Impact of Supercapitalism
Reich’s, Stiglitz’s, and Streeck’s writings about capitalism and the way it works in the modern day America is what we have finished with for this course. Bottom-line of all three different writers is that the way the capitalism is working now is extremely destructive for the environment, for the people, and for the societal morals that are supposed to be the base of this country. Reich talks a lot about how supercapitalism is destroying our democratic values as well as pointing the finger of blame on the government which turns the people against the only power that has the ability to control and tame corporations that only care about profit. Stiglitz focuses more on how the politics are reflecting the needs of the rich while the rest of the country is only getting poorer and the split between classes is growing. He also explains what rent seeking is and how it is affecting our society in a negative way. And lastly Streeck talks about the confusion within people; worker consciousness is replaced with consumer consciousness. He believes that capitalism is just buying time before it collapses again, and again, and again until the government will have to bail it out once more; however he believes that in the near future this cycle is bound to end. This essay reflects on the main points these authors are making and the connection between their works.
Reich believes that at the rate that United States is changing, it is undermining the traditional democratic values and institutions that are supposed to be the dominant power. As we loose our democratic selves we become consumers and investors. Interests of business, community, and government used to be in balance for a couple of decades after the World War II, however this started falling apart in the seventies with the beginning of supercapitalism. Supercapitalism is about shareholders getting the highest return, the lowest possible input costs, and the largest profits. It is Reich’s term for a capitalism system that is extremely competitive, innovative, and globalized. Supercapitalism is striving for highest profits for the investors and offering low prices for the consumers. Advances in things like technology, distribution, and communication have changed the market forever and created a crazy competitive environment. Back in the day before 1970s corporations were kept in check by the government to balance things out, however since the competition became so hardcore, businesses started investing enormous amounts of money into elections to make sure that the policies that the candidates are implementing make sure that they are still making maximum profits possible. While these corporations make sure that investors and consumers benefit on a maximum level, the citizenry and social aspects of life are being thrown away completely. Reich brings up an interesting point about how we always look for a bargain; however always ignore the devastating economic disadvantages that go along with cheap goods. These cheap products are available through underpaid workers and discrimination against human rights, which is the opposite of what this country stands for in the first place. However after having such a strong argument, which could sound like Reich sees corporations as an evil, he doesn’t blame them or thinks they are greedy. He says that corporations are simply making profits for their investors which is a good thing, what Reich has a problem with is investors not being taxed for their profits properly and investors making illegal profits. A corporation has to do it’s best in order to thrive or else it will be stomped by its competitors. Reich believes that the only way that capitalism can work healthy with democracy is when corporations stay out of politics, members can contribute individually as a citizen but not in a way that skews the elections only to profit business. I think that Reich has a very clear and solid point about why United States is seeing separation of classes and an increase in poverty. I completely agree with him about businesses staying out of the way of politics because that in my opinion is the biggest problem with how this country works. Democracy shouldn’t be diminished just to buy a TV for a hundred dollars less, which is just simply idiotic.
Stiglitz and Reich have very similar points about how the market is destroying our society from the core and creating inequality. He argues that we are more unequal than we were in the 1920s mainly because of the shrinkage in opportunity, politics reflecting only the top 20% (mainly top 1% and top 0.01%), and the destruction of the middle class. The biggest problem is that any government response to the policies concerning businesses only makes things worse because of how aggressive corporations become if there is a threat of government restrictions that could diminish their profits. Stiglitz mentions rent seeking as one of the big problems that corporations are engaged in. Rent seeking is essentially advancement in the product in a way that makes it cheaper to make, which in turn boosts the profits and lowers the cost for the consumers. The point of rent seeking is to eliminate the competitors by creating something that is better than their product, however it only works for a short period of time because the competitor can simply copy whatever you invented. While this might seem like a great opportunity to innovate and progress in a positive way, in reality it backfires and only benefits the Unites States bankers. And after the market collapses because of its inefficiency, Government steps in and bails it out. The assumption that markets are self-sufficient is wrong. Government role on banking has been saving the system for the past 40 years ever since 1980s. Stiglitz says that economic crashes happen because of rent seeking, and because markets seek to lie, cheat, and manipulate just to achieve higher profits while hiding the reality of what is selling. Businesses take excessive risks because they know that government will always save them in the end and we need business to survive. In the media we see republicans fighting for less and less taxes and regulations, which has spurred neoliberalism. Neoliberalism is the belief that any government intervention or regulation is somehow “horrible” when in reality government is the only thing that has been keeping this country afloat. This causes more and more jobs in United States be minimum wage and have low pay jobs. Globalization has become more about the profits of the corporations, and greater capital movement. This causes the rise of workers losing equality, decline of labor unions, and discrimination. This being said Stiglitz blames government policies, tax cuts, and de-regulation which cases inequality. He encourages not to focus on what/who caused the problem but to work for improving the situation. Stiglitz wants to get rid of economic malfunctions, which cause inequality, unemployment and failures of private economy. Government used to be the enforcer and tamer of capitalism creating a better environment for the citizens and workers that didn’t impact the society in a negative way. The rise of finance and monopoly has diminished the government strength, which in turn has diminished the government control over the business. Government needs to enforce the rules that better society like it used to.