Book Summary – Rebalancing Society (Radical Renewal Beyond Left, Right, and Center)
In fact, much of the developed world misinterpreted the fall of communism to mean that unbridled capitalism is unequivocally good. As a result, many nations have careened “out of balance,” allowing their private sectors to seize too much power and leaving public sectors marginalized and maligned. Most societies ignore the “plural sector” – the nonprofits, religious organizations and cultural groups that tie societies together.
Communism created at least “a modest constraint” on the profit-driven excesses of capitalism. The fall of the Berlin Wall in 1989, precisely 200 years after the American Constitution took effect, lifted any constraints on capitalism. People concluded that if communism was corrupt and ineffective, then unbridled competition and unfettered consumption must be inherently good. The end of communism brought about an “end of thinking” – after capitalism triumphed, pundits no longer pondered the long-term consequences of capitalism.
“Anyone who believes that corporate social responsibility will compensate for corporate social irresponsibility is living in a win-win wonderland.”
A more sophisticated reading yields a more nuanced view of the end of communism. Communism collapsed because it fell “severely out of balance.” Public sectors came to control everything, leaving private enterprise and the plural society powerless. In that reading, balance – not capitalism – triumphed. Corporations weren’t the heroes; they were the beneficiaries.
“Healthy development – social, political and economic – allows power to shift among the sectors according to need, in a dynamic equilibrium that encourages responsiveness without domination.”
To understand America’s current imbalance, consider its history. The US rebelled against the heavy-handed rule of the British monarchy. In the late 1700s, the US introduced a limited government of checks and balances that kept any one individual or institution from gaining too much power. From 1789 to 1989, the system worked. Individuals pursued economic opportunity, and government was strong enough to regulate the private sector.
“De Tocqueville identified the genius of American society as ‘self-interest rightly understood.’ Now the country finds itself overwhelmed by self-interest fatefully misunderstood.”
As the US economy grew, corporations amassed great power, but government initiatives held them in check, including the federal antitrust laws of 1890 and 1914 and Franklin Roosevelt’s New Deal. Many American heroes – Thomas Jefferson, Abraham Lincoln, Dwight Eisenhower among them – fretted about the rising power of commerce. “An 1886 ruling by the Supreme Court” conferred the freedoms of individuals on corporations. “It reinforced property rights with a vengeance: corporations were recognized as ‘persons’ with ‘equal protection of the laws’.”
“Global warming, for example, will not be reversed without determined collective action, across individuals, institutions and nations.”
Society should aim for balance. A “balanced society” is a three-legged stool that includes the private sector, a public sector to provide protection, and a plural sector to fill in the gaps. Today’s imbalance grows increasingly dire. The US society’s concentration of wealth and increasing corporate power are killing the American dream. Social mobility has become a myth. High-earning parents beget high-earning children; fewer citizens break through class barriers. In this out-of-whack world, the benefits accrue to the wealthy few – at the expense of everyone else.
“Most countries called democratic do not have an independent press so much as a corporate press, beholden to the owners and the advertisers.”
Since 1990, “wealth inequality” has intensified, a result of the growth of corporate power. A Supreme Court ruling allows firms to donate unlimited amounts of money to political candidates. “In the 2012 US presidential elections…private interests spent billions on the campaigns.” Many large firms game the tax system and pay almost no income tax. White-collar criminals rarely suffer punishment, but low-income criminals serve harsh jail terms.
“A healthy economy favors the explorers that serve themselves by serving us.”
The US, known for cutthroat capitalism, leads other, gentler societies into imbalance. Even Canada, long a milquetoast in pro-capitalist circles, displays “a creeping meanness” and veers out of balance. US corporations attempt to impose their will in Canada, lobbying against environmental regulation and in favor of more business-friendly patent laws. As the US negotiates free trade agreements worldwide, leaders in the European Union and elsewhere face a test. Will they insist on balance or agree to the unchecked American way?
“We are living in a high-speed, unbalanced world that is oscillating out of control.”
Externalities are symptoms of a society out of balance. An externality is a side effect of the pursuit of profit that becomes someone else’s problem. Does the factory create air pollution? Keep polluting and let society worry about the consequences. Did the corporation lose money? Lay off thousands of workers and let them deal with the financial setback. Free-market theory says the market absorbs and reflects cost of externalities. If you want fewer people to drive gas-guzzling cars or fly on private planes, let supply and demand drive up the price. This sends a clear message: The rich can do what they want while everyone else makes sacrifices.
“A society out of balance, with power concentrated in a privileged elite, can be ripe for revolution.”
Dumping externalities on everyone else while reaping profits is “exploitation.” That means, for instance, that natural resources and human resources exist for exploitation in service of corporate income. Long-term consequences don’t enter the calculation. In a more balanced approach, corporations turn from exploitation to exploration. Explorers, by definition, are resourceful. They find ways to serve the profit motive and society. Benjamin Franklin invented a popular stove, but did not file a patent for it. Scientist Jonas Salk refused to patent his polio vaccine. Both placed the needs of society ahead of their private profits.
“Capitalism is not good because communism proved bad. Carried to their dogmatic limits, both are fatally flawed.”
As national economies veer out of balance, political paralysis sets in. In the US, presidential politics follow a predictable pattern. Most voters reliably side with one party or the other. Centrists, who switch affiliations based on dissatisfaction with the incumbent party, determine election results. Voters elect presidents by narrow margins, but presidents govern as if they have clear mandates. George W. Bush promised “compassionate conservatism” but launched into war. Voters repudiated his policies and his party lost the White House, a classic example of “pendulum politics.” But voting out the incumbent party never changes a nation whose government operates at the whim of narrow interests. Nor does it restore balance.
“Canada, long known for its balance and benevolence, has become another cheerleader for this one-sided view of development.”
The plural sector is made up of nongovernmental organizations, unions, religious groups, universities, nonprofit hospitals, think tanks, and other such groups. In the 1800s, political philosopher Alexis de Tocqueville marveled at American self-organization that fell outside the private sector and government. Neither the state nor private investors control this corner of society. Groups from the plural sector sometimes remain blandly apolitical. The American Red Cross, for instance, sells swimming lessons and provides disaster relief. From the left, Greenpeace favors environmental regulation. From the right, the University of Chicago produces prize-winning economists who espouse free-market supremacy.
“In the US in particular, the private sector now dominates society to such an extent that no established form of political activity is likely to dislodge it.”
The plural sector reflects the American commitment to community and a neighborly helping hand. Increasing individuality weakens the nonprofit sector. The automobile made society more isolated as mass transit dwindled. Technology replaced communities with social networks, but it’s not the same. After all, will your Facebook “friends” rebuild your barn?
“The US Supreme Court has declared that these corporate persons have the right to free speech. As a consequence, some of them have used their wealth to drown out the free speech of real persons by weighing in on public issues with massive advertising campaigns.”
In the US, capitalism becomes increasingly “predatory” and “crass.” When the profit motive is paramount, questionable tactics follow. These include misleading advertising and marketing efforts that target children. These examples demonstrate how corporate crassness is becoming embedded in American culture:
- Mindless consumption– Corporate-dominated culture exhorts people to buy.
- The “corporate press”– In many nations, the media are in thrall to corporations, and are not public watchdogs. In Canada, nearly every English-language newspaper endorsed neoconservative candidates in the federal election in 2011. Italian Prime Minister Silvio Berlusconi long controlled the Italian media to keep himself in office.
- Advertising overload– In 2000, a typical American child viewed 40,000 TV ads a year.
- Rampant commercialization– Celebrities and athletes take cash to tout products. Doctors accept payments from drug companies.
- Privatization of government services– Free-market supporters promote privatizing jails and other public services that the public sector performs best.
- Hypocrisy– Free-market rhetoric hinges on government intervention in private enterprise. But these private-sector champions meddle in government affairs through lobbying, ads and campaign contributions. If corporations are people, why doesn’t the government file criminal charges against those who knowingly produce unsafe products?
“America did not invent democracy so much as give impetus to a particularly individualistic form of it.”
The plural sector offers checks and balances on the private sector’s commercialism and the public sector’s inaction. Corporations maximize profits and offload externalities. They pay lip service to corporate social responsibility, but no corporation will act against its commercial interests.
Responsible, service-minded social initiatives can help restore balance. If you think a single social-minded activist can’t make a difference, consider Ralph Nader. His 1965 book Unsafe at Any Speed forced General Motors to take its Corvair off the market. Mahatma Gandhi energized a national revolution by encouraging Indians to protest the British tax on salt. Democratic capitalism demands serious reform. The necessary steps to achieve this include:
- Realize that corporations are not people– Corporations enjoy the rights of people but not the responsibilities. This must change.
- Value common property as much as private property and intellectual property– The free market reveres private property, yet scorns the value of common property, particularly lifesaving inventions such as drugs.
- Shine a light on lobbying– Political lobbying must move out of the shadows and into full public view.
- Limit campaign spending– Big donors give private cash to support political campaigns. This rigs the results for those with the deepest pockets.
- Tax financial activities– Short-term trading adds volatility to futures markets and stock markets. These activities should be subject to stiffer taxes.
Fight the Status Quo
Going against the status quo requires a maverick mind-set. Consider how Brazil, in its quest to battle an AIDS epidemic, outmaneuvered the global drug industry in the 1990s and early 2000s. As AIDS infections reached crisis levels, Brazil distributed condoms at Carnival festivals and made AIDS a plotline in a popular soap opera. Brazilians could not afford first-world HIV drugs. Drug makers refused to drop their prices. Brazil’s Ministry of Health declared AIDS a national emergency that trumped the intellectual property rights of pharmaceutical companies.
The Brazilian government ordered its research labs to create AIDS drugs. Brazilian scientists managed to mimic commercial AIDS pharmaceuticals. The multinationals relented and agreed to collect royalty payments. The US turned to the World Trade Organization to challenge Brazil’s actions, and Brazil counterpunched. It asked the UN Human Rights Commission whether AIDS treatment was a human right. The vote was a unanimous 52-0, with the United States abstaining.
Brazil kept its AIDS infections to less than half the projected levels by defying world powers to achieve a social goal. Brazil didn’t back down, in part because it has a diverse population and is linguistically separate from world powers. A huge factor is the “why not?” mind-set of Brazil’s populace. Why not ignore the wishes of greedy drug companies if that means saving lives? Why not buck the status quo, even if the beneficiaries are “homosexuals, prostitutes and hemophiliacs”?
Brazil didn’t invent “why not?” thinking. The US was once the exemplar of common sense, resourcefulness and decency. Political gridlock and societal imbalance grip the country, but Americans can tap again into their revolutionary roots and remake their world. As Thomas Paine wrote in 1776, “We have it in our power to begin the world over again.”