Radical Liberals

Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, by Robert B. Reich (2007, Knoph, New York) and The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity, by Robert Kuttner (2007, Knoph, New York.)

Kuttner — writing before the subprime mortgage meltdown accelerated — cited the two biggest sources of financial risk as hedge funds and the increased dependence of the U.S. economy on borrowing from abroad, so he slightly missed the mark on where the next crisis would come from. But he does have a prescient section on subprime mortgages and the risk they posed. What has happened in the intervening months is a good argument for his broader point about both increasing risks. On the one hand, millions of Americans who got loans that they probably could not afford — the result of lax rules and increased speculative activity by lenders — face foreclosure and financial ruin. On the other, the ensuing crisis spread through the financial industry as a result of broad-scale speculative investment by the financial institutions (who, it turns out, could not afford this debt either) in a way that almost no one precisely foresaw, and that is threatening to be a leading cause of dragging the world into a global recession.

What It Means for Communities

Both books are about the national economy and body politic, with relatively little to say about community-development or affordable-housing issues. Kuttner was executive director of the National Commission on Neighborhoods and has written about neighborhood issues elsewhere, but there is little in The Squandering of America. Reich does include in Supercapitalism a discussion of WalMart’s destructive effects on neighborhood main streets as one of the ways in which our gains as consumers are our loss as citizens. We choose the low prices, even if we dislike both the low wages and benefits, and the loss of locally owned stores and community character.

I would have liked to hear more about how housing fits into this picture, since it does not fall neatly into Reich’s category of products for which the shift to supercapitalism has created more and cheaper options for consumers. Instead, Americans pay a much higher share of their income for housing than they used to (what they are saving on consumer goods they are mostly pouring into housing payments).

On this front, I’d suggest yet one more Robert: Robert Frank’s Falling Behind: How Rising Inequality Harms the Middle Class (2007, University of California Press). In this much shorter but no less insightful book, Frank outlines how the wealthiest Americans, who have reaped most of the income gains for reasons outlined by Reich and Kuttner, have led a “consumption cascade”: paying more for housing, health care, and other goods in a way that has raised the cost of what is generally perceived to be an adequate middle-class life. As a result, middle-class and working-class families are falling behind, even if their incomes have risen modestly, since their costs have risen much more.

Reich has a compelling critique of “corporate social responsibility” — the efforts of business schools and corporations and NGOs to achieve a “double (or even triple) bottom line” (profitability, as well as socially and environmentally positive outcomes) — as a panacea for what ails us. While he is open to the possibility that much of this is sincere (as opposed to a cynical marketing ploy, which certainly some of it is), he believes it is fundamentally misguided. He argues that it diverts political energy from the “more difficult but more important job of establishing new rules that protect and advance the common good, and keep supercapitalism from overwhelming politics.” Instead of the coordinated campaign that unions, environmentalists, and community groups have mounted against WalMart, he thinks that organizing energy should go into a political effort for national health insurance, or an increase in the minimum wage.

This makes sense from a pure policy perspective, and does help to clarify some issues. If we want workers to make enough to take care of their families, and everyone to have health care, and our communities to have walkable or locally owned retail, then we would collectively need to accept that we’d have to pay a little more for what people buy there, and that we have the power as citizens to set new rules that could achieve this.

While this does help to clarify the conversation, it is a bit naive (or maybe dismissive) about how to build the power necessary to make this possible. The groups fighting WalMart know that they would be better off with local, state, and federal laws requiring hiring wages, fairer rules for workers seeking to organize a union, and national health insurance. But they don’t usually have the power to win those campaigns. Locally targeted campaigns against WalMart have been successful in many places and have at least raised these issues. And groups like ACORN have built on local campaigns to fight for statewide minimum-wage increases and progressive national legislation. In Los Angeles, groups pushing for community benefits agreements on development deals have coalesced into a citywide movement for higher standards on all projects.

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Brad Lander
Brad Lander has been a New York City Council member serving the 39th District since 2010. Lander is the former director of the Pratt Center for Community Development in New York City, and of the Fifth Avenue Committee, a CDC and organizing group.

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