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Chapter 2 Analysis


Chapter2 Analysis

Outlineof Chapter Two

pp. 50-53

Reich opens the chapter by illustrating how things changed from the 1970’s at the economic perspective. Reich discusses how economic power was shifted to investors and consumers by giving them more freedom to choose market price and quantity.

pp. 54-65

At this point, the chapter introduces the times when technology was coming about in the production environment of the economy. The chapter then goes on to discuss the effects of the introduction of the technologies in the enhancement of trade in America and other countries.

pp. 66-75

The chapter then further discuses the start of the digital revolution that started in 1990’s. This section of the chapter discusses the impact of the digital age, especially the ability people get in online platforms. The section also takes a look at the freedom for people to make choices based on the access of information that was facilitated by the new technology.

pp. 76-87

Reich covers the introduction and development of new communication sites that were created to promote sharing of information and ideas. In this section, the chapter discusses the impact of the communication channels to the economy trade. Finally, the chapter introduces the aspects of money as the main thing that mattered during these developments. At this point, global supply chains of the 1990’s were getting longer and deeper.

Argumentsof the Chapter


Themain arguments of the chapter are impacts of new technology on theeconomy and market liberalization.

Contributing arguments:

Throughtechnology, the economy of the United States was impacted in both theproduction and the service industries. Reich argues that theproduction levels in the economy rose due to the increase in themechanization. Moreover, advances technological developments reducedthe cost of production, leading to higher profitability as well asdevelopments in trade due to surplus production. Reich further arguesthat it is not the economic policies championed by President Reaganeconomic policies that impacted on the economy, but increasedtechnological advancements that shaped market orientation. Themarkets were now dominated by the powers of demand and supply inregard to price and quantity determination. This explains why Reich(2008) argues that power was transferred from the consumers toinvestors. In the perspective of the consumers, the power was vestedto their freedom of choice and ability to determine the marketequilibrium through demand.

Theargument of the adoption of new technology as discussed by Reich isprobably the main highlight of the chapter that becomes the bridgebetween the introduction of the book and the rest of the book. Thisis because it is trough the introduction of the new technology thatnew communication channels were adopted for the improvement of theeconomy (Reich, 2008). The chapter gives an account of howintroduction of technology impacted on increased production thatmarked a step towards making the largest economy in the world. Reichargues that through technological developments, new communicationchannels and the internet were discovered. It is the impact of thesecommunication channels that impacted on the power that the consumershad. This way, the consumers and the investors had full power due toliberalization and access to information.

Investmentin the economy was impacted by new tax regimes during this time thatcombined with the production potential of the American economy. Inthe perspective of the investors, Reich illustrates their powerthrough the introduction of new tax regimes. In the chapter, Reich(2008) argues that investors were encouraged by the new tax systemsfor new ventures. This led to increased production in the economy,which impacted in the terms of trade within the country and ininternational trade.


Evidencefor argument, thatMarket Liberalization impacted on the Economy

Reich(2008) provides the developments that took place in the economicscene as evidences. To advance his argument of market liberalizationand giving power to consumers and investors, Reich explains theimpact of poor economic performance in the 1970’s on the UnitedStates economy. Reich described increase unemployment at the time andlow trade volumes both in the United States and with other countries.Reich (2008) uses this to introduce the impact of the 1980s economicreform policies that shifted the economic power from the supply sideof the economy to the demand side. This is the main element of themarket liberalization that Reich puts as a shift in the power toconsumers and investors.

Evidencefor argument, thatNew Technology impacted on the Economy

Reichillustrates the outburst of information technology and communicationthat has opened the world. Reich illustrates the emergence ofcommunication websites like Google, YouTube and AOL as the mainevidences of new frontiers of the capitalistic domination (Reich,2008). He further illustrates the development of technological toolslike eBay that have been the new communication channels that haveimpacted on the trading scenario of the capitalistic economy.

Evidencefor argument thatInvestments impacted on the Economy

Reichillustrates the impact of technology on the production of theeconomy. Reich illustrates the recovery of the economy from the1970’s poor performance and associates it to the beginning ofadoption of new technology in the production. The direction of supercapitalism was marked by the developments in the production, whichmade the economy to be dominated by those who were able to new affordtechnologies. The developments in the economic sector led to newelements of leadership where leaders were judged by the economicperformance of the economy.

Connectionwith My Life

Throughthe understanding of the arguments in the chapter, I can nowunderstand the current advancements in technology. At this time, theeconomic environment is being shaped by constant developments intechnology. This means that market domination is propelled by thesuperiority of the technology developed and the strength of thefinancial capabilities of a company or a country. Through thisunderstanding, I can set my goals right. For instance, if I want toset up a company, I will consider the two proven elements of survivalin a capitalistic world.

Inow understand the gradual developments that led to such capitalisticenvironment all over the world and why the trend may not shape futureeconomies. As I enjoy the current information and communication,technological tools, I clearly understand the dynamics of theirdevelopment and can predict future improvements. This is way, I canpredict future elements of capitalism and what will shape futureeconomic and political scenario. This way, I can relate the presentand future personal position in direct relation to the arguments ofReich in the chapter.


Reich,R. (2008). Supercapitalism.NewYork: KnopfDoubleday Publishing Group