Countervailing, Conditioned, and Contingent: The Power Theory of John Kenneth

Galbraith
Author(s): Stefan Kesting
Source: Journal of Post Keynesian Economics, Vol. 28, No. 1 (Autumn, 2005), pp. 3-23
Published by: Taylor & Francis, Ltd.
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STEFAN KESTING

Countervailing, conditioned, and

contingent-the power theory of
John Kenneth Galbraith

Abstract: Power has been a neglected topic in economics at least since the
neoclassical paradigm has dominated the profession. John Kenneth Galbraith
is probably the most prominent and successful among his fellow American in-
stitutional economists in this particular field of inquiry. Steven Lukes's useful
framework to distinguish different theoretical approaches to explain power in
the social sciences will be used to evaluate and emphasize Galbraith's particu-
lar theoretical contributions. The paper scrutinizes the elements-countervailing,
corporate, persuasion, conditioned, and contingent-of Galbraith's power
theory and shows how they all can be coherently combined to form an elabo-
rate theoretical framework in the conclusion.

Key words: communicative action, persuasion, power

The economics profession has paid scant attention to power at least since
the neoclassical paradigm marginalized all other schools of economic
thought.1 A clear sign of this lack of attention is that Robert Heilbroner
had to lament the absence of an entry on power in The New Palgrave
when he reviewed this authoritative encyclopedia of economics for the
New York Review of Books.2 Contrary to the mainstream, American

The author is Senior Lecturer of Economics in the Faculty of Business, Auckland

University of Technology. The author thanks colleagues in Auckland, Bremen, Den-
ver, Fort Collins, Kansas City, Roskilde, and everywhere else in the world for their
valuable advice and suggestions.
1 Apart from the following notable exceptions: Bartlett (1989; 1994) and Rothschild
(1971; 1994).
2 "We would expect a dictionary of economics to contain such entries as Consump-
tion and Production, Investment, Business Cycles, and the like, but The New Palgrave
also has entries on sports, lemons (not the fruit), and performing arts. Yet there is
none on power, although power would seem to be inextricable from economics"
(Heilbroner, 1988, p. 23). However, an exception to this generally true observation is
the article on "Countervailing Power" in The New Palgrave (Adams, 1987).

Journal of Post Keynesian Economics/ Fall 2005, Vol. 28, No. 1 3

2005 M.E. Sharpe, Inc.
0160-3477 / 2005 $9.50 + 0.00.

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4 JOURNAL OF POST KEYNESIAN ECONOMICS

institutional economists have continued to emphasize the impo

power relationships for the workings of the economy and hav
quently developed sophisticated concepts to analyze them.3 Jo
neth Galbraith is probably the most prominent and successful a
like-minded peers in this particular field of inquiry.4 He is ind
concerned about an economics without power: "The most d
feature of neoclassical and neo-Keynesian economics is the ar
ment by which power-the ability of persons or institutions
others to their purposes-is removed from the subject" (Ga
2001, p. 136).5
Galbraith's best known contributions to economic power th
his concepts of countervailing and conditioning power.6 One pu
this paper is to show that Galbraith's approach to power is base
premise of communicating economic actors.7 In addition, this p
tends to demonstrate that Galbraith's approach to power incl
encompasses all the features of the modern social theory of po
this purpose, Galbraith's concepts will be scrutinized with th

3 Compare, for instance, Bartlett (1994), Boulding (1990), Dugger (1989)

Rothschild (1994), and Veblen (1975; 1979). Marxists are the only other sch
economic thought with an eye on power relations (cf. Bowles and Gintis, 19
4 "In contrast to the approach of orthodox theory, Galbraith and the institu
take not only the flow of real income to be an analytic variable but also the
and ends to be served by their deployment. Since the direction of technologi
change and the drift of human sentiment is an evolutionary tendency of the
process, the institutionalists insist upon the necessity of including power in
sis. Conversely, to take resources, therefore technology, and preferences as
to take the existing power structure as given and render nugatory any concl
involving the redistribution of power in economic and social life" (Stanfield
pp. 156-157).
5 Worse than its ignorance of power is mainstream economics' role in man
public belief systems: "Once it is realized that economics as it is taught is pa
process by which people are persuaded to accept the structure of power in s
vital part of the conditioning process which disguises that power-then the
neoclassical economics is over" (Galbraith quoted in Sharpe, 1973, pp. 93-
6 A whole section containing several critical articles deals with the counte
power concept as Galbraith's contribution to economic power theory in the
edited by Rothschild (1971). Twenty years later, Caporaso and Levine direct
specifically to his concept of conditioning power (cf. Caporaso and Levine
7 Note that such an interactive model of human action is commonly used i
can institutionalism: "Instead of a bedrock of given individuals, presumed b
mainstream and 'new' institutional economics, the 'old' institutionalism hold
idea of interactive and partially malleable agents, mutually entwined in a w
partially durable and self-reinforcing institutions" (Hodgson, 2000).

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 5

Steven Lukes's framework of power theories, whose Power-A

View is still regarded as the seminal work in the field.8
So, let us look at Lukes's answer to the question: What is social

Lukes's general framework of power theories

Lukes developed a very useful framework to distinguish differen

retical approaches to explain power in the social sciences. This
work is still very much respected and often quoted (Scott,
According to Lukes, all power theories follow either a consens
conflictual model of explanation, of which the latter can be und
as dealing with conflicts on three different levels: overt, cove
latent.

Conflictual and consensual power theories

Lukes does, in principle, see two general conceptions of power, of which

the first can be measured along three dimensions. John Scott sketches
out the two general approaches to power as follows: "The first of these
concepts sees power as arising wherever A affects B in a manner that is
contrary to B's interests. Such an approach sees power relations as asym-
metrical: they are zero-sum relations which involve actions in which
there is potential resistance or conflict between agents. Power is, from
this point of view, an element in a conflict of sectional interests....
The second concept of power that Lukes identifies-the nonsectional
or nonzero sum concept-sees power as existing only in and through
processes of legitimation. Power is seen as a collective capacity that
arises from structures of harmonious communal organization" (ibid.,
p. 2).
The most prominent proponent of the first, conflictual view, accord-
ing to Lukes, is Max Weber (Lukes, 1986, p. 2). Weber variously de-
fined power as "the probability that an actor in a social relationship will
be in a position to carry out his own will despite resistance, regardless of
the basis on which this probability rests" (Weber, 1978, p. 53) and as
"the chance of a man or a number of men to realize their own will even
against the resistance of others who are participating in the action" (ibid.,
p. 926).
The leading representatives of the second basic framework are Talcott
Parsons and Hannah Arendt (Scott, 1994, pp. 1-17; Lukes, 1974, pp.

8 Compare the emphasis on it in Scott's "General Commentary" (1994, pp. 1-17).

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6 JOURNAL OF POST KEYNESIAN ECONOMICS

27-30; 1982, p. 137; 1986, p. 3).9 Arendt defines power as follow

corresponds to the human ability not just to act but to act in
Power is never the property of an individual; it belongs to a g
remains in existence only so long as the group keeps together.
say of somebody that he is 'in power,' we actually refer to h
empowered by a certain number of people to act in their name" (19
44). Lukes regards power theories following this second basic
work as endangered by not having a good grip of the crucial a
conflict as an element of interaction. Aspects that make the in
power particularly interesting: "They focus on the locution 'po
ignoring 'power over.' Thus power indicates a 'capacity,' a 'faci
'ability,' not a relationship. Accordingly, the conflictual aspect of
the fact that it is exercised over people-disappears altogether from
(Lukes, 1974, p. 31).
According to Lukes, in the second framework, the central ele
any power relation is lost-namely, the effort to ensure that
vidual or a group of people will give up resistance and will act
ing to the demands of others. In addition, Lukes is convinced
sophisticated version of the first conception can capture all as
the second. However, Lukes is only successful in his integration of
metrical and symmetrical power conceptions at the expense of
ond while assuming and stressing the conflict of interests: "In
and authority may or may not be a form of power-depending on w
a conflict of interests is involved. Consensual authority, with no c
of interest, is not, therefore, a form of power" (ibid., p. 32).
The main inconsistency and disagreement between conceptio
longing to the first or second paradigm, however, revolves ar
question of whether language-based rational understanding and
sion by arguments is a form of power and influence or not.1

9 Habermas's concept of power by use of media (money or hierarchical pos

derived from Parsons, and his concept of communicative action is much infl
Arendt's concept of power. Habermas quotes Arendt in one of his articles (c
Habermas, 1977).
10 In comparing one major theorist of the second conception (Habermas) w
the first (Foucault), Danish political scientist Bent Flyvbjerg reaches the conc
that both approaches have their particular merits and flaws: "In sum, Foucaul
Habermas agree that rationalization and the misuse of power are among the m
important problems of our time. They disagree as to how one can best under
act in relation to these problems. Habermas's approach is oriented toward un
context-independence and control via constitution-writing and institutional d
ment. Foucault focuses his efforts on the local and context-dependent and tow
analysis of strategies and tactics as basis for power struggle" (Flyvbjerg, 199

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 7

admits that he cannot solve this opposition and concludes that

theoretical endeavor is bound to fail.

Three dimensions of power

Although it is not easy to resolve the tension between power theories of

the first and second types, the three dimensions of power developed by
Lukes are nonetheless a useful tool to sort out and evaluate forms of
power and theories that try to explain them. Table 1 lists the most impor-
tant characteristics of Lukes's dimensions of power.
Power on the level of the first dimension is openly observable in the
actions taken by individuals or groups who present and fight for their
interests in relation to a certain topic. The conflict is overt and the sub-
jective interests of participants in a political process are clear and ob-
servable. Hence, actors behave strategically.
Power on the level of the second dimension cannot only be accounted
for by observing the actions taken by individuals and groups but also by
actions not taken by them. Power is apparent not only in an open con-
flict but also through agenda setting and the suppression of certain top-
ics within political processes. Potential and covert conflicts do exist.
These covert conflicts, however, are potentially observable and might
be transformed into open conflicts. For participants to become aware of
these covert conflicts and to articulate them, it follows that they will
have to seek information.
Power on the level of the third dimension is a form of successful ma-
nipulation. Power is not attached to actions or decisions of individuals
or groups. Power infiltrates all political processes and the agenda be-
cause both are socially and culturally framed. In addition to overt and
covert conflicts, latent conflicts on a subconscious level exist. These, at
least for a certain time span, nonobservable conflicts might turn into
covert and overt conflicts later, after a discrepancy between articulated
and conscious interests and real, objective interests of certain individu-
als or groups has been discovered. Somehow, some people must have
become aware of a difference between their articulated and real inter-
ests to make such a transition possible.
Caporaso and Levine (1992) highlight two difficulties of Lukes's third
dimension: the first is to distinguish between objective and subjective
interests and the second is whether a person or group has to exist, which
consciously keeps conflicts latent, or whether a suppressive form of power
without a definitive source is at work-that is, a blind drift. Lukes pointed
toward democratic participation as a way to decipher and discover ob-
jective interests (Lukes, 1974, p. 33). Thus, to discover latent conflicts

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Table 1
Lukes's dimensions of power
Key elements First dimension Second dimension Third
Objects of analysis Behavior, Interpretative understanding Evalu
concrete decisions, of intentional action, of in
issues nondecisions, political
potential issues issues
Indicators Overt conflicts Covert conflicts Latent
Field of analysis Express policy preferences Express policy preferences R
revealed in political embodied in subpolitical pol
participation grievances "real in
Source: Clegg (1989, p. 90).
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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 9

and to transform them into covert and overt conflicts, participa

have to turn to a dialogical mode of communication. To avoid mi
standings, it has to be stressed that Lukes's third dimension of
includes human actors (cf. Scott, 1994, p. 3). Lukes does reject
tural concepts of power or forms of power without subjects.11
To put it a little simpler, the three dimensions can be descri
three typical power and conflict situations: (1) an open battle or
in public, (2) a conflict of interest or values in which one side
suppressed and weak to dare to come out and fight, and (3) a situ
successful manipulation that is recognized by the manipulated party
some time later. For example, think of the historical situation in
Germany where everyone who was not a fascist by conviction and s
in the country had the choice of either open (though clandestin
tance, silent endurance (later termed inner emigration), or to
fascist propaganda and follow the crowd.
Thus, one can draw the schema shown in Table 2 composed of
conflict and consensus-oriented power theories and of the afo
tioned three dimensions of power.
In line with Lukes's leaning toward the conflictual power conc
the three dimensions are meant by him to describe different si
and theories of the conflictual type. However, it is possible to
the first and third dimensions as well as a part of the consensual do
The second dimension does not apply to the second paradigm,

1 Compare, for example, Lukes's carefully balanced critique of Foucault (

1982, p. 147). Lukes writes that Foucault does not always seem to identify wh
erces whom in power relationships. On the other hand, Luke concedes that th
reasons for Foucault to do so and that the opposite (that is, a clear-cut identif
the powerless and the powerful) has its weaknesses, too: "However, this unm
view of the link between power and agency certainly seems, from various poi
view, unduly simplistic" (Lukes, 1986, p. 13). However, Lukes's critique of a
personalized source of coercion in Foucault's thinking is flawed, if the "Ame
Foucault" (Flyvbjerg, 1998, p. 220) is taken seriously. In an afterword to Drey
Rabinow (1983), Foucault unfolds a method of detecting and analyzing forms
power with the help of struggles and acts of resistance against it: "And, in or
understand what power relations are about, perhaps we should investigate the
of resistance and attempts made to dissociate these relations" (Foucault, 1983
211). The focus on struggles and resistance allows for the analysis of transitio
latent to covert and overt conflicts: "The exercise of power is not simply a re
between partners, individual or collective; it is a way in which certain actions
others. Which is to say, of course, that something called Power, with or witho
capital letter, which is assumed to exist universally in a concentrated or diffu
does not exist. Power exists only when it is put into action, even if, of course
integrated into a disparate field of possibilities brought to bear upon permane
tures. This also means that power is not a function of consent" (ibid., p. 219)
Foucault's is clearly an action-based approach.

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10 JOURNAL OF POST KEYNESIAN ECONOMICS

Table 2
Schema of power forms and dimensions derived from Lukes

Form of power First dimension Second dimension Third dimension

Conflictual Open conflict Covert conflict Latent conflict

Consensual Consensus Not applicable Unarticulated
reached through (subconscious)
fair exchange consensus
or arguments

consensus to suppressed interests or values is hardly imaginable. The

three dimensions may also help us understand the crucial role of the
consensus-type theories in explaining how manipulation can be discov-
ered and thus latent conflicts turned successively into covert and later
overt ones.

This framework will be used to analyze and to evaluate the expla

tory contribution of Galbraith's power conceptions. The following qu
tions will be addressed in this paper: Does Galbraith provide a synthe
of conflictual and consensual power theories ? Does Galbraith's appro
fall into the trap of power without a cause? How does Galbraith expl
the emergence of power? Does Galbraith integrate all three dimensi
of power?

Countervailing power

Not by coincidence, the first text that Galbraith chose for the collection
of his essential works is a reprint of his chapter "Countervailing Power"
taken from his book American Capitalism (Galbraith, 1956; 2001). This
was one of Galbraith's first books, and his thesis of countervailing power
stirred up the whole economics profession. The starting point is the em-
pirical observation shared by fellow Keynesian economists (cf. Eichner,
1985; Minsky, 1975) that a typical industry structure consists of three or
four firms, where the largest acts as the price leader followed by two or
three, to a certain degree, smaller rivals. The existence of this market
power allows those firms to exercise power over customers and employ-
ees. In Galbraith's ironic words: "In principle, the American is controlled,
livelihood and soul, by the large corporation; in practice, he or she seems
not to be completely enslaved" (2001, p. 3).
To explain why the American citizen is not in fact enslaved, Galbraith
develops the principle of countervailing power that replaces the prin-
ciple of competition in balancing market power: "In fact, new restraints
on private power did appear to replace competition.... But they ap-

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 11

peared not on the same side of the market but on the opposite s
with competitors but with customers or suppliers" (ibid., p. 5).
His thesis is that "private economic power is held in che
countervailing power of those who are subject to it" (ibid., p. 5). Gal
at first developed this idea as a macro-level principle and seem
believe that countervailing power is not a matter of social constr
but does happen quasi automatically. In Galbraith's original for
tions, it almost sounds as if countervailing power is created by
Smith's proverbial invisible hand:12 "In this way the existence of m
power creates an incentive to the organization of another posi
power that neutralizes it" (ibid., p. 5). He views countervailing p
"a self-generating regulatory force" (ibid., p. 6).
The impression that Galbraith is rejecting social construction and t
of countervailing power as a functional relationship that seem
pear out of nowhere is enforced by his description of the power of
as the countervailing position on the labor market. He downpl
organizing abilities of a famous American labor leader as a rea
the existence of union power, and continues on the same page:
only has the strength of the corporations in these industries made
essary for workers to develop the protection of countervailing p
has provided unions with the opportunity for getting something m
well. If successful, they could share in the fruits of the corpo
market power" (ibid., p. 8). In the part of the text that describes co
ers' cooperatives as countervailing power, Galbraith concedes th
development of countervailing power requires a certain minim
portunity and capacity for organization, corporate or otherwise
p. 13). However, he argues that the function of balancing a pow
tion in the market that was fulfilled by consumers' cooperativ
Scandinavia was approximately as efficiently exercised by chain
in the United States (ibid., p. 14). Hence, a conscious effort to b
an equally strong power base on the opposite side is not necessa
In advancing the macro principle that a strong power position
an incentive structure that attracts the emergence and entry of
countervailing power, Galbraith is aware of the influence of the
macroeconomic conditions. The strength of both power positio

12 Sharpe uses the same metaphor: "In place of the invisible hand of Adam S
he conjured up a new one. It is not true that all effective restraint on private p
disappeared, he advised. A counterpart of competition exists in countervailing
Private economic power is held in check by the countervailing power of thos
subject to it. The first begets the second" (1973, p. 15).

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12 JOURNAL OF POST KEYNESIAN ECONOMICS

pends on the overall demand and supply in the specific m

"Countervailing power, as noted earlier, is organized either by b
by sellers in response to a stronger position across the marke
strength, i.e., relative strength, obviously depends on the state of
gate demand.... When demand's weak, the bargaining position
strongest union deteriorates to some extent" (ibid., p. 16).
From this short description, it is clear that the countervailin
approach belongs to the conflictual paradigm in Lukes's framew
deals mostly with overt conflicts.
A brief review of the critique launched at Galbraith's con
countervailing power is valuable, because most of the flaws an
ciencies pointed out by critics that were not based on misund
ings were addressed in his later works. It also makes clear th
start of developing his power theory, Galbraith did address on
conflicts. Here are the four most relevant arguments:

* Countervailing power has to be purposefully organized,

"a self-generating regulatory force" (ibid., p. 6). Ulmer writes
"it is demonstrable that there are many centers of power
are not matched by opposing or countervailing power con
tions" (1959, p. 251). In addition, Schweitzer points ou
process of concentration is not the cause of the rise of in
dent trade unions" (1954, p. 280).13 Thus, countervailing
does not emerge automatically. So where does counter
power come from?
* This leads to Schweitzer's demand for a general power th
"We are in need of a theory on the origin, base, impact an
of economic power. Since power is enjoyed by persons as
by groups, the theory of power has to be presented in terms
structure of groups active in our economy. Powerful grou
velop their own economic policies and seek to impose the
other groups as well as on the government" (ibid., p. 255).
a theory will have to consider all kinds of power resources
tion, property power, and influence on political decisions
dition, it has to consider more arenas of conflict than the
that is courts and political processes (ibid.). Hunter su

13 In his book The New Industrial State (1967), Galbraith devotes two chapte
organization problems of unions and explains their weakness under current c
14 Charles Hession (1972) provides an overview of critical arguments raised
Schweitzer and others.

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 13

Schweitzer in pointing toward an origin of countervailing

outside the market: "The spontaneity of countervailing pow
appears, is not necessarily a market phenomenon: political
bies and the legislative process may also provide the
whereby 'disadvantaged' groups assert their economic inte
against strong market positions" (Hunter, 1958, p. 268).
The effect of countervailing power does not necessarily ne
ize the original power position. Countervailing power might
power the original one (Schweitzer, 1954, p. 273). It may a
be anticipated and prevented from development by the or
power (cf. ibid., p. 270). Even if a countervailing power exi
does not necessarily create checks and balances, as Hunter
vestigation of British cooperatives shows: "But close exam
tion of practice reveals that the movement, rather than exploi
an advantageous position, has, on the contrary, neglected i
portunities for exercising countervailing power" (1958, p. 2
study of selected American industries does not indicate th
tralizing effect of opposite power positions. Instead, a bil
monopoly seems to lead to collusion of management and l
Thus Adams concludes: "Countervailing power is not a wo
substitute for antitrust policy, because countervailing power t
to be subverted by coalescing power and thus makes the pr
of controlling market power more intractable than ever"
p. 705).
From all the aforementioned arguments follows a much more ac-
tive role of government than Galbraith's original formulation of
the theory of countervailing power implied. Thus, "government is
obliged to curb original power and to support, in all feasible ways,
countervailing power" (Schweitzer, 1954, p. 254).

Galbraith finds an answer to most of these critical arguments in his

later books. With his concepts of conditioning power and persuasion, he
developed a microfoundation, which allows him to explain the emer-
gence of countervailing power. These concepts also lead him to a gen-
eral theory of power that integrates other social spheres besides the
market, including a stronger role for the state. In stressing the contin-
gency of outcomes of all power struggles, Galbraith avoids the percep-
tion of a determined neutralizing effect of countervailing power. Hence,
I agree with Sharpe's statement: "Even though the theory of
countervailing power is not mentioned in Galbraith's later works, it still
possesses some historical substance. Various social groups have in fact

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14 JOURNAL OF POST KEYNESIAN ECONOMICS

converted weak positions into strong ones through organization, t

or overtly supported by government" (1973, p. 17).15

Corporate power

Before I can turn to the explanation of transforming weak positi

power into strong, however, it has to be acknowledged that Galbr
analysis of power starts from identifying a central power holder in w
he calls "Western-style economies" (Galbraith, 1973, p. 221)-nam
the technostructure. According to Galbraith, power has not only m
from capital to management: "In the last half century there has b
steady accumulation of evidence on the shift of power from own
managers within the modern large corporation" (1967, p. 45). Mo
over, since the use of technology increased in production, which Galbr
defines as "the application of scientific or other organized knowle
practical tasks" (ibid., p. 11), power is now assigned to people who
ter this kind of knowledge. "Power has in fact, passed to what anyone
search of novelty might be justified in calling a new factor of pr
tion. This is the association of men of diverse technical knowledg
perience or other talent which modem industrial technology and plann
require" (ibid., p. 53).
This new central production factor (technology) involves more u
tainty and requires more time, capital, specialized manpower, and
nized planning than any preceding mode of production. To integ
specialized knowledge and to use it fruitfully, groups with different
of expertise have to work in teams. As a consequence, "it is not to
viduals but to organizations that power in the business enterprise
power in the society have passed. And modern economic society
only be understood as an effort, wholly successful, to synthesize b
ganization a group personality far superior for its purposes to a n
person, and with the added advantage of immortality" (ibid., pp. 5
In the technostructure of corporations, groups make decisions an
individuals (ibid., p. 59). A decision is the result of group discus
not individual deliberation. In addition, power is located where s
information or knowledge can be found: "Elsewhere the decision
require information. Some power will then pass to the person or p

15 Galbraith repeats his belief in The Anatomy of Power that "the resort to
countervailing power is automatic" (1983, p. 73). However, he concedes in a foot
on the following page that "I took an unduly sanguine view of the resulting equ
rium" (ibid., p. 74).

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 15

who have this information. If this knowledge is highly particular to th

selves, then their power becomes very great" (ibid., p. 60).16 To m
this knowledge accessible to others and to combine and coordinate
with others, groups of diverse expertise meet and converse: "A very lar
part of the exchange and testing of information is by word of mou
discussion in an office, at lunch with alcohol or over the telephone.
the most typical procedure is through the committee and the committe
meeting" (ibid., pp. 57-58).
The basic instrument of power within the technostructure is chan
knowledge and belief by means of persuasion-that is, to argue, co
vince, and, overall, communicate effectively. In meetings and group
cussions, members of the technostructure identify with the values
norms of the group (in this case, the corporation) and try to adapt
group or organization to their own individual values and ideas (ibid.
120-122). Hence, argues Galbraith, from a particular size of incom
upward, money is no longer the only, or even the strongest, motiv
action: "Pecuniary compensation need not be the sole or even the m
motivation of members of the technostructure. Identification and a
tation may be driving forces" (ibid., p. 127).
However, the power of persuasion is not only used in its inward r
tions but it is also employed to influence the environment of the co
ration, the society at large. Apart from using means of persuasion,
technostructure protects the autonomy of its decision-making primari
by seeking to secure a minimum level of earnings. Then it rewards itse
affirmatively with growth" (Galbraith, 1973, p. 103).
In Lukes's terminology, the power of Galbraith's technostructure
build up consensual to use it conflictual (if necessary) against comp
ing interests and values in the larger society (cf. Lukes, 1974).17

Persuasion

Compared to other forms of influence (bribe or threat), persuasion is th

most important instrument for the technostructure to defend and exten
its powerful position: "But persuasion-the altering of the individua
belief so that he comes to agree that the goals of another person or orga

16 In stressing the importance of knowledge for the organization, there is a strong

overlap and link between Galbraith's theory of the firm and that of Nelson and Win
(cf. Nelson and Winter 1982; 2002).
17 For a detailed discussion of this transition, see pages 18 and 19 of this paper.

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16 JOURNAL OF POST KEYNESIAN ECONOMICS

nization are superior to his own-is of increasing importance.

because in modem society physical force, though still applauded by
in principle, attracts adverse comment in practice. And with in
income people become less vulnerable to the threat of economi
vation. Accordingly, persuasion... becomes the basic instrume
the exercise of power" (ibid., p. 6). Persuasion (for example, adv
and the media) is used to support a tendency toward producer
which is the technostructure (ibid., p. 140), to control the resp
buyers (ibid., p. 131).
The overall effect may even result in a change of the whole
system of society:18 "More important still, the aggregate of all suc
suasion affirms in the most powerful possible manner that hap
the result of the possession and use of goods and that, pro tant
ness will be enhanced in proportion as more goods are produc
consumed" (ibid., p. 136). "If growth is the central and reward
pose of the firm and if power is comprehensively available to
this goal on the society, conflict between the private interest in tha
and the public interest in the environment is inherent. And also in
since this power depends extensively not on force but on pers
the effort to make pollution seem palatable or worth the cost,
the effort to make the advertising of remedial action a substi
action" (Galbraith, 2001, p. 149).
Thus, it becomes clear from the two preceding quotes that th
of persuasion may work on all three dimensions of the conflict
digm. It fires away arguments in overt conflicts, sets agendas
up potential conflicts (Galbraith, 1973, p. 202), and manipulat
public opinion or "public cognizance" (in Galbraithian terms;
1973, p. 109).
However, Galbraith does not imply that the domination of the te
structure is automatic or inevitable, which would imply almos
posite kind of determinism that his critics attacked in his co
countervailing power: "An identification of power is not an alle
absolute power" (Galbraith, 1973, p. 159).
Persuasion is contingent for the following three reasons. Fir
costly: "That involves a large expenditure of art and money in
pers, magazines, on billboards and, above all, on radio and tel
(ibid., p. 153; compare also p. 134).

18 William Dugger presents a radicalized version of this argument (Dugger

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 17

Second, the technostructure cannot be sure that this investment i

lic cognizance will pay off. The influence of persuasion is imp
"The larger strategy of salesmanship consists, in effect, in per
the individual that the goals of the technostructure, including t
sures that are associated with the purchase, use or possession of its
are the individual's own. But persuasion is by its nature imperf
those who are unpersuaded or insufficiently persuaded, the arbitrar
ture of the system is fully seen or sensed" (ibid., p. 202; compar
134). And, "as people see that advertising, along with other com
persuasion, has the purpose of subordinating them to the plann
tem-of putting them in the service of purposes that are not th
there is a good chance that it will cease to be effective" (ibid., p
Third, means of persuasion might invite resistance (that is, co
vailing power): "Also the human mind has a retrieving resistan
thority. When it perceives the processes by which, and for whi
controlled, it is fairly certain to reject them" (ibid., p. 224).
In Galbraith's book Economics and the Public Purpose, he has
chapter, "Emancipation of Belief' (ibid., pp. 215-224), on how t
the educational institutions and public policy debates for counte
persuasion. Because persuasion is the most important means of
employed by the original power position (the technostructure), i
also be the first choice for the countervailing power position:
belief is the source of power, the attack must be on belief. Law
anticipate understanding. And a deeper principle is involved. A
ning seeks to win control of belief-to have people conform in t
and action to what, for the planners, is convenient" (ibid., p. 22
emancipation of belief comes first, which is to say that public
must change" (Sharpe, 1973, p. 89).

Conditioned power as communicative power

Galbraith's perspective on power is neither positive nor negativ

his 1983 book The Anatomy of Power, Galbraith explains: "Pow
be socially malign; it is also socially essential" (Galbraith, 1983
The author distinguishes three forms of power. First, condign
which proceeds from threat; second, compensatory power, which is
upon reward; and, finally, conditioned power, which "in contras

19 For a thoughtful analysis of Galbraith's concept of conditioned power, se

Caporaso and Levine (1992, pp. 173-178).

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18 JOURNAL OF POST KEYNESIAN ECONOMICS

ercised by changing belief. Persuasion, education, or the social

ment to what seems natural, proper, or right causes the indi
submit to the will of another or of others" (ibid., pp. 5-6).20
Of course, conditioned power is the interesting one with reg
possible synthesis of the conflictual and consensual paradigms a
gration of all three dimensions of power. This is because cond
compensatory powers are nothing other than strategic action that
on some form of resource, whereas Galbraith's third category d
a language-based form of power (persuasion). Galbraith identi
form of power with a certain source of power (personality, proper
organization) and elaborates the complex relation between sou
forms, with considerable overlap and interdependence. However, he
boldly that modem industrial societies are in the age of organ
and, therefore, conditioned power is the dominating form of powe
ditioned power can be understood as communicative ac
Habermas's sense,21 when a group or organization uses discourse
a common understanding and later publicly defends this consen
might say that the members of an organization develop a pers
allow them to fight for that opinion much more powerfully t

20 There is a strong conceptual relation between these forms of power and

Galbraith's discussion of the four forms of motivation: compulsion, pecuniar
tion, identification, and adaptation (cf. Galbraith, 1967, pp. 121-122).
21 Communicative action in Habermas's sense is not only oriented to succe
ciency, or personal goals, but also to reaching an understanding among the p
pants of a discourse, and it is coordinated "through cooperative achievement
understanding among participants. In communicative action, participants are
oriented primarily to their own success, but to the realization of an agreemen
is the condition under which all participants in the interaction may pursue th
plans" (Habermas, 1995, vol. 1, p. 385; see also Biesecker, 1997, p. 220). Co
cative action is based on language and operates in the process of discussion. T
procedural exchange of arguments during which participants learn to unders
other's motivations, underlying norms, and opinions is called discourse by H
In discourse, participants are required to learn from each other and to change
own attitudes toward the world in general or toward certain problems occurr
it. In a certain discourse situation, the discussants recur to their shared expe
which contain all opinions and world views taken for granted, to begin a co
process of interpretation. During this process, some elements of their experi
remain untouched or stable, while others will become a matter of doubt and
change. The open attitude toward arguments of the other, which is implied h
precondition, was called democratic ethos by one of Habermas's critics: "The
has come for Habermas to acknowledge what pragmatists-especially Dewe
Mead-emphasized long ago: there is no democracy-in theory or in prac
without a democratic ethos" (Bernstein, 1996, p. 1146). Flyvbjerg conclude
larly: "The consequence, for Habermas, is that human beings are defined as
democratic beings, as homo democraticus" (1998, p. 213).

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 19

person could do alone. Thus, conditioned power is consensus or

as well as conflict oriented. It describes the transition from Habermas's
communicative action to communicative power.
From the perspective of Lukes's power framework, Galbraith's condi-
tioned power is used in the first, second, and third dimensions. Galbraith
writes that indirect conditioned power (traditions, patriarchy) is a sub-
conscious influence, as part of the framework of values that surround
and influence all members of society.22 Dugger's theory of corporate
hegemony is built upon Galbraithian thought and can be interpreted as
stressing the conflictual side of conditioned power.23

Contingent power

Interesting, and a little confusing at first, is Galbraith's conclusion from

his analysis of the workings of conditioned power: "As we have suffi-
ciently seen, organization and the associated role of social conditioning
are basic to all modem exercise of power. At the same time, and para-
doxically, they bring not only the modem concentration of power but
also its personal diffusion" (ibid., p. 183).
The diffusion of power that Galbraith mentions results from his con-
cept of countervailing power and that persuasion and conditioned power
are often not, in fact, power (as an influence on someone) but are only an
illusion of power.24 Galbraith explains: '"There are few manifestations of
power in modern times that expend such costly and committed energy as

22 This is clearly formulated by Galbraith in the following paragraph: "Conditioned

power is the product of a continuum from objective, visible persuasion to what the
individual in the social context has been brought to believe is inherently correct. As we
have seen, such power can be explicit, the result of a direct and visible attempt to win
the belief that, in turn, reflects the purposes of the individual or group seeking or exer-
cising power. Or the belief can be implicit in the social or cultural condition; submission
to the authority of others reflects the accepted view of what the individual should do. As
one moves from explicit to implicit conditioning, one passes from obtrusive, ostenta-
tious effort to win belief to an imposed subordination that is unnoticed-taken for
granted. And, an important point, the social acceptance of conditioning power rises
steadily as one moves in this direction from explicit to implicit" (1983, p. 29).
23 Compare, for example, Dugger (1989) and his critique of Galbraith's work in
Dugger (2001).
24 "There is also the matter of the illusion of power, a factor that has been greatly
enhanced by the modem reliance on social conditioning. Since the submission won by
any exercise of conditioned power is subjective and relatively invisible-in contrast
with the far more objective results of the exercise of condign or compensatory
power-there is, as already mentioned, a strong tendency for the submission to be
taken for granted" (Galbraith, 1983, p. 158).

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20 JOURNAL OF POST KEYNESIAN ECONOMICS

the cultivation of belief and the resulting exercise of power th

vertising. However, partly because advertising is a wholly ost
attempt to capture belief, it is not a fully reputable way of winn
regularly invites its own resistance and disapproval" (ibid., p.
This disapproval may also result from countervailing direct cond
power issued by consumer activists or environmentalists (that is,
sensual side).25 The case of Brent Spar shows the general ope
direct conditioned power and the related openness of public
concerning its results and succeeding decisions.26
Hence, from Galbraith's and Habermas's theories, it follows
practice of discourse can generate and strengthen conditioning
vailing power.27 If this dialogical conditioning power (persu
used successfully in a public debate, it will change the minds
participating in it and thereby also change the prevailing rang
norms, and ideologies. Hence, with the help of bottom-up dire
ditioning countervailing power, a latent conflict can be turne
vert and overt conflicts when the time is right.

The Galbraithian system

The elements of Galbraith's power theory-countervailing, co

persuasion, conditioned, and contingent-can be linked as show
ure 1.
Traditional values and beliefs condition society at large and i
ent subgroups. An important center of power in contemporary so
the technostructure (corporate power). Other subgroups evolv
tervail this original power position. Technostructure and other su
of society build conviction in consensual processes and try to
condition each other. While they do this, they also influence t
belief systems of society. These processes are called direct con
by Galbraith. It can be quite powerful; however, its effect is cont
and the outcome of a public battle of direct conditioning is op
it can be based on an illusion of power.

25 Compare note 21.

26 In 1995, the oil corporation Shell announced plans to send their outwor
Brent Spar to the bottom of the Atlantic Ocean and faced tremendous oppo
which was organized by Greenpeace. In the end of that public conflict, She
give in and scrapped the oil rig on shore.
27 Habermas elaborates on this transition from communicative action to c
cative power in his book Between Facts and Norms (1999).

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 THE POWER THEORY OF JOHN KENNETH GALBRAITH 21

Figure 1 The Galbraithian system

Values/beliefs

Indirect iirec
conditioning |3/ t\Coeinconditioning

_ ..__.. n Society at largest

Technostructure Other groups
cn (persuasive ) / organizations
\ \ consensus) J.- (persuasive / /
~~ .c___ ^< consensus)

Countervailing
power/persuasion

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