James K. Galbraith's The Predator State is in the great tradition of institutional economics stretching from Thorstein Velen to John Kenneth Galbraith. In his latest book, James Galbraith describes the distorted political economy that has recently emerged to displace what his father earlier analyzed in "The New Industrial State." Seeing through the fog of myth, the elder Galbraith demonstrated how the modern corporation planned markets through careful internal organization. Now, the younger Galbraith has shown how that system has metastasized under the George W. Bush administration into a nightmare where much corporate organization has been thrown into chaos. The "countervailing power" of government and labor, described by elder Galbraith in his "American Capitalism," is long dissolved into the mist. Instead, the corporations have increasingly lost their ability to direct and control markets through their own mechanisms. An ascendant predator financial class that can only wring higher profit margins out of the corporations at the expense of long-term planning and market stability has subverted their capacity for economic rationalization. Under Bush, the government has not only allied with key corporations but also merged with them. In order to subvert and suppress markets, of course in the ideologically perverse name of the free market, these corporations rely on government to act as their agent. Reaganism has indeed proved to be "transformational," carried to its logical conclusion by the Bush administration.

Despite the rise of the predator state, a corporate welfare state where every public purpose is turned upside down and dedicated to both private and partisan political ends, it has no more fulfilled its alleged promise of a thriving market and society here than its application has in Iraq. As James Galbraith points out incompetence is not an unintended consequence of the ideology. On the contrary, the incompetence is the predictable outcome. Enron was the forerunner corporation of the era. Enron was an innovative breakthrough, not an aberration. It charted the path for what has followed in the Bush years.

Now the economy seems to be entering a long crisis. If not a sustained recession, it appears to be suffering from the ill effects in key sectors, from housing to autos to banking, which will not be easily amenable to short-term solutions. The systemic depth of the crisis and its depressive symptoms will be inherited by the next administration. Can the shackles of the predator state be broken? What kind of knowledge and action within the federal government in captive departments and agencies will be necessary? Can housing and credit markets be restored to health? Has the balance of financial power shifted decisively against the U.S.? Can universal health care be established without mandates, as the draft Democratic platform suggests? Is the correct approach to be located at the University of Chicago Business School?

The Democratic primaries have hardly ended substantive debate. Indeed, it is just beginning. The inevitable conclusion of the Bush administration makes that debate more vital every day. We should be grateful to James Galbraith for his provocative analysis and raising fundamental questions. The time for solutions is drawing close.