But it should be required reading. As he shows, the tide is turning, consciousness is building, and there are certainly a growing number of constituencies, from private and institutional investors, business owners, academics, and government officials, who recognize the need for deep rooted change and revisionist thinking when it comes to the basic precepts of capitalism, a 19th century system that no longer reflects the complexities of today's marketplace. Instead, this maze of antiquidated legal and financial rules continues to create winners and losers, though the victims are certainly becoming the greater,from the environment itself to employees, union workers, investors and retirees to the generations of the future. And the winner's circle keeps narrowing to those few in the academic legal and economic community who expouse shareholder primacy, that a corporation exists to serve its shareholders and shareholders well, and then within those confines, the very few in the ensuing debacles of this past bull market, who actually profited from the internet bubble, not to mention those scamming executives from the likes of World Com and Enron, who managed to escape with their stock options entact before all the cookies crumbled.
Bravo, William Greider, who marches on as both a keen observer and visionary who points out that people certainly aren't going to change, but the system had better do a better job in reflecting the reality of greed and imbalance that is taking a toll globally. This book is a decade ahead of its time and could help build a better future if many take it seriously. A reviewer for The Washington Post dubbed Greider an "optimist" because of his viewpoint that large scale change wasn't only possible, but was forthcoming. But true label is "realist" because the ground swell for many of the issues he tackles has already begun. Not that you'll read about it in Forbes, The Wall Street Journal or hear about it from the usual business talking heads on cable, where contributors aren't brainy or reflective enough to grasp the big picture, if not willingly blinded to it. But Greider offers up what's taking place and why, and the historical context that our marketplace is operating in, in effortless and eloquent prose. And what he's written is an accurate protrayal of change, not just some positive thinking of the possibilities. Within many academic circles, both here and abroad, mulitnationals, stock exchanges, investment funds and business concerns, both profit and non-profit, the pressures egging on the evolution of the capitalist system are already embraced and understood.
I suggest reading Greider's book to not only understand what's at stake, but as way to align your future investment portfolio, employment possiblities, even political beliefs, because the factions he reports on in this book will have increasing power in coming years to change the status-quo to benefit our society at large.
The author emphasizes that corporate capitalism is in fundamental conflict with society in its consideration of human beings. Corporate employees are little more than factors of production, essentially divested of their humanity. Individual and social concerns are secondary to the almost obsessive corporate fixation on the bottom line. The author makes it exceedingly clear that the "master-slave" relationship imposed on workers in virtually all private companies stands in distinct contradiction to the notion of "free American citizens," able to fully participate in all social affairs. Lost in corporate thinking, is the fact that corporations are in fact small societies.
One would scarcely know today that the general citizenry once indirectly controlled corporations. Corporations were chartered by state legislatures for specific, limited purposes with public obligations. But in an attempt to attract corporations, some states began eliminating those limitations. The Supreme Court, in 1886, solidified corporate standing by declaring them to be legal "persons" with 14th Amendment rights to due process. As the author notes, society now must react after the fact to corporate excesses rather than exerting up front control.
Greider contends that for workers to be able to exercise the democratic-like rights necessary to ensure that companies operate without harming the larger society or the environment, it is fundamental that they become "owners" of their firms. Beyond "do-no-harm" standards, corporations need to take the initiative to become more efficient, to develop biologically degradable materials, and to recycle their products. However, authentic worker ownership is extremely rare in the United States. The author readily admits that ESOPs, a touted form of employee ownership, do not carry with them any inherent rights to participate in corporate decision making.
The financial system in the United States, consisting of investment and banking institutions, among others, has become ascendant over the last thirty years in shaping the nature of American capitalism. Those institutions emphasize short term profits and rising stock market prices while downplaying the long term interests of both the economic system and society. The author suggests that it is mostly a convenient fiction that these pressures are exerted to benefit anonymous shareholders. However, CEO compensation and the ability to leverage buyouts are rewarded by the short term manipulation of stock prices.
The author suggests that structural conditions do exist within the financial system that have the potential to exert reforming pressures on corporations. Pension funds are huge owners of corporate financial assets. Those ownership stakes can often enable funds to force corporations to not opt for short-term gains achieved by such measures as downsizing workforces or degrading the environment. Pension funds do have the fiduciary responsibility to act in the long-term interests of their beneficiaries, that is, employees. In addition to pension funds, the author points to investment funds that rate corporations on the socially beneficial effects of their operations.
Though the author points to new ownership forms, socially conscious investing, and positive environmental actions, he makes no claim that those efforts are widespread or having much impact. And the political system, as it is presently constituted, will not hold corporations accountable for the "externalities" that they generate. The political process has been captured by special interests (mostly big business) that produces, at best, pseudo legislation loaded with loopholes designed for evasion by those same special interests.
However, it is difficult to understand the author's greater confidence that political action at the local and state level can readily alter corporate practices. Politicians at those levels are in competition with similar governments to gain favor with corporations. It was, in fact, the federal government that mandated inescapable, nation-wide reforms that brought the country out of the Great Depression. Of course, corporations have increasingly defeated or avoided that regulatory framework that was concerned with "legal rights for workers, antitrust standards, and social and economic regulations."
The author recognizes that American capitalism subtly encourages the distancing of citizens from the operational centers of key social and economic institutions. The citizenry is scarcely aware that its formal democratic control of society has been usurped by autocratic corporations. Consumerism has essentially replaced the practice of democracy as the primary exercise of freedom. However, all is not well.
There are feelings of distress in our modern society. But for a public debate to occur concerning the structure and purpose of corporations, there has to be a perception that they may be at the root of societal dysfunctions. The reform efforts that Greider has noted cannot be discounted, but contrary to his hopes, there is no doubt that it will take a New Deal type of effort through federal legislation to counter corporate power. Fundamental is the need to surpass the scope of current labor law and establish formal democracy within corporations for workers. Citizens must have a voice in our primary economic institutions that have such large societal effects. From that must flow other corporate reforms such as ecological sustainability.
It is a mild criticism of the book that little direct attention is paid to the profound ability of media conglomerates and educational institutions to greatly sway public thinking. It is hardly surprising that American capitalism is, for the most part, unquestioned. The author's optimism for reform is ultimately tempered: "As it presently functions, the economy is certain to generate still greater inequality, still more pointless impoverishment of lives, more social destruction, more empty political combat, and more wreckage for future generations to clean up."
For the most part serious tier-one traders of equities, bonds, commodities and forex markets will ignore the contents of this book. They are on the cutting edge of establishing value and have no technical or fundamental instrument to quantify humanity in the daily battle of market pricing. However, senior management, bankers and administrators would be wise to examine this text. They are in a position to promote change. And only they can end the callous indifference and greed that dominates Wall Street.
Greider does his homework. He introduces the thoughts of several social gospelers and philophers to punctuate many important points. At the top of the list of culprits is how senior corporate executives have no true social responsibilities other than to make money for shareholders. On the contrary, the heroes of nurturing solid corporate social values are union managed pension funds who advocate wholesome investments.
On a less than positive note...Greider's "agitating inquiry" tends to get a little carried away with his criticism of certain segments of the financial system. For instance, his allegations of fuedalism and master/servants labor systems in today's capitalist society are weak and will be discounted by objective economists. Nevertheless, this is an important book that explores how downsizing, restructuring and outsourcing reduce human dignity, equity and self-worth for many Americans.
Bert Ruiz