[E–book] (American Capitalism The Concept of Countervailing Power) author John Kenneth Galbraith


Writing in 1952 Galbraith argues that the prior 20 years the reat depression and Ameria s WW2 driven recovery proves that we must reconsider a fundamental economic assumption Namely that perfect competition does not exist in the US economy and that there is enough consolidation Of Businesses In Most Industries That Companies Do Indeed Have businesses in most industries that companies do indeed have OVER PRICES THIS IN TURN LIMITS OPTIMAL MARKET over prices This in turn limits optimal market and is different only in degree and precision of a single firm monopoly Galbraith Rescuing Gus goes on to argue that the most important power dynamic to study in American economics is therefore not how competitors interact to optimize prices but how customers and suppliers interact to split profits Instead of competition he calls this countervailing power Namely when one industry consolidates say the US Steel industry the important dynamic to understand is how labor organizes one of the key vendors of US Steel is its employees or how customers organize eg the auto industry Galbraith then points out that the US Government plays a critical role in establishing countervailing power where there wasn t before through laws and reforms like the minimum wage or workers safety regulation Obviously this role for the US Government is controversial in practiceIncreasingly in our time we may expect domestic political differences to turn on the uestion of supporting or not supporting efforts to develop countervailing power Liberalism will be identified with the buttressing of weak bargaining positions in the economy conservatism and this is its proper function will be identified with the protection of positions of original power There will be a debate over whether weak positions have been unduly strengthenedGalbraithoes on to say where and why Class of 92: Out of Our League government intervention in the economy to establish countervailing power is important but the conclusions to me ultimately feel pretty obvious Galbraith s criticisms are valid and elouent but his solutions are broad and largely undefined The text is certainly an interesting read for anyone who feels discontented with American Capitalism but don t expect anything radically new or invigorating Much too brief a study of its seminal thesis containing neither a thorough theoretical analysis nor a historical study of countervailing power Even so the concept that market institutions will develop occasionally with state support that check the excess power of other market institutions remains compelling today The labor unions which Galbraith cites as a paradigmatic countervailing power have largely withered away albeit in part through the withdrawal of state support via right to work laws How can countervailing powers develop to techiants whose supply AND consumers are both us its usersI picked up this book interested in the idea of large institutional investors as countervailing powers to corporate negative externalities I now see this does not strictly fit Galbraith s thesis which focuses on counterparties in market transactions This book ave me some exposure and insight into the Keynesian economic theory and how the Depression helpe. In his new introduction to this classic text on political economy Galbraith reasserts the validity of the core thesis of American Capitalism The best and est. American Capitalism The Concept of Countervailing Power

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F someone invented meat derived from plants that is cheaper and healthier than our current food then advertising is used Moreover advertising does not persuade consumers of ineffective products over the long run If a product fails to deliver promises from advertising the company s reputation will be rightfully tarnished and fewer people will accept their claims or buy their products People are not simply brainwashed into buying whatever ad is on TV or radio people are not brainless zombiesFinally on Galbraith s thesis of countervailing power even if it were true workers are crushed under corporate power it does not follow that overnment is the solution Indeed if How the West Was Lost: Fifty Years of Economic Folly--and the Stark Choices Ahead government attempts to manipulate and manage businesses who already has company power and influence overovernment agents It is of course the CEOs the lobbyists and the cronies of politicians Workers may form voluntary unions if they feel they are being treated unfairly but they are in no position to halt other individuals who are willing to work under such conditions Galbraith s over optimism on the role and action of the overnment remain unsatisfactory and unsupported American Capitalism while interesting and written clearly demonstrates how even an extremely influential economist may not know economics and is out of touch with reality The book is fraught with historical inaccuracies statistical misrepresentations over eneralizations and unsupported statements Those who have studied America s Great Depression monopolies and antitrust overnment economic regulations inflation and other have studied America s Great Depression monopolies and antitrust overnment economic regulations inflation and other Keynesian remedies will conseuently find this book reatly mistaken To better spend your time read instead What Has Government Done to Our Money by Murray Rothbard In Defense of Deflation by Phillipp Bagus and The Has Government Done to Our Money by Murray Rothbard In Defense of Deflation by Phillipp Bagus and The of Economic Crisis by Ludwig von Mises A Classic Very interesting to see the role of competition as an element from a Macroeconomics perspective The author emphasizes the role of countervailing power in a concentrated economy as a disciplinary factor to restrain abuse in prices to consumers and reduction in wages what competition would do in less concentrated markets This is true when there is no inflation otherwise both supplier and buyer tend to ally themselves to extract the most income possible from consumers The author recognizes that there would be a lack of resources for the economic agents to invest and innovate in overly pulverized markets The author also comments on the eternal debate between liberals and conservatives on the best economics policy recognizing that Keynesian ideas may have practical importance in times the best economics policy recognizing that Keynesian ideas may have practical importance in times economic depression He doesn t mention land rent Henry George or single tax Sobre poder y democracia citado en La idea de justiciaThere is today much anxiety about the positional power of large multinational corporations but this is not new A concern with the dominance of modern corporations led John Kenneth Galbraith in his1952 book American Capitalism to explore the notion of the countervailing power of workers and consumer roups Ineuality P Fallen Angel: The Passion of Fausto Coppi g99. Is the best answer to the market power of big food companies This work remains an essentialuidepost of American s as well as that as of the American econo. ,

D mold the American perspective and policies on our economy both at home and within our foreign policies This work policies on our economy both at home and within our foreign policies This work aged but the point is still a fair one Monopolies are dangerous for the health of the economy I read this along with several other Galbraith books for the Capitalism Democracy Socialism class taught under the Philosophy Department at Loyola University Chicago during the first semester of 198182 It is one of Galbraith s weaker texts and one of his earliest being effectively the first volume of a series including The New Industrial State and Economics and the Public Purpose Curious it seems why Galbraith was as popular and celebrated as he was In this book American Capitalism Galbraith argues how companies functions inefficiently by misallocating resources and spending wastefully on advertisements Moreover as companies continue to merge and accumulate larger proportions of the market share these companies will undoubtedly be able to affect price and form a monopoly In such monopolistic position companies will be able to charge almost as much as they want and will have large power over the workforce As such Galbraith finds there are countermeasures what he calls countervailing powers which will balance the scale of power These countervailing powers include labor unions After Tamerlane: The Global History of Empire Since 1405 government legislation and social safety nets Thus Galbraith concludesovernment has an important role in unions Alien Alpha government legislation and social safety nets Thus Galbraith concludesovernment has an important role in the economy and to help the workersYet as complete as Galbraith s analysis of American capitalism seems nearly every point is incorrect American Capitalism contains arguments from essentially an armchair economist who remains ignorant of the real world He provides no real examples whereby companies are able to control the entire market within an industry and it is clear why there are almost no cases There is essentially no company that came to buy every other company and then proceeded to raise its prices If one such company that came to buy every other company and then proceeded to raise its prices If one such company purchasing of other companies in the industry the remaining companies will take notice If these remaining companies are still operating with a competitive edge the cost of purchasing these companies will become larger and larger thus also encouraging new companies to enter the market Now even if one company came to completely dominate an entire industry there will be still alternative resources For example if one company came to own all the orange farms and all orange related production there remains apple lemon rapefruit milk water and so on as competitors Simply obtaining a large or entire market share of an industry does not necessarily mean monopolistic power Differing sizes of companies are due to differing efficient sizes of serving consumers for each industry On Galbraith s criticism of wasteful advertising simply because he may not find smoking or liuor terribly important does not mean other people may not enjoy these products The purpose of advertising is to inform consumers of new products If someone invented an innovative cheap and clean alternative to our current as powered engines then advertising is used Ablished answer to economic power is the building of countervailing power The trade union remains an eualizing force in the labor markets and the chain store.