Galbraith, John Kenneth

Galbraith, John Kenneth

(1908-) Canadian-born economist whose radical views about the workings of the market economy have been expressed in a series of books such as The Affluent Society (1958) and The New Industrial State (1967). Galbraith suggests that advanced industrial economies comprise a competitive sector of small owner-managed businesses and a monopoly sector of large industrial companies managed by salaried technocrats, and he concentrates on the workings of the latter.

Galbraith argues that large companies plan their activities so as to minimize market uncertainty and that they seek through advertising to create demand for new products before manufacturing them: a REVISED SEQUENCE, compared with the conventional economic view that consumers express innate wants then see resources allocated to satisfying these wants. Nevertheless, Galbraith acknowledges that such large firms help to foster technical innovation and scale economies that have yielded large gains in incomes. Furthermore, he sees the growth of large companies leading to the growth of trade unions as a COUNTERVAILING POWER to secure a share of efficiency gains for workers. Consequently, Galbraith argues that large companies should not be broken up but controlled by government to prevent abuse of their monopoly power, with attempts to increase the countervailing power of consumers and small businesses.

Galbraith also attacked the American market economy for devoting too few resources to the public sector while allowing private sector activities to dominate, creating a situation of private affluence and public squalor.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005