Saving Capitalism: For the Many, Not the Few

Robert B. Reich, the author of Saving Capitalism: For the Many, Not the Few, is a professor of public policy at the University of California, Berkeley, and the former United States Secretary of Labor under President Bill Clinton from 1993 to 1997. Riech’s professional experience is reflected by his book’s content and focus. It provides the practical experience that informs his analysis and the crucial historical context within which that analysis is situated. Much of the analysis in Saving Capitalism is dependent upon that historical knowledge because it relies on comparing the functions and effects of America’s current economic system with that of more than half a century ago. While the same broad system has existed in both eras, many rules and regulations of the free market have changed drastically, as have the actions of the important players within that system: corporations, wealthy individuals, Wall Street, federal agencies, judges, and—most importantly—Congress.

The longitudinal basis of Riech’s study is made apparent from its opening. In his Introduction, Reich writes:

For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earning of the typical American worker doubled, just as the size of the American economy doubled. Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere (xi).

In the same passage, Reich also supplies a historical comparison of how those at the top of the economic system fared then and fare now. He explains that in the immediate decades after World War II, CEOs of large corporations earned “an average of about twenty times the pay of their typical worker,” but today, they get “substantially over two hundred times” (xi). In pointing out the disparity of incomes, both for those at the top of the economic ladder and those at the bottom, Reich illustrates that the market has changed for both. This historical comparison is essential to Reich’s purpose in assessing the direction of capitalism and its effects on American society.

Reich also uses a historical lens to address the reasons why such a change has taken place. He does this most clearly when discussing the declining bargaining power of the middle and the decline of countervailing power. Globalization and technological improvements have clearly hurt the middle class, he argues, but the most damaging change was when union membership began to decline in the late 1970s, “as did the economic and political power of unions, along with the bargaining clout of most workers” (129). Countervailing power began to shift at the same time because lawmakers today are responsive to the policy demands of “wealthy individuals and moneyed businesses interests—those with the most lobbying prowess and deepest pockets to bankroll campaigns,” instead of to the demands of average citizens and interest groups as they were previously (168).

Reich’s most pertinent historical analysis comes in Chapter 17, “The Threat to Capitalism,” in which he discusses three historical eras in which the American economic system—and capitalism in general—faced great challenges. The first of these was the first industrial revolution, in the Jacksonian era of the 1830s, when average citizens believed the elites had gained too much power and demanded economic reforms. In the second industrial revolution in the late 19th century, advances in technology led to economic combinations known as trusts and to widespread political corruption, which in turn led to progressive income tax and other reforms of the Progressive Era. The soaring riches and influence of Wall Street in the 1920s ultimately led to the Great Crash of 1929, which in turn led to the myriad economic reforms enacted in the New Deal of 1933-1938. Reich argues that these reforms were not a rejection of capitalism, but rather of aristocracy, seeking “a capitalism that would improve the lot of ordinary people rather than merely the elites” (159). This historical context enables Riech’s critical analysis of today’s form of capitalism, which he considers as serving the elite at the expense of the ordinary majority.