American Capitalism: The Concept of Countervailing Power.

American Capitalism: The Concept of Countervailing Power (1952) is the first major book by John Kenneth Galbraith, the Paul M. Warburg Professor of Economics Emeritus at Harvard University, recipient of the Presidential Medal of Freedom, and one of the most widely read and influential economists of the postwar era. The book presents Galbraith's account of the interrelationship between politics and economics based on a theory of competition guiding a capitalistic democratic society, arguing that the classical model of competitive markets had been rendered obsolete by the rise of large corporations that could function as price makers rather than price takers, weakening the accepted principle of consumer sovereignty and allowing concentrated market power to exploit workers, farmers, and consumers without adequate restraint. Against this concentration of corporate power, Galbraith advanced his celebrated concept of countervailing power, arguing that the most effective check on the market power of large corporations was not antitrust regulation but the development of organized countervailing forces on the other side of the market, most notably labor unions in wage negotiations and large retail chains in commodity purchasing. Galbraith reasserted in his later introduction to the work that the best and established answer to economic power is the building of countervailing power, with the trade union remaining an equalizing force in labor markets and the chain store the best answer to the market power of large food companies.