The Work of Nations: Preparing Ourselves for 21st-Century Capitalism

To many people, the public persona of Robert B. Reich appears to embody a sad conundrum. On one hand, Reich has written a series of provocative books joining genuine concern for the plight of average working people with a deep knowledge of current economic trends. In this capacity, he seems to provide a unique resource in an age of declining social concern and waning political-economic literacy. On the other hand, since President Clinton selected him to be Secretary of Labor in late 1992, Reich has seemed to water down and sell out his presumedly progressive ideas by suggesting that labor unions might be outdated and by considering shocking calls for the re-legalization of "cooperative" workplace membership organizations that are little more than thinly disguised company unions. At first glance, these two sides of Reich make him look like yet another far-sighted proponent of the people's welfare who has unfortunately been handcuffed by the hard realities of a prevailing conservative political consensus.

Unfortunately for those who hope liberal knights in shining armor will bring us "change," careful consideration of Reich's recent magnum opus, The Work of Nations, reveals that his vision is hardly far-sighted and that his mind is ultimately neither split, imprisoned, nor unconventional. On the contrary. As this tour de force of trendy but tame thinking reveals, Reich wholeheartedly subscribes to a very familiar kind of conservatism: in his eyes, the capitalist world economy is a natural and generally beneficial phenomenon, and our age's enormous social problems are a mere reflection of simple confusion that prevents us from harmoniously adapting to its benevolent dictates.

What makes it difficult to see this unreconstructed conventionalism in Reich's thought is his knack for compassionately presenting evidence of the growing existential crisis that stems from the changing global distribution of paid work. He is eloquent, for instance, when he describes the way that U.S. elites have consigned the U.S. working class to an increasingly dire and degraded fate. Wealth is rapidly polarizing, most people are facing the prospect of insecure junk jobs and sinking incomes, and the well-to-do are effectively seceding from society by walling themselves into privately policed fortress communities.

All of this is important information, powerfully presented. But what about Reich's underlying explanation of how "the work of nations" has brought us into this quagmire? Here, at first glance, Reich appears to be equally insightful. His argument seems to deploy all the right words and promote contemplation of all the hot trends: globalization, the "high-value" economy, transnational "webs" of production, technological sophistication, worker training, the new world order, and so forth. But stop to think, to read closely, and you will find that Secretary Reich's compassion and trendiness are merely window dressing for his real argument, and that upon inspection this proves to be little more than a sleek rehashing of the oldest case of mistaken identity in the annals of modern social criticism: the notion that capitalism is not really capitalism at all, but "industrial society."

This notion was systematized and translated for a U.S. audience shortly after the Second World War by an influential group of Cold War social scientists that included Raymond Aron, Daniel Bell, David Riesman, and Talcott Parsons. Parsons, a figure usually castigated on the left more for his abstract theoretical ideas and jargon choked prose than for his entirely wishful view of crucial political-economic realities, classically stated the core assumption of the U.S. "industrial society" thesis when he, along with Neil J. Smelser, argued that affluence, high wages, high technology, an unshakable social consensus, and pluralistic power-sharing gave the post-Second World War United States a "new economy" that was "independent both of the previous 'exploitation of labor' and the previous 'capitalistic control.'"

Working from this premise, the heavy hitters of mainstream 1950s scholarly punditry assured their students that an amalgam of diffuse forces, such as the "information economy," psychological "other-directedness," and an affluent and universal "consumer culture, "had replaced big business owners' rigid pursuit of maximum profits as the prime mover of U.S. economic and social life.

It is necessary to understand the history of this amazingly unrealistic but surprisingly widespread "industrial society" argument in order to make sense of The Work of Nations. This is so because Reich's whole argument is really nothing but a 1990s version of the same old song-and-dance about how capitalism is really not capitalist after all, but merely a way of efficiently organizing machinery. Indeed, all the basic assumptions of industrial society theory remain in place for Reich. For him, as for the leading lights of U.S. Cold War social science, the progress of technology is the prime motivation of economic possibility, and, hence, of the division of labor and its profound ramifications. In Reich's view, the big story of economic development over the past two decades has been the spread of high technology and the rising latent demand for the supposedly ultra-sophisticated "symbolic-analytic services" that computers make possible and necessary. (One wonders: has there ever been an age when "high" technology has not been the talk of the town? Weren't the stone hand axe, the wheel, the iron plow, the bow-and-arrow, the steam engine, the cotton gin, the railroad, the telegraph line, and so on, amazing feats of "high tech" around the time of their invention? If so, why should we now talk of technology instead of people when we want to understand and improve our society?)

From his familiar technocratic premise, Reich logically moves on to the accompanying proposition that the power of capital and its major investor - power that he, like Parsons before him, presumes that pluralism had already reined in by the 1950s - is now doubly "diffused" and irrelevant. In Reich's view, "No single group or participant 'controls'" The modern corporation, "[n]or does anyone `own' it in the traditional sense." Hence, in Reich's "capitalism," there is "increasing subordination of capital" - subordination even beyond the low level of priority he thinks profit maximization retained under the old pluralist arrangements of the 1950s and 1960s. Moreover, Reich avers, the major corporation now bears "almost no relation" to its pre-1970s self and, having moved into the era of high-tech knowledge and sophistication, "has no need to control vast resources, discipline armies of production workers, or impose predictable routines." Consequently, Reich presumes that efficiency, efficiency, efficiency - a word that seems to appear on at least half the pages of The Work of Nations - and not profit, profit, profit, is the name of the game for the "strategic brokers" whom he sees as having replaced old style corporate managers and owners.

On this foundation, Reich builds a "policy" argument is ultimately as simple in its underlying logic as it is convoluted, self-contradictory, and downright confusing in its presentation. In a nutshell, Reich contends that, from the 1950s to about 1970, the U.S. economy was based on low-tech, "high-volume" production that lifted all boats in a rising pluralistic tide. Sometime toward the end of the 1960s, however, high technology came into existence and, by placing a premium on the skills of the middle-class "symbolic analysts" who understand high technology's mysteries, rendered impossible the consensual and increasingly equitable sharing of the economic pie that purportedly typified precomputer "capitalism." As this strained premium increases, a new crisis in economic work's distribution and remuneration emerged: at one end of the social pyramid, the dumb, old working-class providers of "routine production services" and "in-person services" have been left behind by the fatal combination of their own high wages and lack of training in high tech. Meanwhile, at the other end of society, since the knowledge on which high-tech assets are based disappeared into the portable heads of middle-class technicians, the old investing class found that it could no longer own and exploit profit-generating assets. Hence, as the vicissitudes of unfolding technological efficiency have worked to place more and more power in the hands of various middle-class whiz kids, both labor and capital have suffered decline, causing social polarization between the middle and working classes. (One begins to see here why Reich is President Clinton's Secretary of Labor.)

For Reich, this disturbing trend raises what he takes to be the central problem of work and employment in our age: confusion. By stubbornly continuing to cling to "our" inherited tradition of old nationalist vestigial thought" and its unthinking assumption that what is good for U.S. corporations is good for the nation as a whole, "we" fail to see that the economic welfare of any nation's people now rests not on its corporations' profitability, but on its ability to train its internal workforce to handle the sophisticated symbol-manipulating operations required by the new stage of high-tech industrialism. To put it crudely but accurately, Reich argues that good jobs and livable incomes now go to smart guys; that bad jobs, unemployment, and low incomes now go to dumb guys; and that the trick of creating nationwide success and prosperity is to train ourselves Oust "Americans," not everybody in the world, of course) to be smart guys.

What is Reich's big policy conclusion from these postulates? "Government policy-makers should be less interested in helping U.S.-owned companies earn hefty profits from new technologies than in helping Americans become technologically sophisticated." In the end, then, Reich's argument is no more complicated than the proposition that we should answer President Clinton's call to "compete and win in the global economy" by turning ourselves into a Nation of Engineers.

It would take reams of paper to catalogue all the painfully dubious assumptions that Reich makes in steering a 339-page book to this stunningly naive conclusion. To name but a few: Is the modern middle class really the dominant class in the United States or in the world? In an epoch of massive financial speculation, enormous corporate revenue streams derived from interest on consumer debt, stupendous CEO salaries, and fantastically generous business depreciation allowances, is it valid to infer the decline of capital from a decline of officially reported profit figures, as Reich does? Are corporate "pyramids" really dissolving into ephemeral, decentralized "webs"? Why does Reich provide no systematic accounting of the overall trends in the division of labor in the United States and world economies, choosing instead to rely on a thin soup of creative taxonomy and random anecdote? If individuals can increase their prospects in the global job market by getting trained as engineers, scientists, technicians, and managers, is it true that whole classes of people can do so? Do managers apply science to production according to scientific principles alone? Is efficiency, in the neutral scientific sense, really the supreme goal that gives order to the private economy? Would anyone survive five minutes as a top executive if he or she actually acted on this assumption? Are government trade representatives really confused and mistaken when they act as if the corporate interest equals the national interest? Or does the continuing existence of such an automatic equation provide striking evidence that government officials' real, de facto, job is to promote the interests of a domestic class of major owners of corporate assets? In an era of high level international tensions and orchestrated fits of immigrant baiting and Japan bashing, and at a time when Einstein's warning that the Fourth World War will certainly be fought with sticks and stones holds truer than ever, is it realistic, wise, or ethical to suggest that `positive economic nationalism" is the answer to people's employment troubles?

I could go on, but there is a deeper and simpler point to be made in closing. Socialists have long argued that principles of human sociability, decency, security, and survival ought to be elevated above profitmaking in the pantheon of social priorities. They have insisted that capitalism will ultimately prove itself unable to choose humanity over profit, and will therefore have to face a far-reaching democratic reconfiguration of the motives, management techniques, and institutions that set the basic terms of modern life. As a first step in making such deep reforms, socialists have insisted, a truly progressive and democratic movement for the improvement of life would have to use public authority to guarantee productive jobs and livable incomes for everyone, regardless of the impact of such guarantees on the private maximization of profits. This proposition, as we all know, is supposed to be utopian.

But stop and think: at this late date in history, we once again find ourselves confronted, in the thought of a supposedly progressive U.S. Secretary of Labor - who probably is the most progressive kind of politician our present system of business bipartisanship is likely to tolerate - with the recycled notion that all we have to do to create the best of all possible worlds is adapt ourselves to the benevolent course of scientific progress under capitalism. Train ourselves to become a Nation of Symbolic Analysts and the streets will be paved with gold, we are told. In such a situation, and in a world where the United Nations estimates that an all-time high of at least 30 percent of the worldwide human "workforce" - a total of 880 million people - is unemployed, one has to ask: Werelies utopia?

Q. Is there such a thing as "humanitarian intervention" carried out by U.S. forces? Does the toleration of intervention in Somalia, Bosnia, and Haiti by key sectors of the left indicate an astute recognition of new realities or a serious error?

A. I believe that debates about "humanitarian intervention" by U.S. forces are futile. On foreign affairs, the best thing the United States can do for humanity is to get out of the rest of the world lock, stock, and barrel.

We sadly report the death on November 4, at age 91, of Bess Horowitz, a friend and valued supporter of MR. Bess became a socialist at an early age and remained true to the cause for the rest of her life. She lived modestly and used her financial resources, as well as her considerable energy, to support a wide variety of humanitarian activities, including the pursuit of peace between Israel and the Palestinians. She contributed generously to MR from its very start and continued to provide encouragement and friendship until her last days.

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