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eventually be licensed to competitors. Many variations on this theme are possible. Even in a very capitalist country, the costs of innovation can be partly socialized; and after the fact they should be widely diffused in order to enhance the productivity of the economy generally. This also suggests the need for re-regulation of at least some industries. The effect of airline deregulation, for example, has not only left the travelling public with a bewildering blend of intermittent bargains and more usual cases of outright gouging. It has produced a weird oscillation between price fixing and ruinous competition, leaving most airlines in the red, and recreating the airline cartel but without either the security or the policing of rate and route regulation. In Schumpeterian terms, perhaps the most serious consequence of all is the drying up of cusmore fuel efficient planes. Re-regulation would leave airlines, passengers, workers, and aircraft producers better off. The same may be true of telecommunications. Trade and Labor. The knottiest issue of all, in a globalized economy, is how to negotiate a social contract that stays put. Robert Reich and Ira Magaziner, at this writing two of Clinton’s top economic advisers, have long argued that Americans must learn to work smart or they will be compelled to work cheap. Neoliberalism offers a high-skill, high-flex economy as the alternative to the old-style, confrontational \(and presumably unionin two of the best recent books on workers and global competitiveness, Irving and Barry Bluestone’s Negotiating the Future, and Ray Marshall and Marc Tucker’s Thinking for a Living. The Bluestones and Marshall and Tucker are, of course, entirely pro-union. Both books suggest something of a new social contract, in which unions and workers commit to a new flexibility, a willingness to absorb changing technologies, and a new commitment to the profitability of the enterprise and managers commit to stop bashing unions. After all, the elaborate and widely demonized work rules which now take up hundreds of pages in modern labor contracts were not inserted there because unions like red tape. Workers like new machines and new skills when they are the path to higher wages rather than layoffs. The elaborate rules are there because they were the best available defense against management taking advantage of technological changes to undercut workers’ wages, job security, and bargaining power. A new social contract must work both ways. This new brand of contract will work best in a unionized environment, because a union is necessary to guarantee the worker’s side of the bargain. A great deal of the recent business school literature on empowerment, total quality management, employee involvement, etc, is the counterpart of pensions pre1973 that is, something that unilaterally extended by management that can be unilaterally rescinded. Although the new management literature celebrates the empowered worker, little of it calls for a true shift in power. That can be accomplished only in the context of co-determination, as well as labor law reform that ends the one-sided union bashing and fulfills the promise of the Wagner Act by allowing unions the freedom to organize without management retaliation. However, in the newly turbulent global economy, a social contract in one company is as elusive as “socialism in one coun try.” Even a manager with the best will in the world and the best union cannot guarantee that the company will be in business next decade, or even next year, to reciprocate the worker’s loy alty. The larger social contract is the responsibility of government. For that matter, even the government cannot guaran tee that particular corporations will stay in business. But it can do a number of things. Government can legislate codetermination so that managers are accountable to workers, and genuine profit-sharing, pension entitlement, and shared ownership to redeem the promise of Meade and Kelso. It can prohibit plainly abusive and anti-competitive corporate practices. It can commit to a program of high growth and full employment, so that the process of creative destruction does not come entirely at. the expense of workers and so that technological shifts lead to new skilling and new opportunity rather than to idleness. Government can design a system of apprenticeship, and school-to-work transition and lifetime learning, recognizing that all of these will make sense for the individual worker only in the context of full employment. Government cannot prevent corporations from building factories overseas, but government does not have to subsidize it. Unless we opt for purely defensive protectionism, there remains the risk of the footloose corporation exporting jobs. But here government is not without strategies either. First, trade policy can demand reciprocity so that other nations that wish to sell in our markets open their own markets to U.S.-based companies, and do not pirate U.S. proprietary technology. Free trade is much less harmful when there is a genuinely level playing field. Second, American leaders can enlist other industrial nations in a program of global high growth and debt relief for poor nations and those of the former Soviet area, so that these nations become markets for American exports. And U.S. policy can insist on. a global social-market economy, based on the principle that pay should roughly match productivity wherever products are made and that environmental and labor standards of products exported to the United States approximate U.S. norms. These last strategies will raise purchasing power in the third world. That, in turn, will remove the artificial inventive for corporations to go where the cheap labor is, while still allowing a normal diffusion of technology and industry. It will also give more third-world workers the fruits of their own labor, and give them the wherewithal to purchase products made in the U.S.A. The answer to the question “Who Is Us? who is an “American” company? is any company, regardless of its ultimate ownership, which provides jobs in the United States, does not discriminate against U.S. employees in its hiring and promotion to management, and does not adopt nationalistic strategies to keep the best jobs and most advanced technologies in its home country. Other nations negotiate “content” agreements when U.S. companies sell products in their borders, assuring that those sales generate some domestic jobs, and we can do likewise. Globalization makes the business of taming the giant corporation more difficult, but not impossible. If we are to have “free trade” that is, relatively open commerce among nations with different competitiveness strategies and different levels of wages and living standards, such commerce most be predicated on a common social charter and on worldwide high growth. Otherwise, it will produce what Brandeis called a race to the bottom. It is not all that difficult to imagine policies that insist on a social return from the corporation. The hard part is winning their enactment. Who is the constituency for such a set of policies? Unions, of course both as the most immediate counterweight to corporate power and as broader political actors in society. It is testament to the basic conservatism of Berle and Means that, for all their progressive egalitarianism and decency, the word union never appears in The Modern Corporation and Private Property. Robert Kuttner is co-editor ofThe American Prospect. Subscriptions are $25 a year, to 146 Mt. Auburn St., Cambridge MA 02138. He writes a syndicated column on political economy, and his most recent book is The End of Laissez-Faire THE TEXAS OBSERVER 17 11.1 it 11411 US