Saving Capitalism: For the Many, Not the Few

The phenomenon of widening economic inequality in America is the overarching theme running throughout Saving Capitalism. Reich emphasizes the significance of this theme in his Introduction and elaborates on it in subsequent chapters, progressively building the supporting evidence and argument. Reich sees widening inequality as a sign and symptom of an unbalanced power system: He traces the reasons for this and suggests remedies. Solving this problem is the main purpose of his book, as evidenced by his subtitle, “For the Many, Not the Few.”

Defined as the unequal distribution of income and economic opportunity in society, economic inequality is a worldwide issue. In recent decades, it has become a significant characteristic of the American economic system, and the US is the most economically unequal nation in the G7. Much of Reich’s work on this theme relies on providing evidence to debunk popular myths on the existence of American equality (both economic and democratic), economic and social mobility, and opportunities available for all. It is part of his key purpose to show that the ideals of democratic civilization are being undermined in practice by a pervasive system that serves the interests of those at the top. Reich explains that for three decades after World War II, the wages for typical American workers doubled, “just as the size of the American economy doubled” (xi). Over the last three decades, the size of the economy doubled again, but the typical worker’s wages stayed the same. To put this in perspective, the CEOs of large corporations in the decades after World War II earned roughly 20 times what their typical employee earned, but now that has skyrocketed to more than 200 times the pay of their typical worker. By comparing these two eras, Reich makes an argument about the negative trajectory and the disparate generational experiences of Americans while also demonstrating that wide inequality is not essentially “American.” In seeking reasons, Reich points specifically to “the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs” (xiii). Wealthy individuals disproportionately influence market rules, and Wall Street directly funds and lobbies policy makers. These structural inequalities are essential to Reich’s argument and the book’s intersectionality between economic and democratic values. For Reich, the widening of inequality is the result of elite self-interest that undermines the democratic ideals and functions of the Unites States.

In Chapter 3, Reich tackles the common argument that “the expanding freedom of corporations to do what they want may theoretically enlarge the economic pie for everyone” (13). This theory is also known as the “trickle-down” effect and is the argument that wealth at the top gradually makes its way to those further down in the economy. Reich points out that this “freedom” has in fact enabled those at the top to enlarge their portions while making the portions of others smaller, thereby accelerating inequality. Wages for typical American workers have frozen, wealth has become concentrated among a tiny minority, and compensation for CEOs has skyrocketed. It is a key part of Reich’s argument here that the experiment of de-regulation and market freedom has been shown over decades not to achieve the stated aim of increased shared prosperity. This failure has not been exposed in economic and political discourse, however, because to do so does not serve the interest of those who shape the system.

Consequently, there has been a drastic increase in a group classified as the working poor—people who work full-time jobs but still live in poverty. According to Reich, until quite recently, “it was rare for a full-time worker to be in poverty” because of the plethora of secure, well-paying, middle-class jobs (133). The rise of the working poor can be simply attributed to dropping wages, but Reich is interested in interrogating the causes of this drop, especially when national wealth overall has grown. The increase in poverty is therefore not a symptom of a general downturn but of inequality. This is borne out by the rise of the non-working rich. In both cases, Reich sees these groups as evidence that the capitalist value system of work and reward is broken due to the increasing concentration of power and wealth. Reich argues that corporate and political forces have worked hard to prevent both unionization and the minimum wage from being raised to offset raises in the cost of living. Simultaneously, wealthy individuals have lobbied to reduce their tax liabilities, including inheritance tax. Again, Reich relies on data and evidence to support his theme, pointing out that “by 2014 six of the ten wealthiest Americans were heirs […] The six Walmart heirs together had more wealth than the bottom 42% of Americans combined” (213). It is significant here that these people are “heirs” and not self-made, as this speaks to potentially undeserved wealth and influence. Reich encourages the reader’s astonishment and indignation with the data that clearly shows how massively skewed the distribution of wealth is in America, supporting his portrayal of inequality as a negative phenomenon for the vast majority of American citizens.