America Winds Down

The Deindustrialization of America By Barry Bluestone and Bennett Harrison Basic Books; $14.95; 322 pp.

ACCORDING TO the U.S. Conference of Mayors, about two million Americans have recently lost their jobs and can't afford to keep their homes. Most of this desperate legion has gone south and west, searching for jobs in what they have been told is a booming Sunbelt. But the recession--which sent unemployment soaring from 8.6 percent to 10.8 percent in 1982 alone--has hit down south as well. So the homeless make do as best they can--in the sprawling "Tent City" outside of Houston, under freeway passes in Southern California, in overcrowded church-run shelters. They are like latter-day Okies, but in reverse. Overwhelmingly, today's unemployed drifters come from the industrial Midwest and Northeast; that is, from a part of the country where another factory is shut down just about every day.

Those factory closings--and their dire costs in human suffering and economic productivity--have, however, sparked a boom in one sector of the economy: Economists have been churning out new explanations for America's "deindustrialization" and prescribing solutions to it about as fast as companies have been laying off workers. With The Deindustrialization of America, Boston College's Barry Bluestone and MIT's Bennett Karrison add to this growing literature, which includes everything from Lester Thurow's baleful Zero-Sum Society to the corporatist musings of Felix Rohatyn in the New York Review of Books to Ezra Vogel's jealous Japan as Number One.

Unlike most of the recent prophets of economic decline, however, Bluestone and Harrison take an explicitly radical view of the current recession, its origins, and its impact. The result is a sobering--if somewhat jargon-laden--account of the effects of factory closings on working people. In shocking detail, the two economists show that high unemployment has led not only to desperate migration, but also to poor mental health, higher infant mortality rates, and community disintegration.

Bluestone and Harrison point an accusatory finger at Big Business, arguing that corporations have been "disinvesting" in the American economy. Capital, they claim, has essentially gone on strike. In the face of mounting political and economic uncertainty since 1971, companies have decided that they simply won't use their cash to create jobs as long as they see high union wages and local taxes threatening their profits in the American Industrial Heartland. Instead, corporations either try to play one state off another in a game of tax-abatement chicken, or they pack up their factories and move to the Third World. Or they merge; Bluestone and Harrison note that two-thirds of all "new" investment spending by U.S. corporations since 1972 actually went for unproductive takeovers of one company by another.

It's a compelling case. By documenting the historical changes in U.S. business policy since the booming '50s and '60s that have led to the present recession. Bluestone and Harrison avoid what has become a tiresome self-defeating habit of American leftists--blaming everything on Ronald Reagan. Indeed, if there's anything The Deindustrialization of America makes clear, it's the sheer irrelevance of Reaganomics to the U.S. economy's underlying problems.


Tax and budget cuts may swing the boom-bust pendulum a little bit one way or the other, but the fact remains that disinvestment began to gather momentum long before Reagan ever reared his Brylcreemed head. Bluestone and Harrison's book demands that readers of all political stripes face the fact that investment, and how to increase it--not this budget plan or that--is the economic issue for the '80s. Deindustrialization is a problem that has been brewing for a long time, and it will require a fundamental and far-reaching solution.

UNFORTUNATELY, Bluestone and Harrison's own prescriptions don't measure up to the provocative task set by their analysis. Their criticism of Thurow and Rohatyn's schemes for government-directed investment in promising new "sunrise" industries--that neither provides any guarantee that companies will actually use public capital productively--is well-taken. So is their observation that going down the "Japan, Inc." route probably involves more social regimentation than Americans would tolerate. But their program, however, is not new; it's the familiar "economic democracy" laundry list: a reinvigorated welfare state; national anti-plant closing legislation; public control over "sunrise" industry profits; massive government investment in mass transit in health care, and "a transformation of the nature of active popular participation in the day-to-day running of the basic institutions of the economy and the society." All of this is to be enacted at the behest of a massive popular movement.

There are four reasons to doubt that this scheme will get anywhere:

* Rhetoric: Bluestone and Harrison just can't resist quoting Marx in support of their plan. When are well-intentioned left-wing intellectuals ever going to learn to speak in terms that don't alienate the very working people they're trying to influence?

* Constituency: The two economists commit a left-wing version of the Japan-worship error in citing Swedish socialism as a model of "humane" industrial policy. American workers would probably resist Japan-style regimentation; but they have some pretty strong anti-collectivist traditions as well. Bluestone and Harrison simply gloss over this obstacle to an American movement for worker's control. And in a near-depression, workers are bound to look askance at any thing that sounds more risky than a job offer.

* Leadership: Of course, deficiencies in working-class consciousness could always be made up for by vigorous, enlightened leadership--a role that Bluestone and Harrison want to assign to the unions. But most union leaders are running scared themselves, trying to sell their shrinking memberships on wage concessions in order to protect vanishing jobs. Indeed, after the United Steelworkers' rank and file did raise its voice, rejecting a proposed give back contract, union leaders cut back the role of rank-and-file representatives in collective bargaining.

* It's just too big an agenda: No matter how well organized, workers would face some pretty tough obstacles putting the Bluestone-Harrison scheme into law. Bluestone and Harrison seem to think that democratic politics is a simple matter of who has more votes. The more complicated reality is that corporations still have plenty of cards to play. Indeed, as the authors point out themselves, they are busily working to make sure that governments will be unable to control them at all:

When Satellite Based Systems begins operations longer will transnational enterprises be reliant on national postal, telegraph and telephone authorities for any of their information needs, removing the last link in their activities susceptible to government scrutiny and action.

Bluestone and Harrison's admirably progressive vision for a reindustrialized America is well-intentioned. But until it is much more carefully elaborated--perhaps in an entire volume devoted to that purpose--skepticism will be all too justified. Equity should be the goal of any effort at economic restructuring. But the way to achieve that goal in the face of hard times and continued corporate power is to prepare a comprehensive, feasible strategy for the hard political bargaining ahead. The necessity of compromise often seems hard to swallow at first, but--unlike sweeping utopian schemes that fail--it leaves you with something to build on.