Self-Reflective: Galbraith Essay (Essay Sample)

Galbraith
Name
Institution
Date
Galbraith
Thesis: Galbraith argues that with proper intervention by the government; disparities in poverty and inequality and related phenomena caused by capitalism can be modeled towards the welfare of the majority.
Galbraith’s main argument is grounded by the concept of the nexus between power and economy. An understanding of power is crucial for understanding the firm, as the firm is an institution that seeks to control and supersede the market in order to expand the influence of its bureaucratic apparatus, what Galbraith labels ‘the technostructure’. To understand his argument, he bases the concept in three aspects: power and the firm, power and poverty and a vision of political economy.
In his first aspect, power and the firm, he explores the connection between power and big corporations. His argument is that the current models of economy are not an aberration of an earlier system. Rather, it is an advancement of an earlier production mode that has dominated hitherto. According to his argument, firms that produce and sell most of the goods are managed through large bureaucracies and dominated by professional managers which can affect the products in terms of prices or quality dictated by these corporations. This argument is in support that large power firms in one way or another will always control the market because they got the power that is needed for such.
In the second aspect, power and poverty, it is propagated by the notion that the economic and the social world is full of struggles where survival is for the fittest. Education in this concept is power. Through education, one is able to poses the power to govern and to become self-reliant.
The last aspect, a vision of political economy, explores the connection among three elements of economy; power, state and economy. Where the state has more power over the corporations, it is easier to make subject the corporates to government’s policies that seek wellness of the society.
This position in regard to the economy affects the economy in different ways. Different models of economy can be used to explain the effects of the position. These models includes; The Open Economy Model, The Solow Model and the Ad-AS Model.
The Open Economy Model: in an open market system, this position would have a significant effect in that, open markets usually advocate for capitalism. Based on the arguments of Galbraith, capitalism cannot be executed in its full form. This is because his arguments argue against accumulation of resources in one pool i.e. accumulation by one entity. Thus the open market system through this position would be heavily restricted. On the other hand, there is concern for power and politics. With too much power by the cooperates, the government would also be limited on how much control it would have on these cooperates. This is because the government uses its authority over the corporates to incline them into considering the wellness of the society.
The Solow Model: first of all, Galbraith broke away from this model of business claiming that this model creates an oligopoly markets. The players in the oligopoly markets then dictate the value of products in accordance to their own liking. Thus, negating the concept of this model means a situation where the small number of product owners be made weaker. Such a situation creates an environment where even entry players in the market get equal chance to rise to be at par with the existing dominant corporations. Taking this position therefore subjects the corporations to stricter rules regarding competition.
Lastly, the Ad-AS model: in this model, the main concept is that an increase in the GDP translates to an increase in the value of goods. Rise in the GDP is characterized by rise in various elements such as interest rates, consumer confidence and asset prices. Where low interest rates attract more borrowers and encourage more firms to invest and the consumers to spend; consumer confidence boosts the consumer’s expectation and thus build a more sustainable system and the asset prices are key to wealth value for many people. Better value encourages more consumers to spend on assets. This position would create a significant effect on the economic model. This is because; the model aims at narrowing the gap between the rich and the poor by avoiding too much accumulation of capital resources in a small number of people or organizations.
Other philosophic arguments
Market socialism
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