By James K. Galbreath, The Nation

The New Industrial State was my father’s great work of theory. First published in 1967, nearly a decade after the triumph of The Affluent Society, The New Industrial State went beyond criticism of orthodox economics, beyond Marx and beyond Keynes—toward a full alternative, a complete substitute for neoclassical thought. In this book, John Kenneth Galbraith forged a vision of the business firm as an organization, and of an economics of organizations that together form the “planning system.”

The economics of organizations stands in opposition to the economics of markets. In what Galbraith called “the accepted sequence,” consumer preferences come first. Firms place their products before a discerning public, sell what they can, discount the rest, and then repair to study how it might be done better next time. In his own “revised sequence,” large firms start with the design and technology of new production. They see what is possible, they conduct “market research,” they decide what they like. They then engage their advertising and consumer-finance staffs to ensure that the result can be sold.

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