Robert Reich’s “Supercapitalism” Chapter 2 Analysis

Robert Reichs Supercapitalism Chapter 2 AnalysisRichard (Ben) DowdenAnalysis of a chapter from Robert Reichs SupercapitalismOutline of Reich, chapter 2Argument outline of Reich, chapter 2Overall purposeSince the 1970s competition between corporations grew as technology developed, American companies began to pursue profit to remain competitive resulting in supercapitalism triumphing over democratic capitalism.ReasonsGlobalisation, new production processes and deregulation increased competition giving consumers and investors more choices.Increase in investor culture drove companies to compete for shareholders (i.e. highest possible profits) regardless of their social responsibility.The decline in total membership as a result of pursuits in profit has led to the decline of power workers have over their employers, the corporations.Evidence for reason 1In divide 2 (pp. 56-60), Reich describes how technology developed for use in the Cold War had influence over American business. He asse rts the technology had three indirect outgrowths worldwideisation, new production processes and deregulation (p.60). He argues that each of these outgrowths increased business competition giving concrete examine for each in the succeeding(a) sections. variance 3 (pp. 60-63) argues that globalisation has reduced the cost of overseas trade creating opportunities for global supply bondage. Reich states that the Vietnam War resulted in the growth of commercial, global logistics. Reich gives concrete read of how seven new containership companies entered the market in the year following the war and how perseverance grew at a high rate thereafter (p.61).Moreover, Reich argues this created the concept of global supply chains. Reich notes the great increase in American imports from American owned overseas factories between 1969 and 1983 (p.62). He then gives examples describing large companies global supply chains (p.62).Section 4 (pp.64-65) argues new production processes trumped th e economies of scale used by the oligopolies resulting in a marketplace growing in complexity. Reich gives examples of how new production processes allows specialisation. He explains how standardised steel gave way to specialised galvanised steels designed for a niche market (p.64). Furthermore, a huge brand like Coca-Cola faced a novelty of specialised drinks taking away Coca-Colas market share (p.65).In section 5 (pp.65-70) Reich argues that as businesses innovated, new profitable, yet restricted opportunities were discovered at heart regulated markets, companies lobbied for deregulation, driving competition. Reich states that in some cases, deregulation put companies out of business since they lost the cross-subsidies from other previously regulated, profitable companies. He gives evidence of the ships bell Systems segmented telecommunication companies based in the country becoming unviable, opening business opportunities to smaller, extremely competitive companies (p. 68). Fur thermore, trucking and airline deregulation led to added competition, particularly in freight (p.69).Evidence for reason 2At the end of section 5 (pp.65-70) Reich quotes Edward E. Furash stating that due to the change in head word in Americans management of wealth, the American financial system will shift towards competing for investors (p.70). Reich describes the financial deregulation of banking giving new opportunities to investors among others he gave evidence of stock broker, Merrill Lynch setting up mutual funds (p.67). Reich seems to contribute the increase in investment choice and effectiveness because of deregulation to savers becoming investors.Reich backs the carry with statistics at the start of section 6 (pp.70-75) citing the increase in percentage of households owning stock (pp.70-71). Reich goes on to say this also coincided with the bull market of 1980-2000 (p.71). His overall argument here is that companies had to compete for investors which meant maximising retu rns.Reich gives evidence of how profit margins rose from the beginning of the 1980 to 2000 at a high rate of change (pp.72-73). He also gives evidence of how the number of companies that ran at lower profit margins that were subjected to hostile takeovers increased by a factor of 11 from the 1970s to the 80s (pp.73-74).In Section 7 (pp.75-80), Reich begins by quoting the former CEO of Coca-Cola stating companies have the sole responsibility of generating returns for their investors (p.75). He continues to point out a CEOs job security department is increasingly attributed to the clubs stock price recommendation. 50% of CEOs companys stock was downgraded in investment recommendation were fired in the following six months (p.76). Reich uses evidence of how 60% of senior executives in the Fortune 500 companies had been at their firm for fewer than six years (p.76).His argument is that CEOs no longer have room to worry about the social consequences of their organisation. He uses the e xample of Malden Mills, a family-owned textiles company which ran at a loss manufacturing in New England. Their CEO did not want to close the factory since the local economy had high dependencies on it he was eventually sacked by the companys creditors (p.79).Evidence for reason 3Section 8 (pp.80-86) focusses on the decline in union membership starting from the 1970s. He cites evidence from the U.S. say-so of Labor Statistics of how union membership rapidly declined beginning in the 1970s (p.80). He explains this is a consequence of employers contesting unions, giving concrete evidence of this through the fall of uncontested union elections (p.80). Reich also gives evidence of how the rate of illegal dismissals of union members rose through the 1970s and into the 90s (p.81).Reichs explanation for corporations demeanour was related to cutting the costs of the payroll to remain competitive as consumers and investors looked for the cheapest deal. Reich gives concrete evidence of ho w the nonunionised sector of the American economy grew at a greater rate than the unionised sector (pp.82-83). This increase in opposition arising from nonunionised companies forced unionised corporations fight the unions to remain competitive. Reich uses evidence from a vomit of industries to describe this citing the air travel industry (p.83), the Big Three American car manufacturers (pp.83-85) and the construction industry (p.85).Reich goes on to explain how the public services sector was never unionised, consequently suffering low wages. Reich uses the evidence of how members of the public services industry went on strike responding to their wages being cut as anti-union Wal-Mart entered their industry (p.86).Reflection How the chapter intersects with my lifeThe chapter reaffirmed my own opinion that wealth distribution in developed nations, particularly Americas, is unequal. It shows that while deregulation may improve its gross domestic product per capita, it doesnt guarante e a high quality of life. In fact, in more regulated economies like in Scandinavia, quality of life indicators are higher since wealth distribution is far more equal (Wilkinson Pickett, 2009).The chapter is interesting, considering the debate surrounding the deregulation of tertiary education in Australia. It does give universities ability to form an identity, which is a way of saying it encourages elitism. After all, a universitys prestige is generally attributed to how well-endowed it is. But is it righteous the first step to university privatisation? Will universities eventually just pursue profit like companies?List of referencesReich, R., 2008. Supercapitalism. New York Alfred A. Knopf.Wilkinson, R. and Pickett, K., 2010. The spirit level. London Penguin Books.