Seminar 1: John Kenneth Galbraith's "The New Industrial State"

It has to be said, I am not a fan of economics. It is just a load of gobbledygook if you ask me, so I was very relieved that Jenni’s seminar paper managed to summarise the book in a way that I almost understood!

Main discussion points that came up were:

General history of Galbraith; a keen follower of Keynesian theory however said that general price controls are required to keep the economy running smoothly. The book seems to be there purely for informational purposes, not to further his political agenda, in the forward he even said that “I do not write … to provoke” and that “one need not – and in the name of science should not – accept any of it”. He therefore is concerned with telling the public what industry is about, from an insider’s viewpoint, so that we can make up our own views and challenge the traditional thinking.

He argued that within high industry and advanced economies, the ‘techno structure’ (teams of specialised people who organise the industry) dwarf and manipulate government action. From the reading, the general consensus of the group was that corporations are soulless, and even when the run campaigns to help society, it is purely to keep the public on side and maximise profits. The industry seems to me to be flawed from the outset, an idea which I think is supported by the fact that even some entrepreneurs resent the organisation which now controls the economy, even though they work within it and need it to keep their businesses alive. It is clear that small businesses don’t really stand a chance; now the oligopoly has started, big business, it seems, will always dominate the market.

Galbraith’s ideas are very much contrary to Adam Smith’s micro-economics which saw the individual as holding the power and driving the economy. In contrast to this individualistic view, Galbraith says that the economy is all about big business, planning and profit, not fulfilling customer needs.

One of the chapters which we discussed in detail was chapter 6. Here, Galbraith describes 3 parts to a successful business; 1) technology to replace blue collar workers (who aren’t skilled so are more dispensable than white collar workers) 2) people to understand/run the technology (who have specialist skills) 3) co-ordination (communication between the specialists and deciding which specialist skills are relevant and needed. This basically means that “we are becoming the servants, in thought as in action, of the machine we have created to serve us”; technology is taking over, creating whole new problems in that production takes longer and is more specialised (and so not easily transferred to a different product/use) and that investments of time and money sky rocket; it is also much riskier to make an investment that involves technology because you are having to anticipate the future demands of the market. The replacement of blue collar workers also brings the problem that, because of the structure of the economy, society and education, blue collar workers are faced with many difficulties before they have the opportunity to become specialised, and so are sort of locked in blue-collar jobs.

Another chapter looked at was chapter 15 which talked about goals for corporations. I was interested to find out that security was their number one goal, before growth/profit. Next comes ‘technological virtuosity’ and then rising dividends (but I don’t actually know what these last two mean). It also talked about GNP (gross national product) which, apparently, is what our country depends on.

Chapter 7 was also of particular interest in discussing the fact that the goal of corporations is to make money, not to uphold or benefit society. As Claire pointed out, it is a very selfish attitude and not conducive to a thriving whole. Claire put this very elegantly, saying you can’t just be your own company, you need to be part of the world. This is very much the same as society. This topic of discussion brought us on to the fact that corporations not only have this huge influence on the economy, but also in the media and far-reaching impact on society. The conglomerates practically control the mass media, and so the public are hugely impacted on by the industry.

And there you go, that was our discussion of economics as set out in Galbraith’s “The New Industrial State”. If you want to actually understand it, go to an economist as I cannot help. 