Reich, Robert R, "The Work of Nations", New York, Alfred A Knopf, 1991, New York,
Random House Vintage Books Edition 1992, pp xii + 339
Perceptive views of Harvard faculty member attracted special interest after its author
was appointed in 1992 as US Secretary of State for Labor.
1.
In summary Reich argues that national economies have lost their meaning because
they have lost their independence through the mobility of money and of labour. He associates
these changes with the shift from high volume production to high value product, with smaller
more intellectual enterprises taking over leadership from the big US and multinational
corporations. He gives new classifications for labour in three groups: the symbolic
analysts whose links are international and for whom the market is global, and whose
incomes have been increasing rapidly; the producers who are employed where labour is
cheap, investment being attracted there; and the in-person servers who work where people
need their services.
2.
In consequence "value added" goes to the community where the work is done more
than the country providing the capital or housing the company headquarters. This makes the
education of the work force the key to success. There is a threat to social coherence because
different groups of workers have little common interest since success does not depend on
mutual support through a national economy. ("The underlying question concerns the future of
American society as distinct from the American economy", page 9). Reich suggested that
combining against a common threat may maintain national coherence.
The detail
3.
Reich focuses on the United States. He quotes the tariff to protect American producers
as "the most heated economic issue in nineteenth-century America" (page 21) with Americans
using arguments based on ultimate benefit while Europeans spoke of patriotism and honour.
America's immigrants were patriotic because they believed personal well being was bound up
with the nation's economic prowess.
4.
The economic structure in the US rested by the 1950s on about 500 major corporations
which worked in collaboration with government and unions to organise production and set
industry norms on prices and wages. Led by "Organisation Man" they monitored inflation, used
standardisation to bring scale economies, collaborated for defence - and expanded the
influence of the core corporations round the world.
5.
A loss of competitiveness led to calls for protectionism but this hid the deeper changes
from profits depending less on high volume production than on high value products. High
added value comes from identifying and solving problems, and helping customers identify their
needs. The problem-solvers, problem-identifiers and strategic brokers who give the new
enterprise most value need direct contact with each other. The appropriate picture for an
organisation is not the pyramid but the spider's web.
6.
The skills for problem-solving, identifying and brokering grow more valuable when used
but conventional economics is based on ideas of diminishing returns. Hence the system is not
self-correcting: intellectual resource does not get used up like other resources, making it easier
for others to compete, rather it is improved by use making competition more difficult.
Intellectual resource crosses national borders and blurs the nationality of products and
corporations. Hence a people's standard of living depends on the value of the skills and
insights they contribute to the world economy, and skills improve with experience.
Reviews on Governance, Ethics, Corruption, etc, © Denis Osborne, 2012
7.
The three categories of jobs of the future do not match those in the official statistics of
the early 1990s. They are: routine producers (repetitive tasks including data processing), inperson servers (taxi-drivers, secretaries, waitresses, retail sales workers etc, again undertaking
mostly repetitive work) and symbolic-analysts (as above, with Reich estimating their growth
from 8% of American jobs in the 1950s to 20% now). The supply of symbolic-analytic services
creates its own demand because they tell clients what they need and then fulfil the need.
Reich criticises lawyers and financial advisers for doing that too well!
8.
It is the jobs people do rather than the successes of corporations and national
economies that determine the standard of living. American incomes have become more
inequitable since around 1977, after years in which they grew closer together. Routine
producers are getting poorer, and in-person servers also poorer though with some variations.
But symbolic analysts succeed. Differences in education between rich and poor accentuate
the difference between those whose education fits them to become symbolic analysts and the
rest, the symbolic analyst requiring the four basic skills of abstraction, system thinking,
experimentation and collaboration. Those skills facilitate networking, defined by Reich as "the
studied process of knowing what is happening and simultaneously making oneself known".
Symbolic analysts need brains and quick access to the rest of the world.
9.
The divide between types of labour divides the nation, accentuated by vestigial
thoughts on national economies and national wealth. Devolution exacerbates differences
between the parts in schooling, security, etc (implicit from descriptions of US on p 272). Reich
sees the rich seceding from "national" society and argues that the choice need not lie between
zero-sum nationalism (as Reich calls it) and impassive cosmopolitanism because there is an
option of "positive economic nationalism" in which efforts are made to benefit all categories of
worker. One need is to attract investment. In this as in other matters Reich does not favour
unrestrained competition. He sees cities and nations bidding for global jobs by offering
subsidies and tax breaks (“bribes”) and facing threats to remove factories unless inducements
are given to remain. See “Extortion”; p 297. Footnote shows how competing bids in the US
led to a $700 m fee to televise the 1992 Olympics compared with $70 m in Europe, which bid
as a whole. He argues for an agreement about investment to "ensure against zero-sum ploys
in which nations bid against one another to attract the same set of global firms and related
technologies" and to bar "threats to close the domestic market unless certain investments were
undertaken".
10.
Third world development brings mutual benefit, but Reich's argument is that we need to
"assert that our mutual obligations as citizens extend beyond our economic usefulness to one
another, and act accordingly". Reich thinks national identity is often served by coming together
against a common threat, and asks whether Americans will create a new enemy from Japan’s
economic challenge.
Comment
11.
I think this a splendid book: Reich writes well and makes his points with lively examples
and illustrations. I agree with its main thrusts though I think Reich, despite his protestations,
still focuses too much on economic issues at the expense of the social. The symbolic analysts
who value their work too highly may be unsettled by political rather than economic changes.
Moreover Reich omits to mention the in-person servers who share many characteristics with
symbolic analysts - doctors, teachers and others in the traditional "professional classes". That
omission may indicate an important flaw in Reich's reasoning. The link they retain between
different categories of worker brings a cohesion of place and belonging to a locality even for
those whose work is "global". Part of this may be an ethnic "coming together against the
Other" but the Other is perceived in terms different from class and wealth.
Reviews on Governance, Ethics, Corruption, etc, © Denis Osborne, 2012
12.
Though Reich mentions the impact of global flows of information and money he does
not do justice to the importance of technology in bringing changes to society and patterns of
employment. Some details are less convincing than the general thrust of the book. Thus
Reich sees increasing regional disparities as the rich get richer.
Some fascinating illustrations and quotations…
"In 1984, 80 percent of the cost of a computer was in its hardware, 20 percent in software; by
1990, the proportions were just the reverse." Page 83.
A Finnish paper company sold tree-harvesting machines to the machine operators and gave
them contracts for the work. Productivity soared as operators kept the machines in better
condition and used them with greater care. Footnote page 91.
For the US, contrasting 1980s with the 1950s, "Most of the new jobs in the economy appear to
come from small businesses, as does most of the growth in research spending. A similar
transformation has been occurring in other nations." Page 95.
In 1920 85% of cost of automobile went to labourers and investors. Today 5% of price of a
semiconductor chip goes to owners of equipment and facilities, 6% to routine labour, over 85%
for design, engineering services, patents, etc. Page 104.
".. governments successfully block .. at borders .. few things other than tangible objects
weighing more than three hundred pounds." Page 111.
"Until the 1990s each generation of Americans had been better educated than the generation
preceding it... But by 1990 younger men were less educated than the generation before...
Younger women were becoming slightly better educated." Footnote on page 258, using data
from American Higher Education Research Program, American Council on Education, 1989.
Finally
A job likely to be inhabited by a symbolic analyst may be found, according to Reich (page 183),
by joining together one word from each of the three columns below:
Communications
Management
Engineer
Systems
Planning
Director
Financial
Process
Designer
Creative
Development
Co-ordinator
Project
Strategy
Consultant
Business
Policy
Manager
Resource
Applications
Adviser
Product
Research
Planner
Reviews on Governance, Ethics, Corruption, etc, © Denis Osborne, 2012