On Krugman and Reich

It is frustrating that two recent key books in the growth sceptic genre are not yet available in Britain. From what I can gather Paul Krugman’s The Conscience of a Liberal focuses more on politics than economics. Krugman, a New York Times columnist and professor of economics at Princeton, apparently blames fundamentalist Republicanism for widening inequality in American society. It is hard to be sure but I strongly suspect he somehow links inequality to economic growth. I hope to receive the book soon. In the meantime there is a useful review in the New York Sun and a piece in the New York Review of Books.

Robert Reich, a professor of public policy at the University of California at Berkeley and former Clinton labor secretary, is more clearly a growth sceptic. In a Q&A; on Supercapitalism, his new book, he argues that contemporary capitalism has a dynamic side but then refers to the familiar growth sceptic litany:

“Inequality hasn’t been this wide in 80 years. Jobs are far less stable, and the median wage is below where it was in 1980, adjusted for inflation. Main Streets are disappearing. And our planet’s environment is endangered.”

To him the solution is to put curbs on corporations. For him it appears corporations are the force that gives capitalism both its dynamic and destructive side:

“We have to end the corporate arm’s race. That means strict limits on corporate lobbying, on corporate spending for public relations intended to influence legislation, on legislators and public officials turning to lobbying when they leave office, and on corporate money otherwise flowing in politics.”

In reality the problem is not that capitalism is too dynamic. On the contrary, it is not dynamic enough. Rather than putting curbs on corporations the emphasis should be on promoting even more growth.

The first chapter of Supercapitalism is available on the New York Times website. More information can also be found on Reich’s website.