The New Industrial State

"Galbraith is best known for his book The Affluent Society , which predates The New Industrial State . But in many ways The New Industrial State is more interesting because here again we have an economist who reaches beyond the narrow scope of economics and sees economics and social life in a broader frame. Galbraith was looking at what had happened to the large corporation. By the 1960s, he saw it had succeeded, that Croly’s promise of American life had been achieved in many respects. The New Industrial State was more of an explanation than a call to arms. It was an explanation for how it was that the giant corporation managed to create an adequate market for its extraordinary productivity and why, as Galbraith called it, the “technostructure”, the people who were involved in planning the next innovations in goods and services, was really the centre of power in the large mid-20th century corporations. If anything, Galbraith’s book was a warning about that technostructure. The United States, and by inference all nations practising democratic capitalism, had to be careful to make sure that we understood what the technostructure was doing and why it was doing it and how it was trying to influence all of us. Galbraith understood 20th century consumerism probably better than anyone. Just as Thorstein Veblen understood where consumerism was going at the end of the 19th century, Galbraith really saw the future with regards to consumerism in the last decades of the 20th century. Exactly. Galbraith in some senses explained and even celebrated a system of corporate power that was soon to shift to Wall Street. He also celebrated, in a different but related book American Capitalism , what he called “countervailing power”, a system in the United States – but by inference elsewhere where you have democratic capitalism – where unionised workers, small businesses and others would accumulate enough power to countervail against the giant corporations that were beginning to take over the American economy. In both books, in American Capitalism and subsequently The New Industrial State , indeed in the Affluent Society as well, Galbraith is an optimist. He’s as much as an optimist as Herbert Croly. Galbraith sees the victory of a system of democratic capitalism by contrast to the alternatives in the world at that time – communism, fascism, dictatorship and mass poverty. He saw in the delicate balance that the American system had created an answer to the world’s problems. But at the same time he was concerned about the technostructure. He wanted to make sure that it was accountable and responsible."