Galbraith Power Of The Technostructure

John Kenneth Galbraith, The Power Of The Technostructure

The New Industrial State, published in 1967 and one of the most hotly-debated treatises of the troubled late-Vietnam years which followed, is in some ways Galbraith's most ambitious attempt to construct a theoretical synthesis concerning the role of power in economics. It is about advanced technology and the emancip­ation of belief, and most of all about the incipient struggle between the 'technostructure' and the 'educational and scientific estate'.

The technostructure in the modern giant ('mature') corpor­ation is that group of highly-trained experts (engineers, scientists, economists, lobbyists, advertising men) who, collectively, have a monopoly of scarce skills and crucial knowledge and who, in committees but in place of nominal managers and functionless shareholders, increasingly make decisions for the large and technologically-advanced organisation. The technostructure has goals of its own; and whereas the old-style textbook capitalist favours that of profit-maximisation (the centrepiece of the private vices, public virtues argument concerning the unexpectedly beneficent outcome of the market mechanism), the new-style technocrat pursues objectives such as job-satisfaction, security (which means not simply the prevention of redundancies -painful for those dismissed and a cause of diminished efficiency for the team left behind - but also the autonomy of the specialist from interference on the part of uninformed outsiders, notably shareholders, unions, financiers and government) and corporate growth (which means expansion of its bureaucracy, and thus more pay, prestige, power and promotion prospects for members of the organisation). These new-style goals it pursues by means of techniques which Galbraith calls 'planning' (a term he uses to indicate the attempt on the part of large organisations first to forecast and then to shape the business future - otherwise a prohibitively risky one due to the expensive commitment of sector-specific capital in technology-intensive industries substan­tially in advance of marketing the final product-in its desired image). The corporation seeks via advertising and salesmanship to tailor consumer attitudes in such a way as successfully to sell a planned quantity at a planned price; it strives to obtain subsidies (say, for the development of advanced technology in the space exploration field) and guaranteed markets (say, via weapons contracts) from the State; it makes long-term contracts with other firms for inputs and outputs; it integrates backwards (into raw materials) and forwards (into retailing), both at home and abroad; it insulates itself from outside borrowing on the capital market through the expedient of reinvestment of profits; and it copes with uncertainty and disruption stemming from the labour force by policies which replace confrontation by dis­placement (substituting machines for men since the former input does not go on strike) and pacification (conceding wage-claims and then passing the poisoned chalice to consumer or capitalist). In all of these ways, the technostructure seeks to mould the community to such an extent as to accept organisational object­ives (the 'Principle of Consistency' postulating, moreover, that it will succeed in its attempt); and it is unwittingly but effectively served in this exercise by textbook economists, residual util­itarians who conceal the facts of corporate power under the multiplied fictions of perfect markets and who conveniently talk of whether the system works efficiently rather than for whom. The educational and scientific estate, fortunately, may be counted upon to challenge the technostructure and to uphold the social interest (which includes a high priority for social welfare schemes, environmental and aesthetic considerations, and even some nationalisation -especially of technostructure-run corpor­ations doing the greater part of their business with the government, as is typically the case in the defence industries). They offer countervailing power on behalf of ideological emanci­pation and they will win, partly because the present-day premium on trained manpower itself generates an increase in the numbers of educators as a percentage of the population (coupled with an improvement in their social status), partly because all education, even the training of technocrats, develops critical intelligence (an antidote to sophisticated persuasion and to the disciplined conformity of the technostructure) and inculcates socially-re­sponsible attitudes (so that the graduate may be expected to see through the special pleading of the military-industrial complex and demand an end to the war in Vietnam, coupled with an insistence that there is no alternative to prices and incomes policies if inflation is to be contained). The industrial system thus generates its own gravediggers, and these turn out to be the intellectuals, who alone among the groupings in modern society see through the Establishment fictions of vested interests in a way which the classical proletariat (nowadays a pillar of the status quo, as its support to the war in Vietnam and its participation in the gains from cost-push inflation abundantly demonstrates) does not.

Galbraith's model has the breathtaking simplicity of the triumph of good over evil. It is, however, precisely its simplicity which leaves it open to criticism.

Concerning the technostructure, there is no reason to conclude that the locus of power has shifted from managers to technocrats; for it remains the managers who select the technostructure, choose the problems it is to solve, and evaluate its recommend­ations in the light of company policy. Nor would it be fair to say that the objectives of the firm have irrevocably altered; for (and quite apart from the question of shareholder power) the very goals of the technostructure itself are not substitutes for profit-maximisation but complements to it (as where, for instance, growth without outside interference necessitates a sufficient pool of internally-generated investment capital as to obviate the need for borrowing). Galbraith, moreover, tends to exaggerate the extent to which private firms actually succeed in 'planning' the economy, not simply in his attitude to advertising and salesmanship, but also in his insistence that the strike weapon is passe and in his underestimation of the significance of corporate growth via the development of the conglomerate form (where expansion involving diversification may also reduce the power of the corporation in each of its individual markets - a case of large aggregate size and power not justified by economies of large scale which might, incidentally, justify a more intensive use of anti­trust laws than Galbraith is prepared to condone).

Concerning the educational and scientific estate, it is important here to remember that not all intellectuals are democratic socialists hostile to conformity and the affluent society; that many intel­lectuals are close to bureaucracies and dependent on them for research grants; and that most students are not activists and display, at times, an unbelievable fascination with business careers and consumer goods. It is, moreover, somewhat mislead­ing to argue that it is the process of economic change itself which automatically generates a new class uniquely capable of modify­ing the direction of that change; for even if the new class truly enjoyed a class-consensus, it would still be a misuse of the concept of economic determinism to argue, as Galbraith does, that the sensible views of that elite are not simply an emanation of its own values and ideals but also correspond perfectly and precisely to the silent imperatives of the material environment, of the pre-existent reality which the intellectual merely uncovers and reveals