Robert Reich: ‘Capitalism is compatible with democracy as long as democracy is in the driver’s seat’

Robert Reich is one of the most tireless critics of American economics and politics. Millions of people turn to his Substack essays and social media videos to make sense of the complexities of the moment. He is an academic turned influencer, and at 80 he does it with an effectiveness, rigor and simplicity that the savviest millennials and Gen Zers would envy.

What sets him apart is his relentless energy. He recently released The Work in Progress, a documentary he produced that brings together strangers of different generations, races, backgrounds and political views. In a deeply polarized country, the film offers conversation as a path toward understanding, and it suggests that rebuilding America is still possible. For Reich, it all starts with a question: What do we owe each other as members of the same community? His answer: “What we owe each other fundamentally is to engage with each other, to talk to each other, to ask each other questions, to listen to answers.”

Last year, Reich published Coming Up Short: A Memoir of My America, whose title is a play on words. On one hand, it alludes to his childhood as the shortest kid in class. Reich has Fairbank’s disease, a rare genetic disorder that affects bone growth. He stands under five feet tall and as a boy, had to deal with bullies every day, which is why he detests Trump. On the other hand, it alludes to a generation that failed to live up to the country in which it grew up and rose to power.

Although he describes himself as a bit player, over the last six decades he has played that part from the highest positions. He studied at Oxford and Yale and has taught at Harvard and at Berkeley, where he still teaches. He served in Gerald Ford’s administration after Richard Nixon’s fall and was Bill Clinton’s secretary of labor during the “roaring 1990s.” Those were years of globalization and financial deregulation now seen as direct causes of the decline of the working class. He never threw in the towel: ever since, he has relentlessly exposed the causes of growing inequality.

Reich, one of the leading voices among progressive Democrats, swings between optimism and pessimism but ultimately settles on a mix of both: “I am cautiously, in fact, sometimes I say nauseously, optimistic.” The MAGA leader has a formidable opponent in him, one who sees the midterm elections as an opportunity for Democrats to begin paying their debt to the working class and to wake up from what he calls a nightmare.

Question. You were born in the postwar era, a time of extraordinary optimism. Yet when you assess whether your generation, the baby boomers, left America more inclusive, tolerant and just, your verdict is far from positive. Where did things go wrong?

Answer. It’s a very complicated question to answer. We were given this marvelous opportunity to expand the middle class, to be the beacon light of democracy in the world, to avoid authoritarianism. How did we succumb to the degree of inequality we have and the vicious authoritarian politics that we now experience? The easy summary of the answer is that we became complacent. We didn’t pay enough attention to people who bore the burden of economic change, technological change, and globalization. People who were mainly not college graduates, who had at most a high school education. They assumed that the social contract was: if we work hard and play by the rules, we will do better financially through our lifetimes, and our children will do even better. But they discovered that that social contract, that basic bargain, was a fraud. They didn’t do better. After the late 1970s, early 1980s, their incomes stagnated, adjusted for inflation. Their children did even worse, and Donald Trump came along and channeled that anger and rage toward scapegoats like immigrants.

Q. But the social contract that came out of the New Deal worked for decades.

A. It actually worked for 30 years: 1946 to 1978. The problem is that as wealth began to concentrate at the top, with that wealth came political power to alter the rules of the entire system and compound the wealth and power at the top. I can speak quite personally about this. I joined the Ford administration in the 1970s, right after Nixon left in disgrace. I was assistant to the Solicitor General. And then I came back in the early 1990s as secretary of labor for Bill Clinton. That’s why I saw this process. I saw the result of that accumulation, which was corruption: bribing legislators with campaign funds, taking over media companies, hiring armies of litigators to go to court and get changes in the rules that they wanted. I saw people like Jeff Bezos and Elon Musk and Sergey Brin begin to assert more and more power and control, until finally Trump comes along pretending that he’s the tribune of the people.

Q. You argue that the disconnect between the New Left and American workers left millions without a political home, and that Trump filled that void by presenting himself as their avenger, despite being a billionaire whose interests often run counter to theirs. Why have Democrats failed to win those voters back?

A. The Democrats essentially gave up on the working class. The Democratic Party of the 1930s and 1940s, the party of Franklin D. Roosevelt, was a working-class party. It came about in reaction to the first Gilded Age, where the captains of industry abused their power and their wealth exactly the same way they are doing today. But the first Gilded Age led inevitably to the Great Depression. And that’s when the people rose and decided that they wanted a government that was working for them and not for the billionaires. Well, the Democratic Party, by the postwar era — and here’s where my generation comes in — took prosperity for granted. Took the middle class and the working class for granted. Beginning in the 1980s, it began taking in money from wealthy individuals and big business. In other words, it was drinking from the same trough as the Republican Party, and so it was not prepared for what has happened.

Q. For many Americans, the American dream is a promise that no longer rings true. Can it be restored, or do we need a new social contract that reconciles capitalism with democracy?

A. Capitalism is compatible with democracy as long as democracy is in the driver’s seat. It’s not compatible with democracy if capitalism is running the show. And so we do need a new social contract. The question that we’re facing in this country now is whether, if the Democrats succeed in regaining control of at least the House, if not the Senate as well, the Democratic Party has learned its lesson enough so that it actually becomes once again, the way it was in the 1930s, the party of working people, rather than the party of just the upper middle class and the wealthy.

Q. You trace the threat of fascism in U.S. democracy from the New Deal era, when vice president Henry Wallace warned of it, to the present. You argue that Trump is not merely an authoritarian but a fascist leader. Where could Trump’s political project lead the United States?

A. It has already led the United States to a very dangerous point. Trump has disturbed many of the constitutional rules that are reserved for Congress. He has also thumbed his nose at the court system, and he has lied incessantly to the people about almost everything. His own loyalists are taking over more and more of the media. Are we sliding into neo-fascism in America? My optimistic view is that Americans are rising up against this. But on pessimistic days, I fear that big money in politics may have a very large influence. Look at Elon Musk, for example. He puts over $300 million into this election on behalf of Republicans. Now, how can he do that? He does it because the Supreme Court has said that money is a form of speech protected by the First Amendment, which is ludicrous, because his money is drowning out the speech of people who don’t have his kind of money. We must get big money out of politics. We’ve got to change our campaign finance laws. Musk is a true menace. What is he getting for all his money? He’s getting big government contracts, and he’s getting deregulation, so that he can make even more money.

Q. You argue that U.S. democracy and shared prosperity can survive only if the country confronts concentrated wealth and the political corruption that comes with it. Has extreme wealth become incompatible with political equality?

A. Extreme wealth, the sort that we are now seeing, is testing the capacity of democracy to function as a vehicle for the people, rather than for extreme wealth. Democrats, if they regain power, have got to do several things: not only get big money out of politics, but also raise taxes on the super wealthy. There needs to be a wealth tax, for example. Exhibit A is Elon Musk.

Q. Will Democrats tackle that? They didn’t when they had the chance under Barack Obama or Joe Biden.

A. They didn’t do it. They had a chance. You’re absolutely right. Will they do it this time? What’s changed is that the public is now experiencing Trump’s neofascism. The public now sees what happens when billionaires and the tech bros run everything. I think that more and more of the public is seeing the relationship between its own standard of living dropping on the one hand and corruption increasing on the other. In a democracy, that is a critical point in time. That’s when people connect those dots. I’m hopeful. I’ve lived long enough. I lived through the civil rights era, the anti-Vietnam War era, the women’s movement, the gay movement, Black Lives Matter, through a lot of changes, many of them positive in terms of extending rights and possibilities and opportunities. So maybe we had to go through this nightmare in order to become aware of how precious democracy is and what must be done to preserve it.

Q. You describe the past half century as a giant U-turn, in which corporations dismantled the democratic capitalism that built the U.S. middle class. Are we nearing the end of that cycle, or witnessing an even more extreme phase of corporate power?

A. That’s the choice. The people still have a say. I don’t know how many more opportunities the people will have. You know the old expression: “Throw the bums out.” When it comes to politicians who are in it for themselves rather than for the people, we’ll have an opportunity on November 3 to throw the bums out. Democracy is not a spectator sport. Democracy is something that has to be fought for all the time. This is something that my generation’s parents understood, because they had gone through the Second World War. They had literally fought for democracy against authoritarianism, and it’s something that my generation has not done nearly enough of, in my opinion.

Q. Looking back, how much responsibility does the economic consensus of the 1990s, including the Clinton administration you served, bear for the concentration of wealth and the disenchantment that fueled Trump’s rise? What would you do differently if you could go back to that time?

A. During those years, I argued vociferously that we must address the problem of widening inequality of income and wealth, and that if we did not, eventually we would invite a demagogue to run America, and we’d lose our democracy. I said it over and over and over again. I argued against deregulation of Wall Street. I argued in favor of more power to unions and making it easier to unionize. What could I have done differently? As I ask in the book, could I have made my arguments even louder and better? Could I have done more? I’m sure I could have, but I have, for the last 50 years, done what I could

Q. Maybe the game was not under your control.

A. That game was never under my control. I am and have always been a bit player. But it seems to me the neoliberals, who argued in the 1990s and the beginning of the 21st century for deregulation, privatization, globalization, smaller budget deficits, got it wrong. They didn’t talk enough about power and inequality.

Q. Is that era the source of the Democratic Party’s split into two factions? Can they unite around a credible economic agenda for working Americans?

A. If you’re talking about corporate Democrats versus progressive Democrats, I hope the corporate Democrats are defeated. By corporate Democrats I mean politicians and officials in the Democratic Party, who are not on the side of average working people, but who have done everything in their power over the last 40 years to rig the market in favor of the very wealthy. Jamie Dimon, the CEO of JPMorgan Chase, is the Democrats’ favorite banker. He represents corporate Democrats and the Democratic Party should stop listening to him. He has proved that he will do whatever Trump wants him to do. And one of the silver linings of this terrible period of time is that people see the truth about the corporate Democrats. They see that they are fair-weather Democrats. When somebody like Trump is in charge, they become Trumpers.

Q. Is there room in the United States for a genuinely democratic, redistributive populism that challenges corporate power, or are the country’s institutions too entrenched?

A. I certainly hope that we will have a Democratic Party that takes on the billionaires and the corporate interests and acts on behalf of average working people. If we don’t, we’re going to completely lose our democracy. I think in some ways we’ve already lost American democracy.

Q. Trust and truth are public goods, yet both seem increasingly scarce. How can democratic societies rebuild them amid culture wars, algorithmic amplification and post-truth politics?

A. The American public has been exposed to the Orwellian nightmare of a president who has total disregard for the truth, and has even made his lie about winning the 2020 election into a litmus test. If polls are to be believed, the public does not want those kinds of lies. The public is eager for leaders who tell the truth. We’re always going to have 20 to 25% of Americans who are willing to follow a cult-like authoritarian. But as long as we have 75% of the population who has learned this hard lesson from the Trump years, we’re going to be fine. Am I confident that we’ve learned the lesson? I cannot tell you. I am cautiously, in fact, sometimes I say nauseously, optimistic. I say nauseously optimistic because it gives me a stomachache thinking about how high the stakes are.

Q. In your film The Work in Progress, I saw something downstream from public policy: people talking to each other, listening. What can be done to restore the social fabric?

A. I think it begins downstream, with people talking to each other, discovering their commonality, discovering that they have problems that are very basic, and they need to work together to solve the problems. It cannot be all grand public policies coming from Washington. The town I live in, we have a lot of cooperatives owned by workers. There should be even more profit sharing. There needs to be a greater sense that the economy and the rules of the economy are set by people. One of the geniuses of the system, if it works well, is how decentralized political power and economic power are and can be and should be.

Q. How can that overcome atomization, and an attention economy ruled by social media?

A. This is where the film comes in again, because I think we’ve got to show people talking with each other face to face, listening to each other, working together on problems. There’s one scene in the film where an older white woman is talking to a young Black woman, and the young Black woman is trying to get the older white woman to see that she has encountered problems and burdens and difficulties because of her race that the older white woman never had to deal with. And the older white woman keeps on saying to the young Black woman, “But if you only worked harder, if you only applied yourself, everything would be fine.” But one thing that the film reveals is that moment when that older white woman finally understands what the young Black woman is saying. You can’t get there through social media. You can’t get there just by reading something. You’ve got to actually engage person to person. It is learning about what other people have gone through. Democracy requires that. It requires deliberation among individuals, and one of the most important things we have to do is restore that.

Q. Today’s technological sophistication coexists with what you call the absence of a decent society, in a Darwinian struggle that seems to reward bullies. Can we reverse that?

A. I think we can; we must, but we do have to rely on leaders. It wasn’t that long ago that we had a president named Barack Obama, a Black man, who exemplified the opposite of bullying. And in the 2008 election, his opponent, John McCain, also exemplified decency. We now have a leader who’s a loathsome person.

Q. Those times seem long gone.

A. But they’re not forever gone. The era of Trump is 10 years, if we count the interim period of Joe Biden’s presidency. Ten years is long enough. American democracy and American society have been undergoing a real stress test.

Q. What is the most dangerous economic idea widely accepted as common sense today?

A. Trickle-down economics is probably the worst idea: that you need to reduce taxes on the rich, because otherwise they won’t make the kind of investments that are needed for jobs. That’s utterly wrong, rubbish. It’s a dangerous and false idea.

Q. What would you tell a young American entering adulthood amid economic insecurity, political polarization and the prospect of profound technological disruption due to artificial intelligence?

A. Number one, I’d have them look at history. Have them look at the first Gilded Age, from 1890 to 1920 roughly, and what happened after it: the Progressive Era, followed by the New Deal. Secondly, I’d have them understand that at the level of the people who inhabit this country, there’s a great deal of decency. And thirdly, I’d say to them — as I do, because I still teach part-time — these are among the worst of times, but they’re also, if you’re interested in effecting change, the best of times. Think of the challenges we face in terms of climate change and artificial intelligence, widening inequality and the threats to democracy. You can make a huge difference. This is your opportunity. This is your time. This is the best time to be young.

Q. In one sentence: what keeps you going in such an engaged way?

A. I have no choice. There’ssimply no choice.

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