'Can American Capitalism Survive?'
Steven Pearlstein, St. Martin's, 244 pages, $27.99. The stock market has hit a record high, at one point soaring past 26,000. Unemployment has fallen below 4 percent to a 50-year low. All in all, it's an odd time to ask, "Can American Capitalism Survive?" But that is the central question posed by author Steven Pearlstein, a distinguished economics journalist, winner of the Pulitzer Prize and thoughtful critic of our times. His answer? "Yes, but …" or maybe "Only if …," followed by a blistering critique of the excessive pay of corporate executives. The core question of his book is just how much inequality capitalism can really accommodate without bursting at the seams. The speed with which the truly rich have been pulling away from the rest of the country has been accelerating since roughly the mid-1970s, when an oil embargo shoved the world into a deep recession. That unfortunate moment ended a prolonged period of shared prosperity that had persisted since the end of World War II. Linking stock performance to compensation brought the inequality to a gallop. Corporate captains, fearful of hostile takeovers, were incentivized to cut workers' wages by busting unions and migrating assembly lines to low-wage regions of the country and then to Mexico or China. Unholy increases in their own pay and stock portfolios have followed. American capitalism has completely forgotten how to dampen the impact of inequality. Pearlstein argues that the right response to galloping inequality is a resurrection of political guardrails against moneyed interests and a return to robust forms of income redistribution.