The Soul of Capitalism: Opening Paths to a Moral Economy

Rating:
Summary: A lot of economics misinterpretations.
Review: Greider gathers some good ideas, but also many very bad ones. His good ideas include that the business sector is becoming more sensitive to environmental concerns. He views being environmentally conscious at the corporate level as making excellent business sense. He mentions the excellent work of Innovest which is the equivalent of a credit rating agency but covering environmental risk instead of credit risk. Innovest gives environmental risk rating which look and smell just like credit ratings (AAA, AA, BBB, etc...) from Standard and Poors and Moody's. He also praises the excellent returns and practices of all the socially responsible mutual funds. Additionally, he shows much interest in the Wall Street Journal development of the Global Sustainability Index which tracks the 10% most environmentally and socially conscious publicly held corporations. All the above concept are just great. Mind you, he did not invent any of them, but he deserves some credit for uncovering them. However, Greider in his morally driven enthusiasm goes way overboard.

Some of Greider's not so good concepts relate to governance. In his mind, he feels that pension funds should essentially run the World. They should certainly run Wall Street and tell them exactly what to invest in or not. He indicated with much excitement how pension funds in certain cases have exerted their might and forced security analysts to revise their stand on a company stock because they expressed concerns on their rising labor cost due to its unionized force. In another case, a pension fund forced an investment bank to retreat its support for the Bush Administration exploration of the privatization of social security. I gather it is the right of pension funds to throw their weight around. But, to go as far as thinking this is a really positive development leading to a more moral form of capitalism is a real stretch. One thing for certain, is that such pressures rendering optimal pension investing impossible will certainly hurt the returns of these very same pension funds doing all the elbowing. In turn, the pensioners will suffer.

Along the same lines, Greider thinks that labor unions should also regain their lost power. He actually views labor unions and their respective large pension funds on the same power axis, and has nothing but praises for them. I think some of the unions pension fund managers are extremely sharp. I am thinking of CALPERS. But, the majority of them are not so sharp. I certainly don't think that the labor union and pension fund faction represents a broadbase solution for any of the problems that capitalism may or may not have.

Another area where Greider is disoriented is in plain economics. He constantly stumbles on the trade off between equality and opportunity out of his good heart. But, as a result he does not understand anything about the dismal science. He states: "An economic crunch seems unavoidable unless the distribution of income is altered significantly." This is plain wrong. There is no inverse correlation between economic growth and income distribution. Sweden has a more equal distribution of income, but it's economic growth has actually paled compared to the U.S. He goes on further stating: "The house of economics is due for a major renovation if not complete tear down, because the economic order has lost one of its mainly emotional suppositions: the motivating fear of scarcity and deprivation." That statement is ludicrous. Individuals are motivated by maximizing their gains, and minimizing their risks. They are not motivated by merely surviving above a dire scarcity threshold living standard, as he suggests. I could go on an don. The book is stuffed with economics misinterpretation.

In conclusion, this is a very mediocre book at best. If you want to better understand the economics themes addressed by Greider, I recommend the books by Robert Reich. One of his last book, The Future of Success, touches on many of the same economic themes. Also, regarding the environmental business consciousness, I would dip into the very rich literature on sustainable development. There are so many excellent books on this subject, some written 20 years ago, that are still a lot more innovative and accurate than Greider's book today.

Rating:
Summary: brilliant discourse
Review: I'm sure many players in the marketplace are not ready to embrace what Greider is reporting, essentially the call in many quarters for a new economic paradigm that takes into account such off-the-book realities as environmental and technological sustainability and corporate accountability.

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.

Rating:
Summary: The Soul of Capitalism: Opening Paths to a Moral Economy
Review: In this brilliantly written volume, best-selling author and journalist Greider admirably articulates the conflict arising from the US's emergence as the greatest wealth-producing engine in history and the widespread discontent it has generated among workers. His analysis of US capitalism is well documented and always challenging, although readers may disagree with some of his theses, e.g., that workers in capitalist societies occupy a position much like that under feudalism; this denies the current relative freedom of movement by labor within and between countries. Indeed, Greider makes much of capitalism's treatment of human labor as a lifeless input to production, no different from machinery or raw materials, with monetary rewards determined at the employer's discretion (disregarding the reality that comparative productivity of workers usually sets wages.) The dehumanization of labor under capitalism and remedies to end it comprise the bulk of Greider's analysis. He eschews reliance on government to provide a soul to capitalism because, in the long run, special interests appear to prevail. Greider's solution to providing human dignity, social justice, and self-worth to employees is by transforming them into owners of their own labor. An eloquent, populist endeavor, of value to students and practitioners of public policy.

Rating:
Summary: Can Soulless Corporations be Reinvented? (4.5 stars)
Review: It could be said that our economy functions at a level that has basically eliminated scarcity, but Greider is concerned with the tremendous costs imposed on the greater society and on the environment by our economic system. His argument is that corporate capitalism with the complicity of government at all levels has had significant deleterious effects notwithstanding the obvious material abundance. Greider is improbably optimistic that isolated actions of dedicated citizens - he calls them pioneers - or socially-oriented bodies can modify capitalism and its destructive consequences through grassroots approaches or special leverages.

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."

Rating:
Summary: IT CAN WORK!
Review: Mr. Greider has shown us in this book that ordinary citizens can re-invent their economic future and themselves, even though most of Washington reacts to this with a yawn. This book also shows the American system of global finance as both a wonderful and dreadful beast. How can this beast be tamed? By people willing to do the hard work to bring out the best in the beast and to make capitalism work for most citizens.

Rating:
Summary: Provocative Investigation of Postmodern Capitalism
Review: No one writes with more verve, insight, and human compassion than long-time Rolling Stone contributor and Editor William Greider. His perspective always centers on the human cost of social phenomena, and is always heartfelt, compassionate, and extremely well focused. In this book he centers in brilliantly on the ways in which the so-called "Third Wave" of global trading and commerce has both complicated and corrupted the social, economic, and political landscape of the countries in which it has flourished. His writing skills are superb, and the ordinarily dry and stuffy stuff of economics come alive in this highly readable and quite entertaining work. Moreover, Greider demonstrates his understanding of the Marxian critique of postmodern capitalism as well as its relevance for what appears to be a critical point in capitalism's history.

This is a brilliant and perceptive book, one which both recognizes the dangers that confront us as well as the opportunities lingering beneath the surface of the sputtering global economy, which has seemingly turned inward and against itself, with some quite disturbing retrogressive long-term effects for both the workers and middle classes of the societies in which it is most advanced. Yet, Mr. Greider's perspective is more sanguine than one might expect, expressing both concern over the many ways in which this fundamentally anti-democratic strain of global commerce tends toward becoming a revolutionary & extraordinarily well-focused force literally power-hosing the new wealth generated by this commerce in the direction of the rich and well placed at the expense of almost everyone else, and yet at the same time giving signs of some irresistible movements toward greater responsiveness and attention to actual consumer needs, as opposed to those they manufacture and market so well today.

In summary, Greider argues that while the world is still likely to experience a period of difficult & chaotic social & economic circumstances; disastrous levels of industrial plant overcapacity, unmanageable surplus goods, unemployable labor pools, frantic & often irrational stock speculation, unserviceable debts, and chronic massive unemployment, there is also the opportunity for new directions from new sources as the sheer size and scale of global corporations make them seemingly more and more ossified and less and less able to serve the public from which it hopes to maintain its profit margins.

Thus, while all may seem to be wonderful to a casual observer watching along the surface, we are in fact skating bravely over the very thin ice of a totally new and revolutionary set of socioeconomic circumstances, and we should hardly be racing across this fragile and frozen expanse so quickly or so recklessly, trusting so blindly in so many anonymous corporate forces that historically have never bothered to concern themselves with the social, economic or political consequences following in the wake of their profit-oriented activities. We need to recognize the genius of capitalism, and refocus the forces of it toward more human and vital needs in order to build a more sustainable economy for the future.

Rating:
Summary: Mostly Greider's Morals
Review: William Greider certainly has the status and prestige to write about the inequities of the American style of capitalism, which is not the unassailable apotheosis of human civilization. Of course, for most of American history it has been impossible to even remotely point out flaws in capitalism without being branded a Socialist, or recently, getting the extraordinarily narrow-minded condemnation of "Un-American." Our version of capitalism does have the severe weakness of being structurally incapable of considering the social and environmental costs of production, while wealth will inevitably become concentrated and poorly distributed, even among those whose work created that wealth. Greider presents a well-considered and articulate examination of these inequities, along with telling examples of corporate ethical lapses and discriminatory government practices. He also has a reasonably inspiring list of citizens, small businesses, and local governments that are coming up with new ideas for more equitable forms of law and capitalism.

This is all well and good, and occasionally inspiring. Unfortunately, Greider's tales of groundbreakers and visionaries can't reach the next level of believable prescriptions for true improvements across all of American society. Thus we ultimately get little more than Greider's own moral beliefs concerning the current American capitalist system. He comes close to tackling the true structural weaknesses in our social and economic systems, and is much closer to understanding the causes, rather than just the symptoms, than most reform-minded writers. However, his ideas for future improvements mostly get bogged down in flimsy pronouncements like "our main responsibility is to the future" or a general plea for poorly defined "narratives" among visionary citizens. This book does a great job of pointing out current problems and proclaiming the need for change, but its ultimate call for action doesn't have much bite. [~doomsdayer520~]

Rating:
Summary: How to Fix Capitalism's Flaws (without replacing it)
Review: William Greider has written a well informed, sharp critique of capitalism. In this book, he devotes individual chapters to analyzing the dysfunctional ways that capitalism impacts us as workers, consumers, investors, citizens and as human beings. In each chapter, he gives some suggestions about how we can leverage the many strengths of capitalism improve it from within.

Although Greider *does* acknowledge that capitalism has improved our standard of living significantly and lengthened our lives, this acknowledgement is merely a nod; he definitely leans to the left in this book and suggest many interesting ideas for reform. Some of those ideas seem impractical, but he also gives many examples of how some are working successfully today.

Although he is well informed and a fluid writer, some of Greider's arguments and examples seemed one-sided, and this is one weakness of the book. I had wished he could have anticipated obvious counter-arguments and refuted them, instead of leaving them lingering in the readers mind. Nevertheless, his ideas will provide food for thought and an easy, enlightening read.

Some of his main points are as follows. In the chapter on consumerism, Greider notes that despite our material wealth, we're still consumed with the relentless pursuit of "more" - working more hours for more material goods, status goods, or entertainment. Furthermore, companies produce the products we demand in low-cost ways that degrade the environment. To counter this, Greider notes several examples about how organized consumer boycotts have changed corporate behavior more effectively than government regulation.

As workers, our fortunes are tied to the corporations we work for, yet we have little or no say in the big decisions. Democracy stops at the company's door. Vast hierarchies of workers maintain the uneven distribution of money we see in the rest of a capitalistic society. Workers - or "human resources" - are rented by the hour, and those labor costs are often trimmed by reducing healthcare and pension coverage for employees. To fix this, Greider argues for and gives examples of firms with more participatory decision making, employee ownership, and executive accountability.

In the chapter on capital, he notes that corporate investments are controlled by just a small group of executives, investment bankers, and large fund managers. Whether they are serving the stockholders, clients, or investors, this group makes decisions with a heavy emphasis on economic factors, and little or no emphasis on larger social issues or goals. Yet the soft qualities that are hard to put a price on - like dignity, freedom, a clean environment, democratic expression - aren't a byproduct of a strong economy; they are necessary for it, and the fact that they're "priceless does not mean worthless." Thus, Greider believes that when the quest for profits and productivity trumps social responsibility, the economy will suffer. He'd encourage huge pension funds to invest for the long term in socially responsible companies, and cites those that do.

In the chapter on government, Greider highlights the subsidies & other "corporate welfare" doled out by governments. Large corporations on the verge of bankruptcy are rescued by the federal governement (think Chrysler, Savings & Loans, airlines, etc). States compete to draw in new corporations by giving them special tax breaks. Rather than just occasionally intervening in the economy whose direction is set by corporations, Greider believes government should lead more via grand public works projects (Erie canal, the highway system, airports, parks, etc.) or through sweeping social programs (New Deal, etc.) Also, companies that are funded or rescued using tax dollars should spell out exactly what they will deliver to the public in return, or else their corporate charters must be amended to include a social mission.

In a final chapter, Greider notes that we should come up with a collective vision of what kind of society we want, one in which we are more than just consumers and workers striving individually; one in which we are citizens building the society we want.

Overall, I thought some of Greiders ideas were food for thought, some weren't, and some seemed well-intentioned but unworkable. Nevertheless, I found it enjoyable to read, since Greider is a fluid writer since he is a journalist. However, there are other books in a similar vein by economists that argue some of Greider's points slightly better --- in particular, "The Future of Success" by Robert Reich on the work/spend cycle, or "The Affluent Society" by John Kenneth Galbraith on increasing government investment in infrastructure.


Rating:
Summary: Worth a skeptical look
Review: William Greider is a gifted critic of the downside of capitalism, although his proposed changes are somewhat wanting. To his credit he attempts to be realistic in both his analysis and his suggested alternatives although he has excessive confidence in the efficacy of the state to rectify wrongs.

Greider actually has little confidence in the national government to make the changes he deems necessary, however, this lack of faith owes to what he sees as the unwillingness of leaders rather than the inability of government to reorder the economy by fiat. If inertia could be overcome, Greider would have the government be the employer of last resort and a co-owner of many businesses where it would exercise its wisdom to re-order priorities of the modern corporation. This already happens elsewhere (i.e. Europe and Japan) and the results are decidedly mixed.

Greider has an almost patriotic fervor for American innovation but much of what he advocates would tend to stifle the same innovation he lauds. His faith in the virtues of unions tends to ignore their side-effects: arcane work rules and excessive protection for unproductive employees, neither of which are a net benefit.

For all his critiques of American corporations and government he saves his fiercest vitriol for the profession of economics. While he is familiar with the theories of neoclassical economics, one wonders if he only views them as clever propoganda. Its hard to see how Joseph Schumpeter's "creative destruction" could occur in William Greider's ideal economy.

While his criticism sometimes is over the top, he touches on real concerns, particularly in the area of environmental degradation. Contrary to his accusations, neoclassical economics does recognize this as a problem, but they don't offer much in the way of solutions. At least this aspect of his book offers useful, if not fully viable, ideas for change.