Commentary Magazine

Liberalism According to Galbraith

Liberalism, as it was known for a generation, died in November 1964. Whether it will be reborn remains to be seen.

The occasion of the demise was, of course, the famous victory of Lyndon B. Johnson. The triumphant Johnson consensus of that year, stretching from Henry Ford to Walter Reuther, from Russell Long to Martin Luther King, made the traditional liberal program the official national ideology of the United States of America. The Left, Center, and sophisticated Right agreed upon the goals of federal management of the economy, full employment, Medicare, formal legal equality for Negroes, and expanded economic growth. There was even a vague unanimity about a dim future prospect called the Great Society. Liberalism was no longer a subversive and prophetic force. It had arrived at the very center of American society.

To be sure, liberal demands were often adopted more in principle than in practice. Harry Truman’s call for universal national medical insurance was turned into a program which merely covered people over sixty-five and some of the poor; similarly, the bold summons to an “unconditional” war on poverty was followed by actual measures that were cautious and highly conditional. So a struggle is still required if the nation is going to take its own consensus seriously. But that is a matter, however important, of quantitative change. And liberalism, if it is true to its own ideals, must propose qualitative innovations.

The more intelligent and radical segment of American youth sensed this impasse before any scholar had defined it, and its spokesmen began to scandalize the elders of reform by charging them with having sold out and become part of the establishment. The theories which the young invoked to express their anger were intemperate, unhistorical, much too sweeping, and contained a considerable measure of truth. Now, in a book which must be ranked as one of the most significant works of social thought in this generation,1 the chairman of the major national organization of American liberals has provided a brilliant, reasoned analysis which substantiates many of the most bitter charges that have been made against the movement which he leads.

In essence, The New Industrial State is an attempt to help American liberalism recover from its own intemperate victory. This attempt is made by means of an extraordinarily lucid analysis of the planned, privately collectivized, and state-supported system of production which obtains in this mythically, free-enterprise land. There were thinkers before Galbraith who caught the broad outlines of this trend—Rathenau, Schumpeter, and Keynes being among the most notable—but it is Galbraith’s achievement to have presented in detail its economic, political, and even its cultural structure. The unacademic conclusion of his documented argument is that liberalism, and the nation, must strive for the growth of an Ungross National Product.



The new industrial state, Galbraith demonstrates, arises out of that dominant sector of the American economy in which a handful of giant corporations controls the decisive industries. Taken together, these oligopolies form an “industrial system” in which the rapid transformations of technology, organization, and political-economic policy act and react upon one another in a whirlpool of change. The academic pieceworkers have mechanically subdivided this dynamic process into its static, isolated elements; the challenge, however, Galbraith holds, is to see it whole and in motion. And since his model of American capitalism succeeds in meeting precisely that challenge, it is worth summarizing at some length.

It is “technological compulsion,” according to Galbraith, “not ideological or political will,” which triggers the chain reaction of the industrial system. The contemporary means of production have become so sophisticated that they require highly educated skills and enormous investments of money over long periods of time. Therefore, as everyone knows, the corporation, with its tremendous internal resources and socialized intelligence, has replaced the entrepreneur. And therefore, as most economists are loath to admit, planning has superseded the market in practically every crucial area of the nation’s economic life.

When factories were run by semi-skilled operatives, a casual labor market could put foreign-speaking immigrants to work. But a modern corporation in need of digital circuit-design specialists cannot rely on the shapeups of the past. New professions have to be created, multiversities must be established to teach those who will engage in them, and the supply of brainpower has to be carefully plotted to meet the nation’s needs. In the early days, for example, the individualistic Henry Ford could have switched from gasoline to steam engines on a few hours’ notice. His corporate grandson now makes a firm commitment to a new model no less than eighteen months before it appears in a showroom. With such an investment of time and money, Henry Ford II cannot wait around philosophically while some invisible hand determines whether there will be buyers for his car. He must make sure that there will indeed be sufficient aggregate demand eighteen months away by supporting the neo-Keynesian policies of the state. And, through advertising, he must seek to predetermine a popular inclination to use the money that will be available in choosing freely the particular car he has made.

With the labor force, the buying power, and the consumer aesthetics of the society thus prearranged, prices too are of course not left to chance. The oligopolists understand that competition in this area would be mutually disastrous. But they do not then conspire to charge as much as the traffic will bear. That would be a vulgar, entrepreneurial response; rather, the corporate executive seeks stable growth, retained profits which provide new capital without the bother of going to the money market, and sufficient dividends to keep the stockholders passive.

Under these changed circumstances, the great threat to capitalism is not so much depression as it is inflation. It is relatively painless and politically quite popular to incite a boom by tax cuts. But to dampen down the economy by reducing spending or increasing taxes is something else again. Therefore, Galbraith holds (and since this is one of the few weak links in his case, I will return to it later) that the industrial system adopts a shamefaced, de facto system of price and wage control. This is done through the federal government, which establishes guideposts, “the most important innovation in economic policy of the administration of President John F. Kennedy.”

The advent, finally, of all these new forms of rationalized economic activity in both the private and public sectors has been accompanied by the creation of new power relationships and a new power elite. On the campus and in the research institutes, an educational and scientific estate has appeared which provides the theory and the research to make the system work. Within the corporation itself, a technostructure of planners and committeemen has replaced the old-fashioned hierarchy with the owner-manager at the top. As a result of these changes, organized intelligence—and it is more scarce than capital itself—becomes the decisive factor of production.

A system based upon applied intellect, as this system is, cannot depend upon the old forms of motivation. A scientist or administrator cannot be beaten like a serf or threatened with unemployment and hunger like a proletarian. He cannot even be simply bought. The men of the technostructure identify with what they do and they must feel that their corporation has, or will have, a significant purpose. Thus, the goals of the enterprise must receive social approbation—and so they do. The entire nation believes in the GNP, in production for production’s sake, in technological innovation, and in the sacred autonomy of free enterprise in an economy in which the government has socialized almost all the risks of research and development. But government intervention in research and development has sinister implications, when it takes the form of subsidies to those who produce means of annihilation. The conflict between American and Soviet power was not conspiratorially initiated by the industrial system in order to justify the public investment of billions of dollars in an advanced technology. That was a by-product of a very real counterposition of national interests. But the fact that the cold war came to serve this function now makes it that much more difficult to end the hostilities, and a precarious balance of world terror is therefore perpetuated. Here, as in the cult of gross economic growth, the system is transformed into its own excuse for being. It is a magnificently machined automaton.

Yet, Galbraith concludes, the new industrial state is not a monolith. The corporation needs a technostructure; the technostructure needs the scientific and educational estate; and the scientific and educational estate is prone to critical thought and moved by non-material incentives. Could the system therefore “bring into existence . . . the community that, hopefully, will reject its monopoly of social purpose”? Using his rigorous analysis to identify the areas where innovation is required, Galbraith concludes his study by proposing some pragmatic and visionary alternatives to the status quo.



Galbraith’s program operates on three distinct levels, ranging from the immediately practical to the reluctantly prophetic. It deals with the “lacunae” of planning and the abolition of the cold war; the transformation of the quality of life; and the evolutionary socialization of the corporation.

As to the first of these, there are, Galbraith notes, entire sectors of American society which lie outside the industrial system altogether. These include the poor who work in the small, unorganized units of farms, kitchens, laundries, and the like; entire industries, like mass transit and housing, which are run on a horse-and-buggy technology; and squalid public services which have not been able to compete with the affluent standards set by nuclear weapons, lunar expeditions, and mass ownership of private cars. To meet these problems, it must be recognized that there are “very large areas” which demand massive public intervention. It would be a good idea, for instance, to establish a single, autonomous company to take over all the mass surface movement of people in the United States east of the Appalachians. And there must be strong housing and development authorities which will take land out of the market and place it within the precincts of comprehensive social planning.



For such a domestic program to provide an economic substitute for the cold war would be a utopian ideal. Unfortunately, Galbraith argues, it cannot. The defense sector provides federal subsidy to a particular kind of advanced technology and research. Funds for decent services and housing would just not constitute adequate compensation for the loss of these subsidies. Happily, however, the space race offers a sufficient, and socially benign, outlet for these monies. And since the United States and the Soviet Union are becoming more and more alike (the exigencies of the industrial system apply in both countries, despite the differences in ideology) there is a political basis for a permanent detente.

On a less conventional level, Galbraith proposes to make the quality of life itself a subject of economic and political decision. It is an unquestioned article of faith in the industrial system that the National Product is gross and that, therefore, any increase in it is a “good thing”—even if it takes place in carcinogenic cigarettes or noisome automobiles. Moreover, since advertising has the important function of planning the public taste, there is a positive incitement to ugliness—to the bombardment of all of our senses with debased words, pictures, signs, and sounds. The state is a most fallible and undependable institution when it comes to the protection of aesthetics; it is also the only institution available. Hence public bodies must increasingly make uneconomic choices in the name of beauty (like forcing telephone wires underground even if it costs more).

Secondly, work must be redesigned. As things stand now, only the members of the scientific and educational estate can think of the year as a whole, and can consequently indulge in three-month vacations, sabbaticals, and leaves of absence. Given prevailing values, Galbraith believes that many people will choose work over leisure (I think he underestimates the degree to which increased education, delayed entry to the labor market, and early retirement are already changing job patterns)—but he wants people in any case to have a much wider range of choice. Employees, he proposes, should have the right to choose more leisure as against more income, without prejudice to their status.

Galbraith seeks also to emancipate education from its present thralldom to the industrial system. Whereas a theorist like Clark Kerr sees the university’s subordination to corporate and technical power as inevitable, Galbraith believes that the campus should be an independent center of opposition. This, as will be seen, should not be taken as a simple proposal for educational reform and the assertion of individual rights. In Galbraith’s perspective, the educational and scientific estates can hardly be expected to lead in the transformation of an entire society if they are not allowed to run their own faculties.

By this point, it should be clear that Galbraith’s program, while very much in the liberal tradition, involves important new departures. Only a few liberals in recent years have dissented so emphatically from the myths of the marketplace or been able to stress so cogently the need for truly massive public intervention and planning in areas like mass transit, housing, and land use. Disarmament activists, of course, have long talked of the domestic effects of the cold war, but they have been wont to reduce complicated considerations of political, economic, and military pressures to a charade of material interests. Galbraith’s account of the defense sector is much more sober, and his recognition of the difficulties of a transition to peace much more realistic, than the usual run of peacemongering analyses.

I feel, then, that the analytic sections of The New Industrial State (and these sections make up the bulk of the book) are more probing than anything I have read on this subject in years, and that its proposals for immediate, practical change, and for the middle-distance transformations of the quality of human life, are excellent. If I devote the rest of this essay to a critical look at the shortest and most speculative portion of the book, it is not for reasons of utopian nitpicking. Galbraith has every right to be wary of proclamaitons about the Future of Man. His premises are, of course, liberal; mine, however beleaguered, are those of a radical who belongs to the liberal community. Yet I think that by focusing upon a distant area of subtle difference I can raise some important questions which touch on tomorrow’s strategies as well as on the more remote problems of the 21st century.

In Galbraith’s scenario, first of all, it is the educational and scientific estate which must take the lead in putting the industrial system in its rightful, subordinate place. Such a move will, of course, provoke the opposition of at least part of the system. But this hostility, Galbraith continues, may well be mitigated by basic trends within the society. Today, few people discuss the reality of the industrial state since that would require un-American admissions about the degree of planning which already exists in this country. As time goes on, however, the dependence of big business on Washington will become more and more obvious. And as the public begins to understand that the giant companies are not under the control of the market, but willfully decide their own destiny, the argument for corporate autonomy will lose its force.

While all this is happening, a certain idealism will be corrupting the industrial system from within. Since management will no longer be motivated by considerations of profitmaking alone, technicians at Hughes and Lockheed in California will have the same reasons for working as do those at the non-profit Jet Propulsion Lab run by Cal Tech. Hence, the technostructure will no longer have a passionate stake in resisting its socialization. Enterprises which have become public corporations in fact will more and more become public corporations in political and legal theory and thus be subjected to democratic controls. In such a setting, the educational and scientific estate will indeed be able to pose an effective challenge to the industrial system’s monopoly of values.

Galbraith is no Candide. He recognizes that right, justice, truth, and beauty may lose out to the religion of efficiency, production, and corporate power. Yet I do not think he takes sufficient account of tendencies which do not simply frustrate his hopes but work actively against them—for there is a strong evolutionary trend toward subordinating the social good to private purpose. This gloomy possibility, which must be given the unfortunate weight it deserves, is not adequately recognized by Galbraith for what it portends. Nor is he alone in his reluctance to deal with it. Perhaps the first Western theorist to have been over-optimistic about the corporation was Karl Marx. In the third volume of Capital, Marx held that a stock company gave capital “the form of social capital . . . as distinguished from private capital, and its enterprises assume the form of social enterprises as distinguished from individual enterprises. It is the abolition of capital as private property within the boundaries of capitalist production itself.” This “highest development of capitalist production” was, Marx believed, the point of departure for the transition to socialism.

Others since Marx have tried to fit the corporation into some rational economic theory, the most important of them in this century being John Maynard Keynes. In 1926, Keynes wrote that “one of the most interesting and unnoticed developments of recent decades has been the tendency of big enterprise to socialize itself.” This could eventually result, Keynes thought, “in the growth and recognition of semi-autonomous bodies within the slate—bodies whose criterion of action within their own field is solely the public. good as they understand it, and from whose deliberations motives of private advantage are excluded. . . .”



Now, Galbraith redefines and updates the anomaly which fascinated Marx and Keynes. The corporation, he says, is “capitalism without control by the capitalist, . . . socialism without control by the society.” But it is precisely the second half of his formula which is subversive of his optimism. The corporation was not revolutionized into socialism, as Marx hoped, nor was it evolutionized into benevolence, as Keynes predicted. On the contrary, the “natural” inclination of this institution seems to be toward a brutal and anti-social egotism. This is no less true now that the crude definitions of profit have been modified and motives made to seem much less crass. Consider some of the evidence.

In the 50’s, the steel industry systematically sought to increase its profit rate. This, of course, is further proof that Galbraith is right when he denies that the giant enterprises necessarily seek a maximum yield, for the steel industry could not possibly have been operating at its highest profit potential when it decided to double the figure. Yet the decision to seek a higher rate also shows how a major sector of the industrial system could be so self-centered as to pursue a policy which was proving extremely embarrassing to the business-dominated administration in Washington. Naturally, the move was rationalized by a campaign of opinion management which charged that unions were responsible for the wage-price spiral. But for all the statesmanlike rhetoric, the basic thrust of steel’s policy was as narrow-minded as the decisions of any quaint old capitalist of yesteryear.

This pattern became even more pronounced in the 60’s. As the Kennedy-Johnson policies managed to put into motion a remarkable boom, the corporations set out to get a disproportionate share of the gains thus socially induced. Between 1900 and 1965, profits after taxes went up 52 per cent, dividends 43 per cent, and take-home pay for factory workers 21 per cent. It was only in 1965-1966, when a tighter labor market put the unions into a decent bargaining position, that wages went up enough to increase unit labor costs. At that point, the companies—which had received enormous special privileges in the form of tax cuts, new formulas for computing depreciation, and an investment tax cut—advised the nation to face up to the new problems by cutting social spending.

Joseph Pechman has documented similar tendencies over a forty-year period. Since the late 20’s, when corporate taxes were extremely low, America has repeatedly made the democratic decision that big business should make a larger contribution to the common good. Yet, despite all the theoretical increases in corporate tax, the after-tax returns of the 60’s are as high as they were four decades ago. This was not done, in the main, by marking up prices or lowering wages, but through the more efficient use of capital. In other words, when costs fell, the savings were not passed on to consumers in the form of lower prices—which is what the Council of Economic Advisors thought would happen—but were retained by the corporations in order to keep their profits high.



Galbraith has been conscious of these problems for a long time. In as early a work as American Capitalism (1956), he identified the inflationary temptations which come with full employment, or which appear, as they do now, when there is an official unemployment rate of 4 per cent and a real rate of at least twice that. The unions negotiate from strength; politicians who had happily followed the New Economics in cutting taxes are loath to raise them; and companies will accept just about any wage demand which will allow them uninterrupted access to good times. Galbraith writes lucidly about these patterns but, in acknowledging the specifics of the case, he admits evidence which challenges his generalizations about the socialization of the coporation. For at every point in the process, the oligopolies, however sophisticated they may have become, are acting in an old-fashioned and greedy way.

There are many reasons for this persistence of an atavistic egotism in the semi-collectivized enterprises of a semi-directed economy. There is, for one thing, the heritage of business with its sincere, self-serving conviction that private greed is socially virtuous. For another, there is the commercial ethos of the entire society, described so well by Robert Heilbroner: “Thralldom to an overwhelming economic imperative of sales and profits and . . . worship of a calculus of income are features of capitalism that cannot be eliminated by planning.” And there is, finally, a preservative for the traditional vices in the practice of that “reactionary Keynesianism” which Galbraith himself has brilliantly described.

As long as one assumes the contest of a business system, the Keynesian state must care for, and coddle, businessmen. Keynes wrote of the executives: “If you work them into that surly, obstinate, terrified mood, of which domestic animals, wrongly handled, are so capable, the nation’s burdens will not get carried to market. . . .” So it was that John F. Kennedy rejected Galbraith’s advice and stimulated the economy not by social investments, in order to deal with the squalor of the public sector, but by tax cuts and depreciation allowances which conferred discriminatory advantages upon corporations and rich individuals. In other words, government power under the present system tends to promote the common good by granting unjust rewards to the special interest of business. And the companies act like the traditional donkey lunging for the traditional carrot.

Indeed, the motives of the technostructure are generally more complicated than Galbraith suggests. The conglomerate enterprise is a case in point. A corporation like the Textron Company, for instance, makes cologne, rolling mills, pencils, helicopters, rocket engines, bathroom towel racks, chain saws, and eyeglass frames; it alone can stand as a symbol of the current fashion of diversified undertakings; “. . . how can any group of executives,” the Wall Street Journal asked in its report on this company, “maintain control over such dizzyingly varied businesses in most of which they can have had no experience? The answer to the . . . question, say Textron men, is simple. The company has acquired unrelated businesses to make money.” Now there is no question that the individual scientists and technicians in, say, Textron’s rocket-engine division, are moved by many non-pecuniary considerations. But as an institutional entity, as a whole, the corporation is motivated much in the style of the obsolescent individual entrepreneur.

All these data about corporate profit-seeking and tax-avoidance make me question Galbraith’s confidence in wage-price guideposts. In the early period of the Kennedy-Johnson boom, when unemployment was high enough to make the unions relatively weak, the companies took as much as they could get, which was a lot. Then, when an inflationary danger appeared, in part because of the way business had behaved, the executives—in what is by now a familiar domestic comedy—lectured labor on its responsibilities and told the government to be thrifty.

But perhaps the most summary point to be made about the anti-social habits built into the very structure of the industrial system has nothing to do with money. Even when an enterprise is not concerned with a maximum profit, even when it is run by cultivated and idealistic men, it remains a center of power. And, as Ralf Dahrendorf has put it, “If a person occupies a position of domination in an enterprise, it is irrelevant on principle whether his authority is based on property, election by a board of directors, or appointment by a government agency.” Non-pecuniary motivation, in short, may only change the reasons for irresponsible behavior, not the behavior itself.

But if, then, the new industrial state is even more resistant to reform than Galbraith suggests, what hope is there? The answer lies seemingly far afield. Galbraith, as noted earlier, is cautious about entering into speculative debate over vague, distant possibilities. Yet he knows that the industrial system is transitory, and he has the intellectual daring—rare in these days of the “end of ideology”—to consider alternative social systems. So as a socialist I find it much to his credit that he has written a critique of socialism. Most American social thinkers are so complacent that they do not even know that the issue is relevant.

Galbraith’s basic argument against the socialist claim to the future is that it seeks to transform a capitalism which no longer exists. In the days of the entrepreneurial corporation, he maintains, it made sense to propose that the workers’ representatives, or the state, should take over the functions of the owner-manager. The capitalist performed relatively simple, straightforward tasks and these could be done just as well democratically. However, the industrial system changes all that: “The technical complexity and associated scale of operations that took power from the capitalist entrepreneur and lodged it with the technostructure, removed it also from the reach of socialist control.” For documentation, Galbraith cites the fate of nationalized enterprise in India, Ceylon, and Britain. I will pass over the first two cases since they refer to developing nations where the problem is to create the material preconditions for a just society but where that society is itself an impossibility. The British example is in any case the most revealing.



After World War II, an apparently technical problem arose with regard to how British industry was to be nationalized. Would there be parliamentary questions about the statified enter prises? Would, in other words, the elected representatives of the people control the companies held in the people’s name? If this had been done, Galbraith argues (and the British Labour party of 1945 agreed with him), the minister in charge of a given industry would have to have had a large, highly qualified staff, a sort of Doppelgänger to the actual management. “Only if such parliamentary intervention were excluded could the firm, and therein the technostructure, act responsibly and promptly on decisions requiring specialized information.” Thus the traditional socialist program for the democratic control of economic decisions was thwarted by the uncapitalist evolution of capitalist society. A nationalized company in Britain, an American corporation, and a Soviet trust—all three require a substantial autonomy that has little to do with the very character of modern technology.

But Galbraith omits a very important aspect of the British experience. For, as Labour theorist Thomas Balogh is fond of pointing out with some passion, the Attlee government neglected to have a plan or a center for establishing and coordinating fundamental priorities. Yet it is precisely at this level that the sovereignty of the people over economic decisions can be most effectively exercised. The parliament may well lack the competence to make, or even understand, a complex technical choice about exactly how the transportation industry is to develop. But it is quite capable of expressing a preference for, say, mass public transportation over private cars, and of adopting policies toward that end.

This is not to say that Galbraith’s point is a negligible one. As Andrew Shonfield has demonstrated in his Modern Capitalism, it is no simple matter for a legislature to establish sovereignty over a planning apparatus (Shonfield calls the French Plan a “conspiracy in the public interest” between executives and bureaucrats). Still, this is the point at which decisions can be translated into real choices for the layman. By neglecting to note the importance of national planning in the British failure to establish democratic control over nationalized industries, Galbraith is led to a significant programmatic omission.

It is the thesis of The New Industrial State that there are “lacunae” of planning in areas outside of the system proper, like housing and transportation. In these cases, Galbraith is forthrightly in favor of massive governmental planning and intervention. But he seems to be saying tacitly that where the industrial system is already engaged in planning, one need only impose some decent values from without. Once again, I suspect him of oversimplifying power relationships. For if the corporate concentrations are left to themselves, they cannot help but constitute a countergovernment and a counterplan. And whatever one thinks of the question of nationalized enterprise, it seems to me necessary to add to Galbraith’s program a proposal for federal economic planning that would be subject to democratic debate and decision: This is the only way to establish a basic social context in which all of the relevant technical choices can be made. (This does not mean the abolition of capitalism, although it could, in my opinion, be a step in that most happy direction.)

If my analysis is correct, then the tasks posed by Galbraith are even more difficult than he makes them seem, for the corporations will undoubtedly launch a very determined institutional resistance to reforms of this sort. This leads to a slightly different perspective on political tactics than the one presented in The New Industrial State.

In American Capitalism, Galbraith had already begun his analysis of the tendencies toward oligopoly and the elimination of the market. “The long trend toward concentration of industrial enterprise in the hands of a relatively few figures,” he wrote, “has brought into existence not only strong sellers, as economists have supposed, but also strong buyers as they have failed to see.” In The New Industrial State, Galbraith has in effect abandoned a significant portion of this theory of countervailing power. In the earlier work, for instance, unions were seen as a major force against corporate autocracy. Now labor is described as a numerically dwindling movement which does more to rationalize the work situation than to challenge the values of the system itself, and hence as a negligible force in the task of accommodating the technostructure to the needs of society.

The manpower patterns upon which Galbraith bases his analysis are familiar enough. In the mid-50’s, white-collar workers became more numerous than blue-collar workers, causing a decline in the organized percentage of the labor force, whose proportion of (traditionally) organizable jobs was thereby reduced. So the unions have entered a period of stagnation and there is no sense in looking to them as dynamic participants in the movement to break the ideological monopoly of the industrial system.

In making this argument, however, Galbraith ignores what might be described as the newest example of countervailing power. One of the most significant labor developments in recent years has been the growth of the American Federation of Teachers. The AFT has won election after election and, even when defeated, has usually managed to transform the rival National Education Association into a de facto union. The changing manpower patterns are thus not quite so gloomy as Galbraith suggests, especially if one is looking, as Gus Tyler has pointed out, for collective bargaining tendencies rather than mere increases in union membership. Doctors, nurses, priests, social workers, university teaching assistants, athletes, and others have created organizations which negotiate on wages, working conditions, and the quality of service, but which are often not affiliated with the AFL-CIO. And it is of some consequence that the most striking expressions of this growing militancy on the part of white-collar workers have occurred in the two areas of greatest job growth—education and health services.

Thus far, the mood of collective bargaining has not extended to the lower echelon of the technostructure itself. And yet, as office- and committee-work becomes more and more rationalized, it is possible that these people will be affected by the same spirit which now animates the teachers. Were this indeed to happen, the industrial system might be challenged from within, particularly if the nation were to realize, as Galbraith hopes it will, that the stockkholders of the big companies receive princely rewards for performing no economic function whatsoever.

I am not here proposing some kind of corporatist utopia. Collective bargaining organizations can develop their own forms of egotism and national determination of basic economic priorities needs to be established in any case. Yet trade unionism—taking the term in its broadest sense—could well make an enormous contribution in the struggle for alternatives to the industrial system. Indeed, Galbraith recognizes this point in one very important area, but he does not generalize from it. There is a very special danger that the university will be decisively dominated by corporate values. And clearly the educational and scientific estate must have its independent base—its Yenan, its Sierra Maestra—if it is to fulfill the political role which Galbraith imagines for it. In this perspective, the battles in recent years among students, faculties, and administrations cease to be mere quarrels over individual rights and take on deep social significance. They become one of the preconditions for reform in the nation as a whole.

It is an irony of American history that when Franklin D. Roosevelt took militant action against the Depression in 1935 he was also moving away from planning and toward free market economics. The First New Deal, as Arthur Schlesinger, Jr. has described it, thought in terms of national coordination. Businessmen supported this approach as a way of getting around the anti-trust laws and engaging in price fixing; social reformers like Tugwell and Berle were for it because it offered the opportunity to plan for the needs of the country. The Second New Deal, which came into being toward the end of Roosevelt’s first term, was suspicious of bigness and favored competition. Under the leadership of Brandeis, the Second New Dealers argued that the government should prime the pump and then let the market take over. It was this Second New Deal which was codified into the liberal program which prevailed in 1964.

Since 1935, however, the competitive forces upon which the Second New Dealers counted have, in large areas of the economy, ceased to exist. The reality is the one which Galbraith so brilliantly depicts: of giant enterprises using planning techniques in concert with the Keynesian state and with the aid of a massive, semi-nationalized sector for the production of the means of annihilation. Under such circumstances the traditional liberal wisdom no longer applies. The time is come for at least a Third New Deal, and it is this which Galbraith effectively proposes in The New Industrial State.



“Engine Charlie” Wilson unwittingly stated the motto of this Third New Deal when he appeared before the Senate in 1953: what is good for General Motors is good for the United States of America. The industrial system, as Galbraith documents it, plans so effectively that it is able to impose its values upon both the state and the society. Therefore the liberal political movement must counterplan. The techniques which have succeeded so spectacularly in creating a lopsided, discriminatory affluence can be put in the service of an Ungross National Product. The famous American knowhow can be directed to unmet social needs like housing, public transportation, and the dilapidated public sector. The country can decide to find a less terrifying way to subsidize research and development than through the arms industry. Considerations of beauty and social consequence can be politically programmed into economic calculations, the boundaries between work and leisure can be redrawn to suit human needs, the university can be turned into something better than a technological trade school. All this is the stuff which liberal dreams are made of. It is Galbraith’s achievement, in offering American liberalism a new beginning, a summons to go beyond the consensus which it helped to create to have made the realization of those dreams seem possible once again.




1 The New Industrial State, by John Kenneth Galbraith, Houghton Mifflin, 412 pp., $6.95.

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