Galbraith provides some technical evidence on the developments in the various industries. This research is interesting in itself too, but while the book progresses, it appears, a bit to the dismay of the reader, that the industrial analysis is primarily given to show that it is less relevant.
Galbraith has found a ‘productivity measure’ (‘P-measure’) - defined as value added per production worker hour - that enables him to find three clusters in the US economy: a ‘knowledge’ K-cluster, a ‘consumption’ C-cluster and a ‘service’ S-cluster. The graphs show that these clusters can be found in the data indeed. The P-measure might be less convincing, and might appear ad hoc. However, when it turns out that these clusters can (‘basically’) be represented too by the share of the wage bill of non-production workers - more and higher paid R&D and marketing workers - then the clustering starts making more sense, and good sense actually.
The link between this part of the book and the rest is rather weak. The idea seems to be that this research underlines the monopolistic tendencies in the US economy. For such a conclusion, however, more work needs to be done. Another line of thought is that this novel understanding of the US industrial development would help us to better understand the role of technology - and its impact on wages and inequality. That may be true too - but I was already convinced of the less relevant role of technology anyhow.
In my view this part of the analysis will surely help to better model the economy, but it is less relevant for the analysis of inequality proper.
I have been critical of aspects, but in general Galbraith has written a great and very useful book. It is seductively well written, and the subtle points, that are clearly recognised by the author, might easily be overlooked by the readers. My suggestion for a next edition is to split the book in the two books that it actually consists of. This would also give more room to drive the subtleties home.
I may emphasise again that I see a quite parallel line of thinking with my own analysis. I hope that others will see this too, and that they will see that there indeed is something to the arguments.
Cox & Alm: “Myths of rich and poor”
Cox and Alm (1999) wrote a book that one shouldn’t buy. Though the book contains almost 50 pages of footnotes, it is not a scientific but an ideological and highly contorted book. Many of the arguments are at the level of ‘An apple a day keeps the docter away’ - superficially convincing but nonsense at a quick closer look. As such it gives a good idea of what science is up against - and it is not a pretty sight.