Tales of new America.

• Author: Peters, Thomas J.

ROBERT REICH TAKES ON RAMBO

American managers have been besiegedfor almost a decade by an endless parade of "how-to" books. All share the basic assumptions that organizational structures and other managerial tools must be changed, probably drastically. Policymakers have likewise been inundated with proposals ranging from massive funds for worker training to huge tax breaks to support quicker automation of our plants. While many of these proposals have merit by themselves, they have fallen far short of addressing the deeper problems of our increasingly troubled economy.

In tales of a New America, Harvard politicaleconomy and management professor Robert Reich, who has the ear of many of the 1988 Democratic presidential hopefuls, argues that these problems all stem from an inappropriate set of guiding myths that shape the national psyche. In particular, we tend to couch all of our debates in an "us" versus "them" framework--management versus workers/unions, U.S. firms versus foreign competitors, and so on. To cope with new economic interdependencies, we need instead, says Reich, to move cooperation to the place of honor, encouraging, for example, more cooperative ventures with foreign firms and more profit-sharing with the workforce in return for more workforce commitment.

Reich has performed a major service in movingbeyond short-term policy choices and quarrels over competing management technologies. Quite simply, the debate as it is now posed obviously misses the mark--changes are not occuring fast enough to stave off serious economic deterioration in 75 percent of manufacturing industries, or in the service sector where, for instance, our recently formidable positive rade balance has disappeared.

Though the service Reich has rendered issubstantial, his book has serious flaws. It is unnecessarily shrill in its denunciation of entrepreneurs, it overemphasizes the role of old and very big manufacturing firms, and it embraces significantly increased cooperation between Big Business, Big Labor, and Big Government without examining the down side of such major interest group collusion. In the end, one is left with a troublesome question. Must we wholly reject the rough and tumble of the marketplace in order to embrace cooperation on the grand scale Reich proposes?

Needed: a national lobotomy

Readers of Reich's 1983 book, The Next NextAmerican Frontier, are familiar with his basic economic thesis, which is reiterated in Tales of a New America: "High wage economies can no longer depend on standardized mass production." To compete, says Reich, American factories must meet the demand of small market niches around the world for high-quality, complicated, specialized products. This means production systems flexible enough, and workers skilled enough, to change the product quikly to meet new consumer demands.

Reich further develops these themes in his newbook: "The older industrial economies have two options. They can try to match the wages [that is, reduce], for which workers elsewhere are willing to labor, or they can compete on the basis of how quickly and how well they can [utilize labor to] transform ideas into incrementally better products." His principal emphasis shifts from managerial shortcomings (he coined the term "paper entrepreneurs" in his 1983 work) to labor's requisite new role in the emerging scheme. America has a high-wage economy. To keep it, we must turn labor from a commodity that we constantly attempt to reduce, to the antithesis of that--the chief source of added value. Historically, however, we have focused on more specialization for labor (many old plants have 80 or so job categories) or its outright elimination through large-scale automation.

Japan, says Reich, has followed a far differentroute. Americans, the inventors, have made money from transferring our Big Ideas, as Reich calls them, to the Japanese. The Japanese have made money in turn by perfecting production methods and selling the technology back to us in the form of high-quality products: "Thus, the emerging Japanese-American corporation allocates to the Japanese the most important assets for the future [my emphasis]--experience in making complex parts cheaply and well.... They learn how to make...small, incremental improvements in production processes and products that can make all the difference in price, quality, and marketability."

Reich's survival formula requires nothing shortof a national lobotomy--a switch from adversarial to collaborative relationships in just about all business and industrial dealings. Over the years plenty of thinkers, and mot just Marxists, have criticized America's exaggerated individualism and extolled the virtues of cooperation. But Reich's analysis, driven by the specific sources of our competitive disadvantage relative to the Japanese, is quite original.

In the workplace, Reich says, the switch canbe accomplished if we adopt what he's labeled "collective entrepreneurialism." America's John Wayne/Rambo/Great Man/Big Idea entrepreneurs--e.g. Steve Jobs of Apple and Lee Iacocca--should be supplanted as our heroes by workers, every one of whom can demonstrate entrepreneurial behavior. Reich summarizes well: "Collective entrepreneurship involves increasing labor value. For managers, this task means continuously retraining employees...