GALBRAITH. It's not the biggest deal in the world, but I'm a little disturbed that neither Robert Rubin, Peter Orszag, or Jon Chait appeared to know where John Kenneth Galbraith's concept of Countervailing Powers comes from. Rubin appears to think it's from a book called Countervailing Powers, which doesn't exist. No one else even heralds a guess. The actual book is American Capitalism, the first in Galbraith's famous trilogy on the American economy (the other two, in order, were The Affluent Society and The New Industrial State.) As I said, not the biggest deal in the world, but here you have two top Democratic economists and a top liberal policy wonk, and none of them seem particularly familiar with (arguably) the greatest Democratic economic thinker of the past century*. On the bright side, the three do seem to understand -- and this is a particularly wrenching realization for Rubin -- that Galbraith's ideas are absolutely critical in the current moment. I'm often stung by how much everything I write is simply vintage Galbraith, defrosted and mad-libbed for the current era. Take countervailing powers: Galbraith argued that capitalism's natural tendency is towards aggregation. The neoclassical concept of many different competitors all battling it out was, he thought, naive. The realities of mergers, acquisitions, and predatory practices would leave industries with a small number of very large players, most of whom would be tacitly cooperating for reasons of profit or survival. The only way to restore balance, Galbraith argued, was other behemoths. So massive retailers would compete with massive producers (there's evidence of this happening, as Gillette joins Procter & Gamble, in part to better bargain with Wal-Mart), and both had to handle massive unions and activist government. The tension between producers and retailers would safeguard a good economy, and the power of government and unions would ensure a good society. The extrapolations aren't hard. Unions are basically dead, the government is currently gripped by a corporatist ideology that leads them not to stay out of the economy but to use their influence to augment corporate power, and no one who reads me will miss the resonance with Wal-Mart's virtual monopsony. I'm not one who goes in much for the conservative adoration of their philosophers and intellectual forebears, but I think the left is deeply impoverished by its essential abandonment of Galbraith's insights. For those who want to do better, you can get a rich and broad overview by reading Richard Parker's recent biography of Galbraith, this compilation of Galbraith's best writings, American Capitalism, or The Affluent Society. And that's just where you should start.
*Not to mention one of The American Prospect's founding sponsors.
--Ezra Klein
