Book Review: (page 1 of 2)
The Work of Nations
By Robert Reich
New York City, 1992
340 Pages, $12 Paperback
Reviewed by Carl Davidson
Networking for Democracy
Reich's appointment as Secretary of Labor did not sit well
with many lobbyists in Washington. Corporate interests were
generally worried that he might be too liberal and "anti-market."
Union officials, on the other hand, saw him as an elitist
"free-trader" and "job exporter" detached
from their concerns.
there is some truth behind all these critical labels, they
all miss the main point about Robert Reich. The most important
thing about the new Secretary of Labor is the fresh perspective
he brings to the vast restructuring of the labor market caused
by the collapse of "smokestack" industries in the
U.S. and the growth of industry in the third world.
views are clearly laid out in his latest book, The Work of
Nations, which is both a futurist vision of the work force
of the 21st Century and an old-fashioned polemic against "economic
nationalism." Old-fashioned liberals and conservatives
alike will find plenty to disagree with in its pages.
main focus is on the U.S. crisis of de-industrialization and
what to do about it. Unlike many liberals and union officials,
Reich opposes tariffs and other restrictions on trade designed
to "protect" American mass production from global
competition. In his view, the shift of lesser skilled jobs
to low-wage regions is a natural process that could even have
positive results overall. But unlike many conservatives, Reich
doesn't hold out much hope for the free market's ability to
take up the slack by generating adequate high-skilled employment
or high-wage incomes without substantial assistance from government.
does Reich propose? First, he argues for assessing the wealth
of a society's economy in a different way: not by adding up
what its business class owns, but by adding up what value
its working class and small producers can impart to their
products in the process of production. Actually, Reich's analysis
here is quite old- fashioned. Like both Karl Marx and Adam
Smith, he sees the dynamic economic value of a nation residing
in the relative size, skill and productivity of its labor
force. In fact, his book's title, The Work of Nations, is
an implicit tribute to The Wealth of Nations, the 1776 classic
of Adam Smith.
begins by reviewing the history of the interplay between the
American state and economy. He brings out a number of interesting
points, especially on the historical importance of protectionism.
For its first 150 years, for instance, the American market
was far from a free market: until 1913, an average duty imposed
on imported goods was as high as 50 percent. In the early
20th Century, he also shows how anti- trust legislation, intended
to promote competition among these home-grown, hot-house capitalists,
in fact promoted the growth of large corporations that swallowed
their competitors and restricted competition.
corporations grew in tandem with the techniques of a mass
production where products were standardized for a mass market.
The mass market in turn required a mass culture of consumption.
According to Reich:
took it as their patriotic duty to consume, and understood
the purpose of the American economy as enabling them to do
so. `Economic salvation, both national and personal, has nothing
to do with pinching pennies,' declared a 1953 advertisement
for Gimbels, the New York department store. `Economic survival
depends on consumption. If you want to have more cake tomorrow,
you have to eat more cake today. The more you consume, the
more you'll have, quicker."
however, had an important impact on the character of the work
force. On one hand, American workers were more productive
than ever; on the other hand, their skills had declined relative
to their forerunners in the craft unions. Reich shows how
the mass production industries today are still seeking out
the low-wage, unskilled and semi-skilled work force. Only
now they do it on a global scale, often finding it easier
to export the factories rather than import the workers.
where Reich raises a critical question. Does the future of
the American economy reside in competing with the third world
in order to retain relatively low skill and low wage manufacturing
jobs within the borders of the U.S.? Reich doesn't believe
there are any winners in this kind of competition: not American
consumers, for whom protected trade means higher prices; not
the unemployed in the third world, for whom fewer new factories
means semi-starvation; not even, in the long run, for the
unskilled in the U.S., who are losing their jobs to automated
in a global market, moreover, simply doesn't work anymore.
Too many products and too many companies no longer have a
distinct or single nationality. If one wants to buy a car
made mainly by American labor, one would do better purchasing
a Honda from Ohio than almost any Chrysler vehicle made anywhere.
What is an "American" company, Reich asks, in a
global web where by 1990 "Chrysler owned 12 percent of
Mitsubishi...Ford owned 25 percent of Mazda...[and] General
Motors bought more than 40 percent of Isuzu?"
makes a convincing case that it is both impossible and reactionary
to try to prevent the globalization of the market. Instead,
he poses a strategic question: Rather than trying to prevent
low-wage, low-skill jobs from leaving the U.S., why don't
we try a policy that would encourage high-wage, high-skill
jobs to come into the U.S., regardless of the nationalities
of the investors?
It's an important point--Reich identifies the process as shifting
from "high volume" production to "high value"
production. It is especially crucial, he adds, because new
job creation is not going to come from the corporate giants
of the past. More >>