American Capitalism

Blurb

American Capitalism - The Concept of Countervailing Power is a book by John Kenneth Galbraith, written in 1952.
Not as well known as some of his other works, it contains a critique of the view that markets, left to their own devices, will provide socially optimal solutions. Galbraith agrees with F. A. Hayek as far as the assertion goes that "the price system will fulfil [its] function only if competition prevails, that is, if the individual producer has to adapt to price changes and cannot control them."
Galbraith builds on work by Prof. E. H. Chamberlin of Harvard and Joan Robinson at Cambridge and the work done by Joe S. Bain of the University of California at Berkeley arguing that the America of the early 1950s no longer complied to a textbook definition of Perfect competition. On page 66 he sets out the conclusions which result from the abandonment of competitive behaviour in favour of oligopoly or crypto-monopoly:
"The producer now has measurable control over his prices. Hence, prices are no longer an impersonal force selecting the efficient man, forcing him to adapt the most efficient mode and scale of operations and driving out the inefficient and incompetent.