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The techno-structure includes Essay

Galbraith also agreed that shareholders do not have much control over the larger firms; however disagreed mangers have the power to run the large firms. He believes that Techno-structures are those who run aligobilistic market. Galbraith refers the techno-structure as highly skilled technical people with specialist knowledge; who are important for operations of firms at different levels with the organisation. The techno-structure includes specialists of Marketing, Human resources, Auditors, Economists, Scientists and Engineers. He believed that the techno-structure had a different hierarchy for different goals.

Firstly, the main aim is to ensure the survival in a certain company and avoid taking any risks; which may incur losses. This is because losses are likely to damage the firms reputation; for example, Lehman Brother. Once the survival of the corporation is ensured, companies want to get the maximum growth possible, this requires that firms become more on the market; having produced solid planning for its future production and sales beforehand. The process of planning includes investing and controlling its workers through training, coordinating prices with rival firms. This would lead to a potentially maximum growth; and hence mean an expansion in techno-structure. Finally, after the growth has been achieved, the techno-structure would like the

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firm to focus on being an ethical company, and improving the public image as a socially responsible company.

Although many neoclassical books; which are mainstream tradition economic text books, criticise Galbraith’s argument about the power of big corporations, they state that he exaggerated more about the power of large corporations. The economist seemed to think that the big firms could ignore market forces and plan everything to suit them. He used an example of General Motoring; however, other economists argued against why some of the large firms failed in the 1980’s and 1990’s. They believed that firstly, he had made incorrect predictions about the large firms; and moreover, the techno-structure is actually no longer relevant, because in their view, top managers have a lot of power and they can choose to hire a techno-structure, but their interests are more important than any sort of techno-structure.

Some of the mainstream economists such as Friedrich Hayek also criticised this book, The New Industrial State, where he specifically argued that the economy was dominated by large corporations. He said that they control the costs which it sells its goods as well as the prices which it buys products and resources. Most economists disagreed; they stated that the largest firms will become unsuccessful, if they fail to produce what consumers want. The consumers know what they want and they can not be told what to do through advertisements as the adverts cannot shape tastes but it can be eye-catching and give them advice and a great sense of expectation. Along with other economists, Hayek also stated that we should not consider Galbraith’s book as a theory of economics; they reach as far as criticising it, and feel it is too biased and one sided.

In conclusion, I agree that the corporate powers are those who really drive the markets economy, in relation to J.K. Galbraith’s analysis of the large corporations. Galbraith clearly emphasises his view on the Transitional National Corporation; which enables us to reach a conclusion, although many economists disagree with his opinions. The banks influence business decisions of small firms, whilst planning systems are in command of their costs. Some economists believe consumers drive the market economy; which I do not agree with because deep planning is required for a corporation to be able to succeed in the long-term.

Big corporations have the facilities to provide global television advertisements and consumers were being persuaded to purchase goods through these means. There are certain things disadvantages in planning systems though, because they cannot provide skilled workers that they need, so the Government funds educational organisations to provide training. Nevertheless, TNC’s control a quarter of production assets which is why Galbraith believed it was not the consumers but the Planning system which drove the market economy; and that shareholders do not have a great deal of control over larger firms.

Other economists such as Hayek disagreed; they stated that the largest firms will fail, given that they do not rectify what customers want. I agree to this statement to an extent, but feel that the planning system and the larger firms have the foremost control, and success and failure is in their hands.


http://abridge.me.uk/doku.php?id=the_new_industrial_state – History, Nature and change: abridge.me.uk/ The new industrial state (Accessed on: 20th November 2009).

http://www.halexandria.org/dward318.htm – Library of Halexandria


http://www.thefreemanonline.org/featured/john-kenneth-galbraith-a-criticism-and-an-appreciation/ – John Kenneth Galbraith: a criticism and an appreciation

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