eyes, Robert Reich says and he says so in a non-patronizing, wonderful narrative a kid can follow.

He does not stop there. This beautifully penned call to arms breaks the taboos of the unsophisticated, parochial American Left and spares nobody. On page 183, Robert Reich takes aim at the preoccupation of Americans on his “progressive” side of the argument with “noneconomic issues such as same-sex marriage, abortion, guns, race and religion,” and urges them to find common economic cause, because that’s the arena where the politics of the government have true influence first and foremost. Chapeau!

What we have here is the bare bones of a ten-star book as far as I’m concerned.

I find tons of stars to take off from there, of course, because I disagree with a lot that he has to say.

So, for example, I think shareholder capitalism is self-correcting and I genuinely think the stock market is about to punish self-dealing corporates that issued debt to buy their own stock with a massive correction that will bring the practice into disrepute for at least a generation. The government would be hopeless in terms of attempting to adjudicate on who can and who can’t buy his own stock (though I totally agree with Reich that it should not tax-favor such behavior, of course) New competitors, unburdened by silly amounts of debt will spring up and devour the dinosaurs, bet your house on it. (Well you can’t, in this zero rates forever world, they are all privately owned, it drives me crazy)

Along the same vein, I think there’s nothing to do about globalization or the progress of science. You just need to give “palliative care” to the victims and assure they can afford to give the necessary education to their children. I don’t think a futures floor trader will ever earn as much money again shouting and gesticulating and I don’t think a petroleum engineer will ever earn as much money again drilling holes and I have zero problem if they join the girl who used to look at me funny from behind the screen and book my airline tickets at STA travel in whatever endeavors she has chosen to pursue. As for the guy who lost his job reading legal documents to some guy in India, he hasn’t really lost all that much: the outsourced job is about to move somewhere to the cloud. Same as all those Chinese manufacturing jobs. At this point, China fires more people from manufacturing jobs every year than we do.

Let us not forget that in 1910 some 25% of Americans used to work in Agriculture. That number is now 2% and the US remains the world’s biggest exporter of grain. And fewer than half of those who officially work in Agriculture actually get dirt under their fingers, they mostly work for companies like the Monsantos Robert Reich seems to dislike for monopolizing what is now a tiny (though obviously vital) part of the American economy. My point is that the children of the 23% did not disappear into an abyss, the Great Depression was their parents’ problem and society made sure it wasn’t theirs (chiefly through the GI bill that followed WWII). Our job is not to restore the jobs of the parents. It’s to make sure the kids fit in the new economy. Yes, it’s a massive job, but let’s talk about that, please, let’s not cry about what’s lost and never coming back.

And I think he’s barking up the wrong tree with all the campaign finance stuff. The billion dollar charitable foundations set up by the Clintons and Blairs and so on mainly sell exemption from tax. Suppose corporate tax was set to some extremely low number (dunno, 5%) you would not collect a penny less from Amazon, you would help the law-abiding small corporates Reich loves and you would deliver a very targeted punch in the stomach of the gatekeepers of tax exemptions in Congress, the lobbyists, the 10^3 tax accountants GE employs etc. It would not be without its challenges of, course. You’d have to then be draconian about taxing the people who would rush to dress themselves up as companies. All I’m saying is Reich is not at all imaginative when it comes to looking for the right place to strike at the status quo, he’s repeating some of the old solutions and just shouting louder.

So when he says we must give power to the unions, he’s ignoring that in the new economy we keep changing jobs all the time. The companies themselves come and go. And he’s ignoring progress. GM had to shut down because it makes cars 8 times more efficiently than it used to. It makes twice as many cars as before, but that means it needs a quarter as many people to make them. Them guys can’t carry four retired people on his back each, all of whom are living longer than it was anticipated they would, incidentally. We cannot “magic” a solution to this problem. The union actually exists, it’s called the UAW and it’s rather powerful, but it cannot work miracles.

More generally, unions can either be all-encompassing, like in France, where they cover millions of people across the entire industry, or they can be more industry-specific (example: teachers, autos etc.) or they can even be firm-specific. The all-encompassing union is what we chiefly have in Europe and the results are out: it redistributes to its members from other poor people. Germany’s super successful Hatz reform was all about allowing more specialized unions, in order to reward industries that were performing better AND THUS INCENTIVISE PEOPLE OUT OF INEFFICIENT INDUSTRIES AND INTO MORE EFFICIENT INDUSTRIES whose workers command more power at the negotiating table.

In summary, unions of course have a role to play, but they are already playing it and (much as the managers at Walmart are not exactly angels with wings and halos) this role is being diminished by the realities on the ground.

And so on. The rant against Steve Cohen, for example, should also have been included in his list of red herrings, along with same-sex marriage, abortion, guns, race and religion. There’s plenty wrong with finance, but the (tens of billions of) profits from insider trading are not on my top-ten list, much as they are distasteful. There are trillions at stake here and if you get the trillions right, the billions will follow. And I get to watch the same movies and same football games as Steve Cohen, it turns out. They don't make different ones for him. I still have (marginally) more hair than him too. I avoid jail by not breaking the law, on the other hand, but I don't find that enormously burdensome and I have bigger cares than cutting him down to size.

I also thought the sundry solutions involving a minimum endowment for every citizen were rather off the wall. We need to look at what it is we’re already doing and we need to fix it. There cannot be a deus ex macchina, that’s the wrong place to look.

I can go on taking stars off and discussing points where I disagree rather vehemently with Reich.

But I can’t get below five stars, because this is a tremendous call to arms for the American Left to come to the table to discuss the real, material issues we all face. I’m not aware of an equivalent book for the Right.

[Benjamin Sigman · Rating 4 out of 5]

I think this commentary is very important for policy decisions that would incorporate an economic component to a nation. Money that is regulated by a government requires a very scrupulous oversight to leech potential and actual corruption. The bit on unions was an inspired call to the common worker but was shorted by the lack or revolutionary rhetoric. Unions were the capitalist compromise to an world calling for communism when capitalism was still a theory. Now capitalism is dogma and no nations seem to have the sole power to regulate it to that degree.

I’m internally comparing the points addressed in this book to the Sovereign Individual. Some questions that I wanted answered are maybe too new for satisfying answers but we have non-regulated currencies acting across a global market. American policy makers can only control what American corporations do. When our companies leave for lighter regulations because of their their fiduciary duties to shareholders, what does that do to our nation?

^ I’m not advocating for light corporate regulations only framing the issue.

If we REALLY want to bust trusts then we should replace these monopolies with equally powerful distributed business entities capable of bearing the economic weight of their absence. The LLC is a great example of an entity stepping in the right direction but let’s take it further. What about a tethered sole proprietorship to every American citizen with tax benefits for doing business and liability coverage for special business activities? I don’t know what it would help but give me a solution other than a return to the 1950s please.

All-in-all I think America exported Capitalism and now it no longer belongs to us. The SEC and Federal Reserve are only as powerful as America is willing to enforce our version of capitalism globally through violence. The World Trade Organization has sanctioned America for our actions and maybe a better forum for action on capitalism as a global economic system. Good ideas though.

3 Star Smut.

[David Sasaki · Rating 5 out of 5]

It was doubly frustrating to read a book of such sensible policy analysis during an election season that is practically devoid of any discussion of real policies and their effects on real people.

Saving Capitalism -- a dramatic title for a book that otherwise mostly avoids hyperbole -- begins with the premise that we must drop the typical way we frame liberalism and conservatism as big government versus small government. Ostensibly, Reich wants to appeal to both Bernie supporters and the Tea Party disenfranchised, but this is clearly a book by a progressive for progressives. He would rather us think about a government that works on behalf of the 99% -- the middle class and poor -- regardless of whether it is a very large government or a very small government.

To create such a government, Reich argues, we need to reform some very basic laws that set the rules of the market -- things like bankruptcy laws, intellectual property, contracts, and financial and anti-trust regulation. Reich calls the effects of these regulations that favor the wealthiest "predistributions" -- a play on "redistributions," borrowing the term from Jacob Hacker's paper, The Institutional Foundations of Middle Class Democracy. Unlike Joseph Stiglitz and Thomas Piketty, who have focused on tax reform as the most effective way to reduce economic inequality, Reich argues that we must first set fair rules of the game that don't discriminate against the non-rich working class. If you'd like a condensed summary, Reich touches on the major points with some illustrative examples in this blog post. Our intellectual property and antitrust policies, he points out, cause Americans to "pay the highest pharmaceutical costs of any advanced nation" and to "pay more for broadband Internet, food, airline tickets, and banking services." (For a maddening overview of the current state of American monopolies, including sunglasses, cat food, plastic hangers, syringes, take a look at this 2015 American Prospect piece by David Dayen.)

This is a very different argument from Reich's earlier work, which focused on the need to improve education and skills training for adult workers in order to adapt to technological change. Paul Krugman, comparing Reich's first and latest book, writes: "economists struggling to make sense of economic polarization are, increasingly, talking not about technology but about power."

Saving Capitalism is enlightening with its clear re-telling of 20th century US economic history. By looking back in time, the gravity of our current economy comes alive. Sure, life is still good, but we realize that it could be so much better and that our current state will only accelerate with continuing technological displacement of middle class jobs while the wealthiest individuals and companies further their own interests through lobbying, campaign finance and tax evasion. In addition to the benefit of historical comparison, Saving Capitalism helpfully compares how the United States has decided how to regulate its market with other countries. In the US, for example, the wealthiest neighborhoods have the best schools because we mostly finance education through property tax. Other countries invest more money in schools in the poorest neighborhoods. "The bottom line is that the vast majority of O.E.C.D. countries either invest equally into every student or disproportionately more into disadvantaged students," notes Andreas Schleicher. "The U.S. is one of the few countries doing the opposite.”

Reich is equally enlightening in his survey of reports from think tanks and journal articles from economists on the expected effects of the policy adjustments he proposes. By comparing our present state with our past, our peers and our potential future, it is clear what must be done.

But how to get it done? Only then does the no-nonsense, fiercely intelligent Reich veer off into a fantastical world of political theory that only seems believable at a Berkeley coffee shop or a Bernie Sanders rally. Skimming the surface of John Kenneth Galbraith's notion of countervailing power, Reich proposes with a straight face that the disenfranchised on the far left and far right come together to build institutions that take on the power of the 1%. He's intentionally vague about what these institutions might look like. It could be a new political party, or a reformed party (in the way that Teddy Roosevelt reformed the Republican Party in 1901 or how FDR reformed the Democratic Party in 1933). Or it could be a resurgence of workers' unions. Or it could be some new platform connecting all gig workers to stand up to the dominant power of monopolistic firms like Uber, Task Rabbit and Etsy.

Reich's call to arms for a countervailing political force seems so out of touch with the current political reality -- which has divided the country based on fear, identity and personality types -- that it's hard to take seriously. Krugman's review offers an observation that is as fundamental as it is simple and obvious:

Anyone hoping for a reversal of the spiral of inequality has to answer two questions. First, what policies do you think would do the trick? Second, how would you get the political power to make those policies happen?

Reich has me sold on his answers to question one. But he comes up short in his effort to tackle question two. Given Hillary Clinton's close relationships to Wall Street and the most powerful and influential of our country, I'm doubtful (as is Reich, who served as Secretary of Labor under Bill Clinton and went on a date with Hillary Clinton in college) that she is positioned to "rewrite the rules of the American economy." But a recent New York Times Magazine article highlighting the work of Felicia Wong and the Roosevelt Institute leaves me feeling more hopeful. Regardless, Reich is a model of what we need from our economists: a recognition of the importance of power in shaping policies and a recognition of policies in shaping the market.

[Thomas Edmund · Rating 5 out of 5]

I'd already watched the netflix short doco with the same name, so was fairly familar with the content of this book, however I was still pretty happy to read the full book.

Saving Capitalism is written in an engaging and accessible style, and even though strong I don't believe its particularly harsh nor polemic (I'm sure some would already be anti this book but I encourage them to read it the most)

Reich focusses mostly on how various sectors, industries and US polictics have changed or failed to change to support the majority and how things have slid out of touch and out of balance economically. Similar to Inequality which I just reviewed Reich doesn't suggest radical or over-the-top solutions but sound suggestions for getting back on track for the majority of people rather than just the top few.

Definitely a must read for anyone even remotely concerned with wealth trends lately and going forward, Reich has an enjoyable but intelligent style which fits the topic perfectly.

[Caleb · Rating 5 out of 5]

This was my first reading of a work by Reich. I found his writing to be easy to follow, while laying out great points. My favorite part of the book was when he discussed the negative sum game of capitalism. I also like that he did not take political sides while outlining both major parties complicity in looking out for the wealthy at the expense of the middle class.