John Kenneth Galbraith: American Capitalism. Concept of Countervailing Power. Houghton Mifflin Company, Boston 1952, pp. 217. $3.00.

Modern economic thought has suffered from a kind of schizophrenia. On the one hand, economists have been interested in the determination of prices, outputs, and employment under assumptions of competition individual or corporate maximization return. On the other hand, they have been interested in the phenomenon great organized power blocs such at huge business corporations, trade associations, organizations, corporatives, and labor unions. But they have never successfully fitted the power blocs, with their combined economic and political power, into the basic economic theory of prices, outputs, and employment. An attempt such as integration is Professor Galbraith's great contribution.

Galbraith demonstrates that the advanced of United States capitalism, as characterized by industries dominated by few large firms, is in fact as highly productive socially responsible as prescribed the theoretical rules laid down by Smith, Bentham, Ricardo, and other early proponents of laissez faire. His question : How does it happen that an economy power blocs, administered monopoly, and public controls can be reasonably successful when all of these things are inconsistent with the traditional ideology of capitalism? He finds the answer in "countervailing power." argues that power, whenever exercised creates "an incentive to the organization of another position of power that neutralizes it« (page 119). For example, the power of employers gives rise to labor unions, the power of the buyers of farm products stimulates farm organizations, power of monopolistic manufacturers mass buying by chain stores or cooperatives. Moreover, when no one group is able to achieve the power necessary to counter an oppressor, coalitions possible.

The Scandinavian reader would be particularlyinterested Galbraith's illustrationof newly rediscovered concept by the development of consumer cooperationas dominant instrument of countervailing power in consumer's goods market. Had the large retail buying corporationsnot chain stores and

super markets, cooperatives might also have
grown in the United States. As it happened,"....
chain stores pre-empted
the gains of countervailing power first"
(page 132).

The theory of countervailing power could easily become the basis of a new theory of laissez faire. It could be construed mean that governmental intervention not only unnecessary but harmful that, if individuals and groups are only left to their own devices, a balance of power will be achieved in which no one is able to exploit anyone else, and the economic conditions envisioned by the early advocates of laissez faire will be realized.

Actually, the book permeates one with a feeling that here is somebody who has tried to "humanize" the impression of ruthless exploitation which the pure theory of monopolistic competition creates a reader. Professor Chamberlin and Mrs. Robinson are, in a sense, brought closer to the brass tacks-grass roots reality. God that this is the way American capitalism works" is the relieving

The relief is not complete, of course, because Galbraith recognises the countervailing can be made effective only over long periods of time and that serious problems arising in the shorter run may call for governmental intervention. And even in the longer run, he has no blind faith in the automaticity of countervailing power. He explicitly states that it is one of the prime duties of government to facilitate attainment of "countervailence" measures intended to weaken excessive power or to strengthen inadequate

Perhaps, the main shortcoming of Professor treatment of his theory as a prescription for the future is that he gives inadequate attention to the fairly common tendency of power blocs to try to take over the government itself and thus to suppress countervailing power. This is essentially the nature of fascist and communist revolutions. The tenability of the theory of countervailing power rests, therefore, upon the maintenance of liberal democracy with strong guarantees of the rights to freedom of thought, speech, assembly, and organization, and with definite on the tactics and ruthlessness which any power bloc pursues its end. In the new laissez faire, there must be rules for competition among blocs just as in the old laissez faire there were rules for atomistic competition.

Galbraith has made a profound contribution only to economics but also to literature. He has again proved that economics be presented briefly, witily, and without ponderous language or complex apparatus. This should serve to remind us that economics is a discipline with a distinguished literary tradition.

Men like Adam Smith, John Stuart Mill, Alfred Marshall, and J. M. Keynes were influential economists not only because of their keen analytical insights but also because they knew how to write well. Unfortunately, of today's science is put down in a criminally dry and boring jargon. It seems like the French maxim "if your language be jargon, your intellect, not your whole character, will almost certainly correspond" contains more truth than many an economist would like to admit.

University of California.