Book Review (Part I): The Work of Nations
by Robert B. Reich © 1992 by McGraw-Hill. Pub. by John Wiley & Sons, Inc.

The Work of Nations describes the future economy of the world, particularly as it regards the ascendancy of the symbolic-analyst in the U.S. labor force. While the book does not discuss solar energy, and it is about two years old, it is now finding its way into college classrooms as required reading. Its message has such profound implications for our society and the way resources are allocated that we feel compelled to bring it to your attention and are reviewing it in two parts. Our comments will follow Part II in May's issue.

Robert B. Reich in his The Work of Nations, asserts that, in the labor market of the near future, what will be much more valuable than a professional credential or the memorization of an established body of knowledge is the capacity to effectively and creatively use knowledge and that is because the jobs of the future are segregating into three categories, corresponding to the three different competitive positions in which Americans find themselves: routine production services, in-person services, and symbolic-analytic services.

Reich observes that traditional categories of work are becoming irrelevant because they assume the continued existence of an American economy in which jobs associated with a particular firm, industry, or sector are somehow connected within the borders of the nation, so that American workers face a common fate; and a common enemy as well: the battlefields of world trade pit our corporations and our workers unambiguously against theirs. Reich asserts, however, that in the emerging international economy, few American companies and industries compete against those foreign -- if only by American we mean where the work is done and the value is added.

Such implies that workers whose training is limited to preparation for traditional categories of work will soon find their present jobs disappearing and their adaptability to the new categories of work limited. In part, this is one of the factors that leads to the next point. These emerging job categories in part explain why the working poor in America are getting poorer due to increased wage competition from all corners of the world. In part, this is because, as Reich tells it: "twelve thousand people are added to the world's population every hour, most of whom, eventually, will happily work for a small fraction of the wages of routine producers in America."

At Midcentury, when America was a national market dominated by core pyramid-shaped corporations, there were constraints on the earnings of people at the highest rugs. First and most obviously, the market for their services was largely limited to the borders of the nation. By the 1990s, in contrast, the earnings of symbolic analysts were limited neither by the size of the national market nor by the volume of production of the firms with which they were affiliated. The marketplace was worldwide, and conceptual value was high relative to value added from scale efficiencies. There had been another constraint on high earnings, which also gave way by the 1990s. At midcentury, the compensation awarded to top executives and advisers of the largest of America's core corporations could not be grossly out of proportion to that of low-level production workers. It would be unseemly for executives who engaged in highly visible rounds of bargaining with labor unions, and who routinely responded to government requests to moderate prices, to take home wages and benefits wildly in excess of what other Americans earned. Unless white-collar executives restrained themselves, moreover, blue-collar production workers could not be expected to restrain their own demands for high wages. Unless both groups exercised restraint, the government could not be expected to forbear from imposing direct controls and regulations.

At the same time, the wages of production workers could not be allowed to sink too low, lest there be insufficient purchasing power in the economy. After all, who would buy all the goods flowing out of American factories if not American workers? This, too, was part of the tacit bargain struck between American managers and their workers.

By the 1990s informal norms that kept white-collar incomes somewhat in line with blue-collar income were evaporating, just as (and largely because) the core American corporation was vanishing. Symbolic analysts at the top are in such great demand worldwide that they have difficulty keeping track of all their earnings. Never before in history has opulence on such a scale been gained by people who have earned it, and done so legally." (pg 219)