Zinn argues that the national government responds to the Civil Rights Movement by doing just enough to keep the movement from becoming truly revolutionary. He argues that the government manipulated and used moderate leaders like Martin Luther King, Jr. as a way of ensuring that the basic power structure of the US would not be affected.
Zinn gives, as an example of this, the famous 1963 "March on Washington." He says that it was supposed to be much more confrontational, with protestors tying up government offices and even lying on airport runways. He argues that the government (notably John and Robert Kennedy) got King and other leaders to tone down the protest. He says the government gave the protest its official support, but at the cost of making it a much less confrontational and revolutionary act.
Zinn argues, then, that the government simply coopted the Civil Rights Movement to prevent it from creating real change.
Yes, you are right to ascertain that chapter 17 of A People's History of the United States deals mostly with the Civil Rights Movement and the government's response to it. Zinn has a definite opinion here: that the government kept the Civil Rights Movement under tight control using leaders exemplifying moderation in order for the movement not to become a revolution.
Continuing with his more liberal take on history, Zinn points fingers, again, at our government for moderating the Civil Rights Movement. Zinn ascertains that leaders in the middle of the spectrum (who represent moderation, and not violence), such as Martin Luther King, Jr., are focused upon ON PURPOSE in order for the movement not to become so grand in scale as to become a revolution. According to Zinn, Martin Luther King, Jr. (and others like him) were both used and manipulated in order to keep the basic US hierarchy.
Zinn realizes that most readers aren't familiar with anything but the result of the March on Washington in 1963. What looked like a peaceful protest and was supported by our government, was really meant to look much more revolutionary by crowds actually blocking/chaining government offices, tying up officials in their wake, and lying en-masse on the runways in order to impede government official aircraft.
Zinn gives credit of the shift of the "revolution" to the "march" to two Kennedys: Robert and John F. Supposedly the two talked to King and asked him to inspire more of a peaceful event. There was a cost: the lack of a real revolution and, according to Zinn, the loss of real change in Washington. Still, Zinn attests to the following:
The memory of oppressed people is one thing that cannot be taken away, and for such people, with such memories, revolt is always an inch below the surface.