An interesting argument that the standard competitive model of economics had long since broken down, if it ever effectively existed at all, and that a new concept - "countervailing power" - was required to describe what was happening. Competition had broken down because many markets were filled by two or three established giants, with strong barriers to entry, rather than the ideal of many small firms with frequent turnover, and those giants could effectively set prices and output levels themselves, stimulating demand with advertising not competition by price.

So, if competition wasn't working, what did? The concept basically says that as well as large manufacturers having the power to set prices, large purchasers and suppliers have their own power in the market, which they can exert against industry - retailers, for example, can use their countervailing power to drive down the costs they pay for goods from their suppliers, where a thousand individual customers would have had no chance. The big supermarket chains are probably an excellent modern example of this...

This power, he argues, serves to regulate the economy far better than many forms of government intervention would, and judicious work to strengthen the hand of one group or another (ie price supports for raw-material producers or legal backing for union negiotiations) a great deal of governmental control can be avoided.

As with all Galbraith, the prose was delightful; dense and chewy, making you feel like an elderly and well-read uncle was patiently explaining something to you and it was all very simple, really.

The book is extremely well written and has a very astute comment on the psychology of competitors (all of us):

"A decision which one is free to make rarely impresses one as an exercise of power. To the extent that it makes any impression at all it is likely to seem a rather obvious exercise of intelligence. A decision on which one is blocked by the authority of another is a very different matter. It is bound to make a deep impression. the impression will be of arbitrary or egregious misuse of power. This is why we live in a world of constant protests against the authority of others and of replies which reflect a deep and usually genuine content of injured innocence." (p. 41) ( )