Micro-economists have a concept they call external
diseconomies of scale. External diseconomies of
scale exist when, for reasons beyond its control, a firm''s long-run average total cost rises with the scale of production. On the margin the analytical underpinning of such behavior is that output increases far less than the corresponding cost. One of the reasons that explain diseconomies of scale is that larger and larger production scales exhaust the benefits of specialization, i.e., the firm grows beyond its optimal size, also called the minimum efficient scale. In his book "Supercapitalism" Robert Reich generalizes diseconomies of scale to an economic system to compel the reader to examine whether present-day
capitalism has gone too far. By
Supercapitalism the author suggests it has. Supercapitalism is no longer
good for liberal democracy, which is paradoxical because historically the virtue of capitalism has been the improvement of the material conditions of the individual at the basic (biological) level, as well as the individual''s social well-being at the higher levels of human needs. Supercapitalism is starving the latter, and that ultimately is not good for the former. First the book focuses on the Golden
age of capitalism in the USA, before turning to a description of the road from the Golden Age to supercapitalism, and how supercapitalism has "overwhelmed" democracy, and "diverted" politics. The last chapter describes what the citizen needs as a guide out of the current mess. This book is good reading for the general readers, and it is stinkingly relevant for the specialists whose blinders so often keep them from seeing the broad landscape around them. Five stars.
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