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Saturday, May 26, 2007

The Breakdown of the Postwar Social Contract

Here's a small part of a much longer essay from the New York Review of Books:

The Specter Haunting Your Office, by James Lardner, NY Review of Books, Volume 54, Number 10: [Review of The Disposable American: Layoffs and Their Consequences by Louis Uchitelle Vintage; The Great American Jobs Scam by Greg LeRoy Berrett-Koehler; The Battle for the Soul of Capitalism by John C. Bogle Yale University Press.]

...From their different vantage points, Uchitelle, LeRoy, and Bogle are writing about the breakdown of what some have called the postwar social contract, and about the rise of a new "money power" more daunting, in some ways, than that of the late 1800s and early 1900s. To gain their political ends, the robber barons and monopolists of the Gilded Age were content with corrupting officials and buying elections. Their modern counterparts have taken things a big step further, erecting a loose network of think tanks, corporate spokespeople, and friendly press commentators to shape the way Americans think about the economy. Much as corporate marketing directs our aspirations disproportionately toward commercial goods and services, the new communications apparatus wants us to believe that our economic wellbeing depends almost entirely on the so-called free market—a euphemism for letting the private sector set its own rules. The success of this great effort can be measured in the remarkable fact that, despite the corporate scandals and the social damage that these authors explore; despite three decades of deregulation and privatization and tax-and-benefit-slashing with, as the clearest single result, the relentless rise of economic inequality to levels so extreme that since 2001 "the economy" has racked up five straight years of impressive growth without producing any measurable income gains for most Americans—even now, discussions of solutions or alternatives can be stopped almost dead in their tracks by mention of the word government.

The rules, procedures, and understandings of the postwar social contract were designed for a world in which practical forces kept businesses anchored in geographical place, reinforcing the sense of obligation that many corporate leaders felt toward workers and communities. That being said, those arrangements were spectacularly successful in creating a broad, accessible, and secure middle class, and in bringing unprecedented transparency and fairness to the hazardous relations between individuals (whether customers, workers, neighbors, or shareholders) and corporations.

In addition to being good for the society at large, the postwar social contract turned out to be very good for American business. ... Economically and in other ways, then, the future will depend on our ability to find more durable means toward the same ends; and while none of these books lays out a blueprint, taken together, they suggest a few operating principles.

The economic policy of the United States has in recent memory been directed almost entirely toward the goal of growth, and treated, accordingly, as the preserve of experts and corporate and financial insiders. Policy initiated outside this preserve has been limited, for the most part, to a set of narrowly defined issues (such as health care, retirement security, pollution, etc.) considered fit for democratic deliberation. This compartmentalized approach, we now know, is guaranteed to be an exercise in damage control, requiring obsessive vigilance and leaving a trail of frustration. Instead of trying to prod or seduce companies into doing what they cannot justify from a profit standpoint, we should be trying to bring everyday corporate thinking into rough alignment with the goals of society as a whole.

That will mean, as Bogle says, finding efficient ways to check the speculative excesses of today's financial markets and cut down on the tremendous amount of energy and human as well as economic resources that go into the pursuit of what he calls "aggressive financial targets" at the expense of "character, integrity, enthusiasm, conviction, and passion." It will also mean ... coming up with mechanisms to recognize the stakeholder status of longtime employees and local communities, and— as we are just beginning to do on environmental issues—bringing some of the intangible concerns of work life and community and social wealth onto the corporate balance sheet.

Devising workable policies in service of these aims; ... looking for strategic ways to loosen the hold that the free-market mythology still has on us—that is the great challenge of this fluid moment in our national story. ... The injuries examined by these books are felt, to one degree or another, by most Americans. A countermovement might eventually be as broad as the harm, reaching across some of the lines that have defined American politics, unconstructively, since the 1970s; such a movement could, in time, draw support from inside as well as outside the business world...

Most Americans are troubled by the culture of dealmaking and financial engineering and insider self-enrichment that Bogle deplores; by the callous treatment of workers and work life that Uchitelle describes; by the erosion of communities and community institutions that LeRoy examines. Not very far below the political surface, most of us feel some version of the same vexed ambivalence toward corporate America—dazzled by the conveniences and comforts it delivers, yet resentful of the tradeoffs that it continually demands; few Americans would be anything but grateful if our corporations and financial institutions could develop some respect for our non-material and non-individualistic selves. It is hard to imagine such a fundamental transformation of these giant institutions. It is even harder to imagine a better world in which they remain essentially what they are.

    Posted by on Saturday, May 26, 2007 at 02:25 AM in Economics, Social Insurance | Permalink  TrackBack (0)  Comments (21)


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