Supercapitalism
By Robert B. Reich
Knopf, 272 pages, $25

Surely you remember Robert Reich? He was the first secretary of labor under President Clinton, a post in which he served as the house lefty and the administration’s closest link to the Democratic Party’s lunch-pail, working-class traditions. While the rest of the cabinet was busy forging a consensus in the center and catering to constituents who all seemed to be driving minivans, Reich was hanging out in factories. While centrist advisers such as Bob Rubin were obsessed with appeasing the bond market, Reich wanted the government to focus on industries with the potential to create jobs and invest federal dollars to make it happen. Rubin and the New Democrats won, and Reich departed after a frustrating tenure, good-naturedly recalled in his bestselling memoir, Locked in the Cabinet.

Now he is back (actually, this is his fifth book since leaving Washington) with Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, a thoughtful and heartfelt critique of the ruthless, hell-bent-for-profit brand of capitalism that has been in vogue under Democrats and Republicans alike since roughly the end of the cold war.

As Reich admits, this unfettered capitalism is very good at what it tries to do: mainly, earn profits for shareholders and offer a wide array of affordable products to consumers. It is lousy at everything else, which, according to Reich, includes providing health care and ample pensions for employees or a living wage for those on the bottom or protecting small retailers and the environment.

Reich wants to readjust the balance, and if his timing was all wrong under Clinton, it may be spot-on now. The consensus for what Reich terms supercapitalism has never looked more precarious: Witness the chorus against free trade and Wal-Mart, and in favor of mandating universal health care and boosting the minimum wage. Even Bush advisers have admitted to a real concern with the level of income inequality. Free markets have been great for the kingpins of private equity—not so for the working stiff.

Reich is a polemicist, maybe even a radical, with a desire not to sound shrill—something like Michael Moore squeezed into the affable bodysuit of a Tom Friedman. I use the word radical in context. He is not an ardent redistributionist; he would reregulate in myriad ways. He would tax the sale of stock to “slow” the movement of capital; he would limit foreign trade to nations that met much tougher guidelines than exist at present; he would circumscribe the freedom of companies to shutter factories in communities dependent upon them; and he would mandate paid family leave so workers could upgrade their skills, diaper a newborn, or tend to an ailing parent without losing income. U.S.A., meet the welfare state.

Reich spends a lot of time contrasting the present era with what he calls the Not Quite Golden Age of the 1950s and ’60s, when unions and government promoted stability for workers and communities at the cost of a far less innovative economy. It’s startling to be reminded of just how controlled the U.S. economy used to be. Besides industries such as trucking, airlines, banking, and telephony, which were directly regulated, many others—autos, steel, chemicals—were run by cartels.

C.E.O.’s were corporate statesmen who brokered the demands of unions, regulators, and communities along with those of shareholders. Since cartel members (G.M. and Ford, for example) did not much worry about new players entering the market, they had no need to fight their workers for the last buck.

Reich looks longingly at the Eisenhower era, when top earners accommodated marginal tax rates of 91 percent, and private-sector careers were as predictable as those in government. Managers (remember the “organization man”?) simply, and slowly, trod through the ranks toward their promised pensions. They had it so good that their kids started freaking out (in the ’60s) and smoking weed—Reich’s nirvana was in fact a regimented stranglehold. He calls it democratic capitalism, but that is a misnomer, given the power of big labor and big business to carve up the pie. Managed capitalism describes it better.

Anyway, technology ended it. Ma Bell lost its monopoly to new long-distance-transmission technology, and truckers to Federal Express. Down came the regulatory walls, companies were forced to compete, and Wall Street demanded profits and profits alone. Communities be damned.

Reich convincingly argues that, these days, social activists who strive to reform Wal-Mart have it wrong. Corporations cannot be expected to divide their loyalties between social interests and capitalist ones because they have no means of weighing one against the other. Only a democratic institution can decide whether, in order to preserve community values, it is worth throwing a little sand into the gears of capitalism—say, by keeping a big-box retailer out of downtown. But those institutions, namely Congress and state legislatures, are failing. They have lost the will to govern. If we want to redress the balance, Reich says, it is folly to demonize outsourcers, as John Kerry did. We need regulation and enforcement.

Reich covers a lot of ground, and in his urge to simplify, he conflates various trends that were not all moving in sync. Thus the past 50 years are represented as two points in time, one supposedly stable and “good” and the other dynamic and “evil.” He writes that “three or four decades ago . . . laws were passed to guard the environment.” Actually, such protections were only beginning in the ’70s and are far more stringent today.

I also found him weak on solutions, but this may be the nature of the beast. He rails against the lobbyists who have undermined Congress, but does anyone believe that if we could string up the suits on K Street, the Jeffersonians would return to power? Reich admits that “supercapitalism is generating unimagined prosperity.” Aside from some modest reforms, his ideas for restraining it may not have the votes.