This summer marks 50 years since the publication of John Kenneth Galbraith’s The New Industrial State and its quick rise to the top of the New York Times Best Seller list. The book was one of the rare instances where an economist was able to capture public imagination and focus debate on big-picture economic issues. We have only rarely seen its like since — although Thomas Piketty gave it a great go in 2014, with Capital in the Twenty-First Century.
Galbraith’s book is worth revisiting, since its subject is back in the news. Like many people today, he was worried about unchecked corporate power. Yet with the benefit of hindsight, we can see his worries were largely wrong. And therein lies a lesson for economists and policy makers today.
Of course, you would be hard-pressed to find an economist today who has read the book, and you might even find some who have never heard of Galbraith. I’m not one of them. As an undergraduate in Australia, I was exposed to a nonstandard economic curriculum that introduced writers like Galbraith to me early. He had a crisp way of theorizing and took on issues that, let’s face it, seemed far more interesting than the standard textbook fare. I wanted to grow up to be like him. It took four years of graduate school to socialize me out of that aspiration. And so when I recalled this anniversary, I decided to crack open Galbraith’s most famous book with the intention of explaining just how wrong he got it.