Academic journal article The Innovation Journal

Makers and Takers: The Rise of Finance and the Fall of American Business

Academic journal article The Innovation Journal

Makers and Takers: The Rise of Finance and the Fall of American Business

Article excerpt

Rana Foroohar Makers and Takers: The Rise of Finance and the Fall of American Business New York, NY: Crown Business, 2016

Reviewed by Howard A. Doughty

American capitalism may have been a magnificent example of what Karl Marx praised in the ascendency of the bourgeoisie and its unique engagement with the industrial revolution to transform the decadent, creaky, complacent and inefficient political economy of England into the dominating global power that it once was. America, however, took the innovative British mode of production further. Without the need to accommodate an antique aristocracy or much in the way of a paternalistic desire to make a miserable life endurable for the working classes (and the slaves), Americans created a country which their progeny never tire of calling the greatest nation in the history of the world and a "shining city on a hill" which serves as the a beacon and a goal to which all sensible nations should aspire.

Recently, of course, the United States has been experiencing a discomfiting crisis of confidence. The American Empire has been rather solidly rocked by disasters of military adventurism, first in South-east Asia and now in the Middle East. Even "winning" the Cold War brought little lasting joy and, more recently, internal cultural tensions, residual hatreds and a notable problem in the distribution of wealth with the fabled "1%" accumulating virtually all the economic benefits of (post)modern society. For the rest, the perils of deindustrialization and the rise of seemingly permanent casualized labor force have upset the expectation that each generation would improve upon the American dream. Paradoxically, at the peak of their power, Americans lost much of their self-assurance. One pertinent symptom of the malaise can be seen in the recent presidential election. Instead of a triumphal nation making the best of its wealth, status and enormous opportunity to do good for itself and others, the USA is internally divided both ideologically and materially. The gap between rich and poor is wide and growing; anger, resentment and cynicism are afoot in the land.

This is the situation. Makers and Takers is an attempt to diagnose the illness. It is a wellcrafted, well-researched, well-written and mainly successful attempt to make sense of the situation in which Americans and, by necessary extension, the rest of us find ourselves. Rana Foroohar did not undertake an easy project.

The first problem she faced was sorting out the enormously complex and contradictory issues that underlie American economic problems. Although in some respects the American economy has recovered from its abrupt collapse in 2008-2009, the recovery is neither broad nor especially deep. In other respects, the American economy has been in some trouble for about four decades. Why chronic problems of inequity, inadequate private investment, trade deficits, high rates of personal and government debts and other signs of difficulty should bedevil the United States is difficult to understand. The US, after all, came out of World War II as the only major power standing. It then embarked on a thirty-year arc of success. It became bigger, richer and technologically more advanced than any of its putative competitors. It enjoyed previously unprecedented prosperity which it managed to share more equitably than at any time in its past. It may not have perfected the "middle class" or the "American dream," but it largely defined the phenomenon. Loosely translated into observable indicators, it was seen as the ability to purchase a new car every few years, to afford a single-family suburban home, to send kids to college and to feel sure that the next generation would succeed even better than the last.

Foroohar demystifies the decline in America's economic prominence, showing that the competitive threats come not from the outside-migration or China-but from within our borders. She explains how finance has permeated every aspect of our economic and political life, and how those who caused the financial crisis wound up benefiting from it. …

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