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Large firms

Lastly, after growth has been accomplished the technostructure will concentrate on creating a public image of being a socially responsible company or one for technical excellence. Galbraith believed that it was the ‘planning system’ and not the ‘market system’ that drove capitalist economies. He said that the aspirations of large firms shaped societal goals. This he thought was evident in the fact that firms want growth and government consequently want economic growth. Also where firms want skilled talent and the government consequently expands higher education.

If Galbraith’s vision was correct he implied that there was a corporate ‘planning system’ where the technostructure ran the company, and firms were impervious to market forces. The relevancy of Galbraith’s work is debatable. Some if not most neoclassical economists saw Galbraith as completely irrelevant and felt he often exaggerated the power of large corporations and some went as far as to say Galbraith’s book ‘The New Industrial State’ was not considered to be “real economic theory”. Others just came to the conclusion that he was relevant at the time of writing but now his works are outdated.

Let’s discuss the case against Galbraith’s teachings. Firstly, as we now know, Galbraith thought that firms were unaffected by

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market forces and could plan everything in their favour. They would also avoid making losses at all costs. If this was so, why do some firms fail? He also said that consumers’ tastes could be controlled by the large corporation through advertising. Most notably we can cite the Ford Edsel case in defence of this argument. The most famous thing about this case is the fact that the Ford Edsel (a new breed of cars made by Ford) failed “despite Ford’s investment of $400,000 into its development”.

(www. wikipedia. org). It can be said that this was so because consumers are not stupid, and they cannot be forced to acquire goods they don’t want. Also just because firms advertise, doesn’t mean it actually works! Galbraith also said that the technostructure was highly important to the corporation and damage to them would have been damage to the ‘brain’ of said corporation. He argued that it was them and not really the manager that was in charge of the organisation, however it could be argued that this view is wrong.

Firstly, the technostructure is hired by the manager and at the end of the day could also be fired by the manager. Also, in the 1980’s and 1990’s some firms had massively downsized their workforces after making losses. Two points can be made about this argument. Number one: Galbraith had said that the technostructure could not be easily fired because they were the ‘corporate planners’ of the organisation. Number two: firms making losses? Hadn’t Galbraith said that the technostructure would ensure survival at all costs? Let’s us now consider the case in support of Galbraith’s work.

Above it was mentioned that the power of large corporations was exaggerated however there is more concern now than ever about the power of large firms. It can be argued that there is a lack of social responsibility where large corporations are concerned and this time it is globally. Let’s consider the evidence. ? of the world’s population are now surviving on $2 a day or less. 1/2 of the earth’s forests have been entirely destroyed, and 1/2 of the world’s rivers are in a dire state due to contamination and depletion (www.wikipedia.org).

They are often referred to as sadistic psychopaths not caring about anything and anyone but how have TNC’s and MNC’s gained so much power and affluence you ask; well many governments have removed trade barriers however in the process have also failed to balance this with creating rules and guidelines to prevent the mistreatment of the environment and neighbouring communities. Some may say that guidelines are adhered to however in realty these guidelines are usually ‘weak and un-enforced’.

In a nutshell Galbraith states that the long-established system of supply and demand has been replaced by corporate planning by firms, using techniques like advertising. Although it has been argued against this belief, the evidence in support of it is overwhelming and if he can be criticised it will be for not delving deep enough into the power of large firms over aspects such as culture and human interactions. In my opinion Galbraith was a giant, both literally (at 6ft 8) and metaphorically in the world of economics and his views will stay with us for decades to come.

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