James Galbraith's PREDATOR STATE reviewed in the Austin American Statesman

James Galbraith's 'Predator State': damning, incisive
The UT professor and son of a famous economist denounces the 'free market' that has created a vulture-like capitalist culture

By Roger Gathman
SPECIAL TO THE AMERICAN-STATESMAN
Sunday, August 03, 2008

Since John Stuart Mill wrote "The Principles of Political Economy" in 1848, economists have generally believed that free trade and free markets arise universally from the principle that supply and demand eventually meet in an equilibrium, which is why markets are self-correcting, and government action is self-defeating.

But there have been brilliant dissenters. For instance, Thorstein Veblen, in "The Theory of the Leisure Class" (1899), observed the robber barons of his time, who flaunted their art collections and stripped their workers and their companies of wealth, and was reminded of the warriors, kings and priests of the "barbaric" ages who spent their time competing for prestige and preying on the artisans and peasants who made up the productive classes.

Decades later, there was John Kenneth Galbraith, who, in his 1952 book "American Capitalism," coined the term "countervailing power," which he defined as a concentration of power that allows an agent to influence prices over and above the "market." Wal-Mart, for instance, has countervailing power over its suppliers.

Galbraith passed away in 2006. Before he died, he challenged his son James, himself a prominent economist and a professor at the University of Texas, to write a book on "predatory" capitalism. The word "predatory" is taken here from Veblen's classic book. It was long thought that Veblen's predatory capitalists and the system of laissez faire that made them possible disappeared after the New Deal was created in the 1930s. But the predatory capitalist culture emerged, again, at the end of the 1980s. The narrative Galbraith lays out in "The Predator State" is an explanation of why it resurfaced and how it has mutated.

Galbraith makes the most of his material in the first section of the book, which criticizes the many shibboleths of economics, including the slipperiness of the concept of the "market." The reader might, however, find it difficult to see these self-contained chapters in terms of the larger narrative, which comes into focus only in the second section. That narrative takes its bearing not just from Veblen, but from Galbraith's father's 1969 best-seller "The New Industrial State," which argued that the postwar era was defined by a three-way alliance between big business, the government and labor. During that era, the Fortune 500 corporations accepted and exploited government regulation and tax rates that supported a growing social net. The government passed back and forth between Democrats and Republicans, but both parties shared a modestly progressive agenda and a sense of good governance. Unions, the wild card, had settled down, demanding better wages and benefits, rather than the public takeover of major industries.

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