Abstract
When Harold Demsetz reviewed Galbraith’s New Industrial State, he stressed the author’s remarkable talent “to rally popular support for ideas not now popular.” 1 Without questioning this view by entering into a detailed analysis of the characteristic features of the demand and supply conditions of the competitive market for ideas and beliefs, we suspect that Demsetz laid too much stress on Galbraith’s powers of persuasion and thereby strongly underrated Galbraith’s superior ability to know the market conditions for his products and to react to the demand functions of his consumers. We think it is not too far-fetched to classify both The New Industrial State and Galbraith’s two prior popular writings2 as major historical reference books that articulate, support, and manifest the otherwise unstructured cultural uneasiness of his typical reader.
Reprinted, with some changes, by permission of the author and from Schweizerische Zeitschrift für Volkswirtschaft und Statistik, III 1975: 317–335. The paper was presented at the First Annual Interlaken Seminar on Analysis and Ideology, Switzerland, June 1974.
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Notes
Harold Demsetz, “The Technostructure, Forty-Six Years Later,” Yale Law Journal 77 (1968): 802.
John Kenneth Galbraith, The New Industrial State (Boston: Houghton Mifflin, 1967; 2d ed., rev., 1971); American Capitalism: The Concept of Countervailing Power (Boston: Houghton Mifflin, 1952); The Affluent Society (Boston: Houghton Mifflin, 1958).
John Kenneth Galbraith, Economics and the Public Purpose (Boston: Houghton Mifflin, 1973). All page and chapter references in the text are to this work.
Adolph Berle and Gardiner C. Means, The Modern Corporation and Private Property (New York: Macmillan, 1932)
Walter J. Adams, “Another View of the New Industrial State,” ed. Edwin Mansfield, Principles of Microeconomics—Readings, Issues and Cases (New York: Norton &Company, 1974), pp. 101–104; first published in Hearings before Subcommittees of the Select Committee on Small Business (Washington, D.C.: Government Printing Office, 1967).
Walter J. Adams, “The Military-Industrial Complex and the New Industrial State,” American Economic Review 58 (May 1968): 652–665.
Robert M. Solow, “The New Industrial State or Son of Affluence,” Public Interest 9 (1967): 1.
Scott Gordon, “The Close of the Galbraithian System,” Journal of Political Economy 76 (1968): 635–644
James E. Meade, “Is ‘the New Industrial State’ Inevitable?” Economic Journal 78 (1968): 372–392
Myron E. Sharpe, John Kenneth Galbraith and the Lower Economics (New York: Macmillan, 1973), p. 45.
Armen A. Alchian, “Corporate Management and Property Rights,” in Economic Policy and the Regulation of Corporate Securities, ed. Henry G. Manne (Washington, D.C.: American Enterprise Institute, 1969).
Armen A. Alchian and Harold Demsetz, “Production, Information Costs and Economic Organization,” American Economic Review 62 (1972): 777–795.
The latter control mechanism is discussed in Henry G. Manne, “Mergers and the Market for Corporate Control,” Journal of Political Economy 73 (1965): 110–121.
John Kenneth Galbraith, “Economics as a System of Belief,” American Economic Review 60 (May 1970): 473.
Harold Demsetz, “Where Is the New Industrial State?” Economic Inquiry 12 (1974): 1–12. There is a theoretical ambiguity in Demsetz’s procedure, for he thinks incorrectly that growth rate maximization is the dynamic counterpart of sales revenue maximization. And it may well be that the latter model performs better.
John H. Williamson, “Profit, Growth, and Sales Maximization,” Economica 32 (1966): 1–16.
Armen A. Alchian and William R. Allen, University Economics: Elements of Inquiry, 3d ed. (Belmont, Calif.: Wadsworth, 1972), pp. 343–344.
Harold Demsetz, “Economics as a System of Belief—Discussion,” American Economic Review 60 (May1970): 482.
Lester G. Telser, “Advertising and Competition,” Journal of Political Economy 72 (1964): 558.
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© 1979 University of Rochester Center for Research in Government Policy and Business
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Monissen, H.G. (1979). “Economics and the Public Purpose”. In: Brunner, K. (eds) Economics Social Institutions. Rochester Studies in Economics and Policy Issues, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-9257-3_6
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