The Road to Supercapitalism - Coursework Example

Student Name: Tutor: Title: Chapter 2: The Road to Supercapitalism Institution: Course: Date: Outline of Structure and Content of Reich, Chapter 2 pp.50-56 Reich traces the history of supercapitalism to the 1970s that commenced with deregulation. He points out that supercapitalism may have started long ago than it can be imagined possibly in the 1950s and 1960s. He discredits the theories of emergence of supercapitalism. pp.56-59 Reich discusses the disturbance of oligopolistic system. Reich explains the role of the department of defense and other allied institutions in the shattering of oligopolistic system to give way to supercapitalism. The development in the department of defense technologies and other technological advancement opened a way to growth of economy internationally. Internet was developed out of the need of Pentagon to communicate. pp.60-63 Reich looks at the effect of globalization. He focuses on the increase in international trade as War-torn countries look for ways of rebuilding themselves. There was an increase of manufactured products into America. Reich reports that global supply chain deepened and lengthened. He goes ahead to mention some of the businesses that were involved in international trade growth. pp.64-65 Reich examines impact of new technologies on communication and service delivery. He mentions telecommunication, insurance, and banking as being able to provide customers services to meet exact needs of their users. The growth of internet made oligopolies unnecessary. Numerous new technologies came to take up stable production systems which had previously been dominant. pp.65-70 In this part, Reich explores impact towards economic deregulation. 1980s was a period that saw increased deregulation. There was spirited campaign to deregulate businesses in the Congress. Deregulation was seen as stifling innovation. The means of transmitting information changed drastically with advancement in technology. pp.70-75 Reich argues that financial deregulation brought some relief to some savers in America. Mutual funds were seen as exotic and funds in the money market were yet to be discovered. Very few people had invested their saving in shares. Corporations were in the ownership of individuals who kept stock certificates at very safe places. There was no distribution of profits through dividends. There was tremendous change in the money market. Reich emphasizes that it was not greed which led to hostile takeovers, junk bonds, corporate raiders, proxy fights, or leverage buyouts that occurred in the 1980s; or occasioned the private equity firms, hedge funds, minority activists, and one more time of proxy fights and leverage buyouts. pp.75-80 Reich discusses the role of corporate statesmen in the balance of interests of all parties. pp.80-86 Reich investigates the involvement of labor unions in the welfare of workers. Reich asserts that membership to trade unions declined substantially. Union membership in the private sector was at its lowest. pp.86-87 Reich summarizes what he recounted in the chapter on the growth of supercapitalism. Outline of the Main Arguments The history of supercapitalism had its foundation in the technologies which came out from the Cold War. Cargo ships, containers, planes, satellite communications systems, and fiber-optic cables are some of the advancement that characterized the growth of supercapitalism. Reich traces the development of global chains as a result of collapsing of oligopolies as new technologies took shape. Globalization saw increase in international trade as countries took advantage of water transport and other means to get necessary goods. Reich discusses the decline of union membership as a resulting of shifting economies. The falling apart of oligopolies intensified competition and provided more choice to the consumer. Unionization was weakened by increase in competition. Reich explains the development of deregulation in the advancement of economy. Initially investors had very few places of investing their funds. Financial deregulation brought about increased opportunities of investment. Other forms of deregulation like Airline deregulation led to increased competition from other low-cost companies. Airline and trucking deregulation occasioned new opportunities and new ways of competition. Reich explains labour union activities and the involvement of Ronald Reagan in them. Unionism seemed to decline in the wake of new trade following increase in supercapitalism and advanced technology. Reich compares the development of trade in different countries after the Second World War and attributes supercapitalism to cold war and technology advancement. Reich’s main evidence for his argument Evidence for the first argument of emergence of supercapitalism Reich discredits many theories that tried to explain the growth of supercapitalism. Reich refuses the suggestions of capitalism as the as a result of deregulation which commenced in the early 1970s. Globalization occasioning capitalism has also been objected to by Reich. Other people indicated paroxysm of egocentric greed as being the result of capitalism. Globalization and deregulation are mentioned as having a role to play in the advancement of capitalism. None of the theories given explains changes in democratic capitalism. Most theories used in America do not explain the similar happenings in Japan and Europe. Real explanation for technologies empowered investors and consumers deals which were better. The fall of oligopolies which was the anchor of American system collapsed giving way to development of capitalism (Reich, 2008, p. 51). Evidence for globalization and collapse of oligopolies Increased in globalization was as a result of growing competition and advancement in new technologies. The ability of large corporations to set process declined dramatically. Deregulation, technology, and globalization led to increased competition in companies as they struggled to attract investors and keep consumers. Entrepreneurs pushed for deregulation of markets through removal of regulatory barriers. Stable oligopolistic systems were shattered in the event of cold war. Fall of oligopolies paved way for growth of capitalism. Free trade and elimination of barriers led to increase in globalization (Reich, 2008, pp 52-54). Evidence for Impact of globalization Reich examines the effect of globalization in the earlier days of the cold war. War-torn countries engaged in increased effort to get goods from different parts of the world. The Americans saw an increase in manufactured products from other parts of the world. Retail trade and shipment of goods from one part of the world to another by use of water transport. The cold war brought about realignment in the world politics (Reich, 2008, pp.60-63). Evidence of deregulation Ronald Reagan was proponent of free-market. Deregulation began even before the term of Ronald Reagan begun in 1981. Independent deregulation commissions set terms of entry and prices. Benefits of deregulations were demonstrated to the congress. The thought of regulation stifling innovation mounted pressure for deregulation to take place. Companies in telecommunication got an opportunity to look for lucrative markets for selling directly to customers. New ways of transmitting information were developed (Reich, 2008, pp. 65-70). Deregulation in airlines led to advancement in aircraft design and telecommunications. Coming on board of upstarts in airline industry increased competition. Financial institutions and big banks pushed for financial deregulation, and financial regulatory walls were torn down. Stockbrokers were ordered to stop fixing commissions on trading on stocks. Insurance companies and pension funds were allowed to invest in government and high-grade corporate bonds. Deregulation affected democratic capitalism (Reich, 2008, pp. 70-75). Evidence for declining union membership Close to a third of workers in America in the private industry were members of labor unions in 1955. However, by the year 2006 less than 8% belonged to trade unions. American workers drastically lost their bargaining power to get higher benefits and wages. Reagan’s interference in union activities in 1980s led to a decline in unionism following the aftermath of striking air traffic controllers who were fired. Union member went down not only in United States but also in Japan and Europe. The new way of development of business and changing economy led to decline in unionism. Trade unions played a big role in lobbying for improved working conditions for employee (Reich, 2008, pp.80-86). Is Reich arguing against something? Reich is arguing against the perceived notion of misleading beliefs concerning the growth of supercapitalism. Reich points out several views of people and what they think is the reason for capitalism. Reich discredits deregulation and globalization as being the cause of capitalism. He goes on to explain the link between the cold war and the growth in trade. He goes on to demonstrate the impact of technology advancement as a result of cold war to increase in trade. He says that communication and internet was discovered for military purposes. Consequently capitalism came up to replace oligopolies that wane out with time. Reflection Reich traces the development of supercapitalism since the era of cold war. I found this interesting since I thought supercapitalism would be a term that would only exist in the 20th century. The explanation by Reich is an eye opening message that gives a wider perspective of growth in supercapitalism. The impact of new technologies was tremendous and significant in the growth of capitalism. Increased connectivity owing to growth of telecommunication opened new ways of doing business that further pushed capitalism to a new level. I was fascinated with the relationship between technological advancement and growth in free market and deregulation. Reich discussion of the impact of deregulation to the growth of economy and increase in competition paints a clear picture of the cause of decline in unions. The rise in capitalism came with many things. Old regulatory economy denied companies from reaping maximum profits. Deregulation increased the level of doing business. Reich traces the development of supercapitalism from its very basic to involvement of intensified lobbying for removal of trading barriers. I have learnt the role of cold war period in the advancement of international trade as economies around the world expanded. It was exciting to explore the connectivity in the cause of capitalism throughout the ages. I enjoyed the way Reich linked the various aspects that he talked about like unionism, deregulation, supercapitalism, and globalization. It was interesting to learn the real cause of supercapitalism. When Reich begins by dismissing the various theories used to explain the growth in supercapitalism, I began to wonder what was coming next and it made me to anticipate more as I read further the chapters. Bibliography Reich, R 2008, Supercapitalism the transformation of business, democracy, and everyday life, Scribe: Melbourne. Read More