Galbraith's The Road To Serfdom '

The introduction of technology has surely made production process easier and has changed economic world ever since. It has opened new doors, enabled possibilities that humans could only dream about before and it has created new theories and terminologies. However, because not everyone, every firm could have access to technology, not all of them are directly affected positively by the holy influence of technology. Friedrich Hayek, in his book The Road to Serfdom, John Kenneth Galbraith, in his book The New Industrial State and Milton Friedman in his book Capitalism and Freedom have asserted the relationship between technology and the large corporations, who have attained higher positions in societies and economies thanks to technology. To Galbraith, …show more content…
And the time span would increase if the technology needed for the process got more sophisticated and complicated. Secondly, there is an increase in the capital required for the increased output. This is a consequence of the first one. Increased time span means the increase in cost, capital and knowledge. Thirdly, since time and money increase, the process of a particular task becomes even more inflexible. Details about each task should be decided before the process and remain unchanged. This guarantees the quality of the final products, because each task is handled until perfection. Fourthly, specialized manpower is required. The people in charge need to have expert knowledge in the area they are responsible for, and strictly limited to that area. Fifthly, the need for organization increases as a result of specialized knowledge. There needs to be an organization to make sure that all the specialists working on their fields reach their best potential. Therefore, organizing also requires specialists. Lastly, all of the fore-mentioned five factors lead to the requirement of planning. Tasks must always be the same correct ways every time. The amount of capital needs to be right. The path of success needs to be drawn since the very beginning, including the possible inclusion of unexpected events in order to ensure the final planned …show more content…
He stretches it a bit further by making it the relationship between technology and monopolies. With the rise of monopolies, there had been opinions that technological changes have put an end to competition and left people with a choice between control of production by private monopolies and direction by the government. (Hayek, 91) He analyzes the belief that “the alleged technological cause of the growth of monopoly is the superiority of the large firm over the small, owing to the greater efficiency of modern methods of mass production. These methods have created conditions in the majority of industries where the production of the large firm can be increased at decreasing costs per unit, with the result that the large firms are everywhere bidding and driving out the small ones; this process must go on until in each industry only one or at most a few giant firms are left.” (Hayek, 92) That’s how monopoly is born. This fits perfectly to the definition that Salvatore provides in his book Managerial Economics: In a Global Economy: “In some industries, economies of scale may operate over a sufficiently large range of outputs as to leave only one firm supplying the entire market. Such a firm is called a natural monopoly.” (Salvatore,