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Man and the multitude. This University of Illinois Centennial symposium presented by the College of Liberal Arts and Sciences studies contemporary man poised between past and future and between isolation and community of the world. Guest speakers and panel members comment on the conflicting forces which push men apart from others. And into communion with others. Lectures in this series will be followed by discussions involving speakers visiting professors and University of Illinois faculty members as well as interested students. On our last program John Kenneth Galbraith professor of economics at Harvard University discussed the shift in economic power from owners of capital to managers of capital. He traced the former importance of land and capital and economic power and offered the opinion that power had passed to a whole structure organization Embracing the talent and experience of specialists. These men formed a collegial body using technology and planning to hold the power of our
economy today. Mr. Galbraith will answer questions posed by Norman Grabner professor of history at University of Illinois. James Hines Associate Professor of Economics University of Illinois. And Margaret Reed professor of Economics University of Chicago. MARTIN Wagner director of the Institute of labor and industrial relations at the University of Illinois will serve as chairman of this discussion. Robert Eisenhower professor of economics Northwestern University will now make the first comments on Mr. Galbraith selector. What in effect is a guiding force. What are the rules that have to be obeyed in the society beyond which no individual can Google. I recall reading of the laments of the late President Kennedy's if he couldn't get the things he wanted done at the State Department there were certain rules of behavior there were certain forces at work which even the president of the United States found himself relatively powerless to affect. I'm reminded of the
example of an orchestra. You can say well the conductor has no power. The people in the orchestra all know what they're doing they're barely even look up his baton and yet it's perhaps that they don't have to look up at his baton as long as they know they're doing what his baton is suggesting they should be doing. And they look up at the critical moments and I thought is that the critical element. And this I think Professor go Brith rather concedes. But I would put it slightly differently. The critical element is really still the accumulation of capital. It's a capital gains. Is this the the word even by which the system is named. It's not just profits particular because proficient in accounting sense and misleading. But the system can go on and the people that exercise power can exercise power as long as they obey this central rule that you have to go ahead and always have more tomorrow than
you had yesterday. A corporation has to grow. The owners of equity have to have their stock increase in value. And while that hardly would explain everything and indeed we should perhaps modify our lot along the lines Professor gold Wraith has suggested to note how this central directive or force is modified if not mellowed by the various specializations and interests of the people required. You know I take the technical processes. Essentially all of them face this challenge of acting in such a way that capital can be accumulated that people can have their stock go up in value. The corporations can get larger and larger essentially because they too by getting larger and larger they can survive better as well as perhaps earn greater profits.
And finally I guess I would suggest that I should think if you're looking for. A departure which has more moment in terms of explaining our economic and social development then the departure in terms of the rule of the specialists the collegial rule of the specialists the departure that I would look for is along the lines of the growing interrelation between the. Look close the centers of power in business and in government. That in fact the big decisions by industry in the last decade. Our decision is inextricably into woven with government the huge expansions in defense production in missiles and supersonic transports. In almost in
atomic energy production in all of the many of the major technological breakthroughs that involve close relation between people in business and people in government whether to our good or to our dismay and I don't mean this is necessarily a pernicious insidious comparison is a bit what are you. What I used to learn about the Nazi system of the fascist system. Now the people in business become the people the government the people in government are the people in business the major decisions are not made without agreement amongst them and the intellectuals among those amongst us who pride role in government can be influential as long as we don't something too essential in that relation. And I guess as a final point in the sense of this line I would point to I think one of the major contributions of a lot of professor his recent work. Shortage the starvation we face in public goods and I would say that would explain that
shortage. Because public goods accumulated in private hands for capital gains and therefore the society has no interest in that and it becomes very difficult for those of us who understand the problem to have the appropriate accumulation of capital in human brains. The research and development can only be sponsored by government because it's in the collective interest. That would be then if confirmation of this notion that you can explain most of the phenomena of phenomena that we have observed by the direction of accumulation of capital of capital gains of the prophecy go into this and the rest of us be to the extent that we operate within this broader framework.
That's a relief. I would like to make some comments along the lines that Mr. Eisner has opened up. I don't think that any of us. I think that all of us are very grateful to Mr. Galbraith for having presented such a clear picture of the impact of the new science and technology on how large firms are organized. We are facing have been faced with a great revolution in science and technology that has had a very important impact on the way in which the industrial firms are working. And this organization is something that characterizes all types of institutions that have grown large and it is true of the universities and is true of the hospitals and true of merchandising firms as it is true of the industrial firms that have been so conspicuous in the use of the new signs. But it is something that goes with the largest and this large nose has been something that has been growing
now and Mr. Galbraith has tied this up to a shift in has interpreted this as involving a shift in power. And this is one of the things about his comments that puzzled me because after all how do you judge a shift in power. What are its manifestations. Any kind of behavior with respect to how the firm relates itself to the society at large. Is it going to be seeing the change in the income distribution. And here I include in income distribution there are rewards to capital and the rewards to to get to Labor. Is it going to be seen in the control over prices. Is it going to be seen in the control of our products as they relate to qualities that consumers want. I mean these are the things in which the change
in the organization within the firm would have to manifest itself. It represents a change in the orientation of the purposes of the firm so that they power directly. Now as I recall the Commons only thing had to do with the fact that the new technology that would break obviously would result in these people who had been getting additional income for themselves. Now money in the future the trend is going to be to word from the technologists and the highly specialized people with special knowledge leader the vanguard of incoming emigres. But I would. I see nothing strange in terms of any kind of general economic model. I have
been long used in the past and so that I see it merely as a demand and supply situation. Now I would like to know how you were going to separate out. The demand and supply factors that are going to result in this reallocation from things that relate to a redistribution in power. Now the other thing that I see that has entered into the picture out of this new stance on technology is the change in the nature of capital. And I see nothing in it that makes me feel that the power of capital to command income through its productivity is going to lessen the returns to capital. Because I have long felt the economic leverage or tended to understate the extent to which capital is the most mobile of all of our resources. In other words it can shift the most easily. Now we've
had certain kinds of changes that have been taking place partly the scientific developments have led to an obsolescence of capital so that there has been an increased need for a continuous flow of new capital firms in order to and the newness the extent to which the only becomes obsolete makes They need to attract new capital and new truck capital is attracted in terms Arbet turns. And there has been the other new development in economic theory that I was rather surprised that Mr. Galbraith didn't touch on and that is the increasing attention that is being given to human capital. Now in many ways I don't like this term. I like capital I like to think of capital in terms of capital goods that can be bought and sold. And in terms of people who have skills but this term has come to be used and I think certain kinds of usefulness and the understanding of what is happening. And this kind of capital too.
Yes I have a type that unless it is constantly brand new in terms of the new sciences as they develop it becomes obsolete too so that we have quite a new kind of obsolescence right there and bog timbers and any kind of organization of the capital is a toll it's sensitive to decision making processes with respect to the society in general. I think such that will command a very high court I see nothing that is going to change it in this respect. Now the other thing that I was involved in the situation is how does the consumer stand in the situation. Mr. Galbraith did turn his attention to this but he has turned his attention to this in a great many other things. We have a great many of our products. Her decision making about any of our products are made. An
increase in the specialists. Now these specialists have the scientific knowledge and it will help them more effectively to design products that will meet consumer needs or meet needs that are conceived by a central group. We've had a great growth and marketing and marketing specialists who study consumer motives and study consumer behavior. This is being put to two uses one is to design the product so that it's more effective and more nearly meets consumer demand and the other is to. Play upon the motives so that people will more nearly buy the products that they have decided to produce. I would like to know whether Mr. Galbraith in this change in the technology. Any change in the way in which the industrial firms are going to serve the consumer interest or whether he sees it as a dominant profit for wages for the
employers to be as effective as it has been in the past. I think sometimes Mr. Galbraith is overrated the extent to which the consumers have been exploited but I think exploitation is there and the question is is it going to be augmented or is it going to be diminished by these changes. It was a great honor. I should like to comment just briefly on my impressions of the speech last night. It seemed to me that Professor gall Brace in a very orderly logical progression move from power through land ownership to the management of capital and then on to the effusion of that power to many elements and large corporations. There's no doubt that this system works beautifully and I suppose the Boeing 707 is a monument to the system. But you've got to be well organized believe me on many in many sectors and in many levels to produce something like this. I sometimes I lessoned wish that somehow we could turn government to such a magnificent operation and
use intelligence and technical knowledge this way to get the same kind of policies that are so perfect and so well balanced and so on. But I guess the environment is different there are not political pressures hovering around the chemists and physicists in the big corporations. But be that as it may I think there are only things that bothered me is the question of power that is the definition of power. Our tremendous diffusion of of authority of the distribution of the right to engage in decision making in large corporations is there are but is a vice is technical knowledge power. When the hundred and fifty thousand dollar executive runs down the hall to get needed advice from a $12000 does assist our chemists. Is he sharing power who hires and fires a luminous organization that makes the basic decision as to what's going to be made how is it going to be made and price will it be sold. And others I don't
see this necessary as a sharing of power as I understand pot. Who was running the Manhattan project anyway. It was for me running out it was someone else running it. And I do as I'm not sure are that even the highest level of technical knowledge is synonymous with power even all that knowledge is required in any greater cooperation. So I think less than yours. The question is money power isn't it. Who really runs the power. Economists are concerned as most of you or all of you have had an economics course know with answering such questions what is to be produced. How are these goods to be produced and who is to get the fruits of this production. Obviously it's the decisions of the total society in general that answers these these questions it's a behavioral science. But of course we are aware of the fact that some people's decisions mean more than other people's decisions and this is what the study of power is all about this in attempt to measure the
relative importance of various decisions. Now with respect to the governor thesis as demonstrated or indicated last night of the transition of power from the landowners to the capital owners to the corporate management to the new collegial type of organization one might explain this really through. An examination of the concentration of the ownership or the importance of the these types of activities for instance he suggested that when capital became more abundant then the transmission B was from of power was from land ownership to capital ownership. I think that really it's not so much of a question of the abundance of the total of land or man made capital but rather a question of the concentration there up. We know in many parts of the world that land ownership is synonymous with power and the reason is
not so much that there is so much more land than capital but simply that there is the concentration of land ownership in a few hands but then also with regard to the question of the of the decline in the importance of ownership of capital insofar as power. Or its exercise is concerned he offers evidence that people don't attend stock holders meetings they don't vote their proxies they don't do these things and this is evidence of the fact that corporate ownership is losing control or power in that sense while you don't think that that's a very meaningful notion at all because we know that ownership can exercise control in many other ways besides voting its control in a stockholders meeting. We say sometimes that stockholders walk with their feet in the sense and I can exercise control over the management of my firm by my desire to buy and sell the stock in that firm and if the stock if the corporate management or the total corporation
the illegal activity does not generate a return or reward that I find satisfying. I exercise my option to sell this stock and if enough of us do this this results in a decline in the value of the stock and hence the influence of the corporate management the corporate power and hence presumably maybe eventually a change in the policies. Of the the corporate management or perhaps even the personnel of the corporate managers. And this stance I still view the total power of the ultimate And part of the fundamental power and AI society is really resting with. Each of us is in. Visual consumers and each of us is individual capital suppliers. But still recognizing the fact that again the degree to which this power exercised the pants only or depends upon the degree to which we have these accumulations of capital and the degree to which therefore we can affect the from the supply side by supplying side capital are from the consuming side by our willingness to buy
alternative goods and services. I don't find the professor's Madres thesis is very helpful to me in answering the fundamental economic questions I want to have answered. What is to be produced. How is it to be produced and who is to get the fruits of this production that grow. This paper last night extended summer long and tedious which in turn grew out of. Afghan society at the time when I finished the Afghan society I've reached a rather disturbing conclusion that I had written the wrong book and that I was on the edge of the problem of a large organisation. This bears on something that Margaret Reed just said and the tendency of a large organisation to define its own goals for itself goals which are not entirely in accordance with the market objectives which Professor
Hinds almost instinctively defends but are relative to the group structure of that enterprise. And which and this bear is bearing what you're feeling to the to the consumer market which reaches forward to manage prices reaches back to manage costs reaches to secure its supply of capital. And above all has as an instrumental part of its service to its own goals. The tendency so far is it is unable to do so to manage the reactions of the consumer and hence the enormous going to large in an enormously complete apparatus by which a modern enterprise through its advertising history merchandising and so forth.
And image of the consumer product that in turn is the one that it can serve a very considerable extent our view of the modern motor car is given to us not as an original inspiration of Heaven by what by what General Motors seeks to have us believe on automobiles should be like. And in other words a very successful effort at modeling our view of the modern automobile or at least the views of people who are somewhat shorter and I am and can get into the damn things to the to the convenience of the producer. So my answer my answer on this my going to be your point specifically which you do I think very well to raise it. This is a that it is a collegium in the pursuit of its goals. It does seek to manage or
control its environment and part of that environment is the consumer attitude and consumer taste. I mean go back however in slightly more systematic fashion just to mention one or two points that have come up along the way. First of all I must say that I sympathise enormously with Professor Eisner's difficulty in finding something to criticize. The point on. I concede your problem on composition as regards savings. It still doesn't meet the more limited point which I am dealing with this which is that the individual firm still has the capacity keeping earnings out of the hot nigger hands of people who would like to spend it and therefore has substantial authority not complete but substantial authority over the savings decision. It's possible for you to take your capital gains
and and sell the stock and get the savings of somebody else. This doesn't however this fact does not however impair the car which is a modern firm has and as proof and in reference to the professor Hines point that my. My suggestion last night at the largest hundred firms have now sufficient control of their environment along with the support that they get from the state and the management of that environment so that they do not lose money. I would point out that there is some further evidence and that they not only do not lose money but they are able to raise about 75 percent of our savings requirements of the society from retained earnings which is not without indicative that debate. On a question that to the implied question of Professor I read that
Grace and I think this was back of something that Professor Graham also had in mind is there are some still some residual SRT in the box. Is there some ultimate power which comes to a major decision like closing a plant or opening a plant or initiating a new product that is that is that that is still related to the position higher in the higher. I don't want to I don't want to overstate my case. Certainly there is a lot I would point out that even a decision such as a closing of the plant. Involves a lot of technical study involves a lot of examination and various kinds of information which is which GEOS on into the specialized knowledge of very considerable variety
of people and that what ultimate authority may be doing in a very considerable number of cases is ratifying rather than making decisions. This is I think is one of the tendencies. I'm very much impressed with in the modern industrial enterprise we do tend very often to to to confuse the ratification of decision with the process of decision. This is I think particularly true for money is involved. We still have a sufficient appreciation of money so that when something having to do with it with obtaining a line of credit by General Motors which is involves no decisions are greatly more complicated than that a decision to close for the Fourth of July holiday. This is still in book if it involves a good deal of money will be
treated in a rather morbid and glum fashion simply because money for the exchange of money requires a certain certains sanctimonious respect and therefore one gets the impression the decisions of that so are often very much more difficult very much more complicated and in fact there they they are they. I'm Professor you made a point on that. On the extent of the Interlocked modern interlocked decision between government and business which I just couldn't agree with more and I touched on this marginally last night and it's quite evident that he could have written those chapters of the book and they would have evoked my unqualified praise of a process by which modern industry and modern government share
in decision making and the extent to which modern industrial decision and the areas of high technology is a joint process of public and private decision making. I think one of the extraordinarily important parts of this development. I have commented on. Most of our good reads points.
Man and the multitude
Galbraith discussion, part two
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University of Illinois
WILL Illinois Public Media
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University of Maryland (College Park, Maryland)
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Episode Description
This program presents the second part of a discussion of John Kenneth Galbraith's lecture, with Norman Graebner; James Heins; Martin Wagner; Margaret Reid of University of Chicago; and Robert Eisner of Northwestern University.
Series Description
A lecture series commemorating the centennial of the University of Illinois.
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Producing Organization: University of Illinois
Producing Organization: WILL Illinois Public Media
Speaker: Graebner, Norman A.
Speaker: Eisner, Robert
Speaker: Heins, James
Speaker: Wagner, Martin, 1911-
Speaker: Reid, Margaret G. (Margaret Gilpin), 1896-
AAPB Contributor Holdings
University of Maryland
Identifier: 67-4-12 (National Association of Educational Broadcasters)
Format: 1/4 inch audio tape
Duration: 00:28:48
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Chicago: “Man and the multitude; Galbraith discussion, part two,” 1967-02-21, University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC, accessed May 28, 2024,
MLA: “Man and the multitude; Galbraith discussion, part two.” 1967-02-21. University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Web. May 28, 2024. <>.
APA: Man and the multitude; Galbraith discussion, part two. Boston, MA: University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Retrieved from