New Ideas in the Tradition of Galbraith
New Directions in Modern Economics series
Edited by Blandine Laperche, James K. Galbraith and Dimitri Uzunidis
Chapter 8: Large Corporations and Technostructures in Competition
Blandine Laperche 1. INTRODUCTION In neo-classical economics, the firm is seen as a ‘black box’, i.e. an entity receiving flows of raw materials and turning out flows of processed or finished products. The purpose of such an entity is to maximize its production and profits, being limited only by its resources. It operates on a market which functions in accordance with the rules of pure and perfect competition and thus is similar to its numerous competitors in terms of quality. In this picture, very little space is left for the big firm. Monopoly, which was originally ignored, was later perceived as an exception to the general rule detrimental to the market system: wasted resources, very high prices, and slower technical progress. Such abnormalities have justified the fight, both theoretical and practical, against monopoly (e.g. anti-trust laws in the United States). In the tradition of the economists who decided to start from the monopoly, and not from pure and perfect competition, to study the formation of prices and the realization of profits on the market – i.e. in the tradition of K. Marx, J.A. Schumpeter and J. Robinson – J.K. Galbraith spent most of his intellectual life analysing the big firm. His major writings on the subject are American Capitalism (AC) (1952 ), The New Industrial State (NIS) (1967), Anatomy of Power (1983) and more recently The Economics of Innocent Fraud (EIF) (2004). His study relates both to the structure of power throughout the organization, and its impact on prices, consumer behaviour, and...
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