Innovation, Evolution and Economic Change
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Innovation, Evolution and Economic Change

New Ideas in the Tradition of Galbraith

  • New Directions in Modern Economics series

Edited by Blandine Laperche, James K. Galbraith and Dimitri Uzunidis

The book begins with a penetrating analysis of the main features of today’s capitalism and in particular the conflict between shareholders and managers. It moves on to focus on the consequences of globalization in the decision-making processes of large corporations and represents an important step in the development of a theory of fraud and corruption within corporations. In the final part, the authors address and explore the consequences of the domination of influential groups over major social and political decisions, on the blurred boundaries between the public and the private sectors and its consequences in the fields of technological regulation and the evolution of public services. In so doing, the authors question the meaning and power of democracy in today’s society.
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Chapter 4: The Power of Large Companies

Marlyse Pouchol

Extract

4. The power of large companies Marlyse Pouchol 1. INTRODUCTION * In his major works: The New Industrial State (NIS) (1967) followed by Economics and the Public Purpose (E&PP) (1973), Galbraith undertakes an ‘emancipation of [the] belief[s]’ (E&PP, p. 223) conveyed by ‘neoclassical economics’. He suggests that neoclassical economics might consist of an economic science that serves the views of large industrial and financial groups. These groups he classifies as: ‘the planning sector’, or more often ‘the planning system’, because of the organizational requirements to which they are subjected. He consequently does not hesitate to ask such questions as: ‘Is it not possible that economics also serves the purposes of organisation?’ (E&PP, p. 4). A more recent book: The Culture of Contentment (CC) (1992) underlines this collusion even more clearly: ‘Finally, the great enterprise – the large modern corporation – is extensively under the protection of conventional economic education’ (CC, p. 76). Consequently, it is not surprising that the relations between Galbraith and the most prominent economists have been tense. For Solow, notably, who was very critical of The New Industrial State when it was published, ‘serious’ economists cannot be content with a literary approach that isolates the phenomenon of large companies to exaggerate their power. Such an approach is not scientific and one should consider that ‘Professor Galbraith is essentially a moralist’ (quoted by Frobert 2003, p. 74). The controversy between Galbraith and Solow thus brings into play the status of the economist as much as...

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