Watch: Why capitalism is broken and what’s the solution? with Robert Reich
The global pandemic has thrown the spotlight on the gaping chasm of inequality between the wealthiest few, who saw their fortunes soar even during the economic lockdowns, and those who lost their entire livelihoods.
Even before the COVID-19 crisis, however, many people saw capitalism as a system that had failed them. In the third season of the #ChamberBreakers podcast series we are unpacking capitalism, to see what needs to be fixed, and what we can do as businesses to pave a more equitable future for all.
In this episode, Lianna Brinded, director at Yahoo and Xavier White, CSR and innovation marketing manager for Verizon Business, talk to celebrated US economist Robert Reich. A former US secretary of labour, Reich is currently professor of public policy at UC Berkeley and co-founder of Inequality Media.
Reich believes capitalism is broken to the extent that big companies or very wealthy individuals are able to become so powerful that they can essentially override democracy.
He describes capitalism in the US and to some extent the UK, as “probably the most brutal form of trade and economic relationships we see around the world. Yet in that system, the wealthy enjoy what Reich calls “socialist capitalism,” which saw bankers getting bailouts in the 2008 crash while ordinary people lost their homes.
“What we need, if we're going to have both capitalism and democracy, is for democracy to be in charge,” Reich says. “We need regulations, antitrust rules, we need to restrict the kind of subsidies that go to businesses that are unrelated to any social goods.”
Corporations and the super-wealthy wield outsize influence in American democracy because of the political practice of taking large campaign donations. This creates a situation where a handful of CEOs not only control substantial portions of the economy, which prevents the government from doing very much about the power that they've amassed.
Reich says that arguably there is, and has long been, an indirect collaboration between wealth supremacy and white supremacy in the US. “I don't mean that there is a direct link, I simply mean that there are people who are very wealthy who tolerate and quietly encourage racism or white supremacy for a very simple and obvious reason...it’s called, for want of a better term, divide and conquer.”
As long as working- or middle-class black and white people feel that the reason for their problems is the other, “then they cannot and will not come together as a voting coalition to try to get back some of that wealth to change the rules of the game so that they are fairer.”
While billionaires like Jeff Bezos are shooting themselves into space, the inflation-adjusted median wage has barely moved in the US in the last 40-to-50 years, which only fans the flames of populism.
“If the wealthy of this country want to avoid a continuing populist revolution, I think the wealthy and big corporations have got to say, ‘it is in our interest to make sure that capitalism works for everyone, not just for the elites,’” he says.
Reich believes we have no choice but to fix capitalism, whether by increasing social safety nets and public investment, or creating international standards to cut down on corporate tax avoidance.
His message to executives who want to make the future a better place is simple: “Get out of the way and don’t use your corporate public relations and government relations offices to distort the political process.”
The six-part podcast #ChamberBreakers is out every Monday. Next week’s episode features professor Sarah Kaplan, director of the Institute for Gender and the Economy at the University of Toronto's Rotman School of Management.
The six-part video series is also a podcast and is out every Monday. Next week’s episode features Sarah Kaplan, Director, Institute for Gender and the Economy (GATE) and Distinguished Professor of Gender & the Economy at the University of Toronto
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