John Kenneth Galbraith

What I wrote about John Kenneth Galbraith last year:

Foreign Affairs - Sisyphus as Social Democrat - J. Bradford DeLong: From Foreign Affairs, May/June 2005. John Kenneth Galbraith: His Life, His Politics, His Economics. Richard Parker. : Farrar, Straus & Giroux, 2005, 820 pp. $35.00:

If there were justice in the world, John Kenneth Galbraith would rank as the twentieth century's most influential American economist. He has published several books that are among the best analyses of modern U.S. history, played a key role in midcentury policymaking, and advised more presidents and senators than would seem possible in three lifetimes. Yet today, Galbraith's influence on economics is small, and his influence on U.S. politics is receding by the year.

In this lively and thoughtful biography, Richard Parker sets himself the task of explaining Galbraith's career: why it was so dazzling, and why its long-term impact has turned out to be so much less than expected. The result is not only the story of a smart, witty, and important man, but also a fascinating meditation on the rise and fall of twentieth-century American liberalism.

A MAN FOR ALL SEASONS

That Galbraith's career has been dazzling nobody can dispute. Professors of post-World War II American history can still do no better than to assign his books The Affluent Society and The New Industrial State to teach students how the midcentury U.S. economy came to dominate the world (and what should have been done to make it work better). Anyone wanting to learn about the beginning of the Great Depression should start with The Great Crash; there is no other history of the stock-market crash of 1929 that is as short and even half as worthwhile. During World War II, Galbraith helped run the Office of Price Administration, working to square the growth-inflation circle by pushing production far above economists' measures of potential output without sparking runaway price increases that would threaten the economic mobilization. And after the war, his work on the Defense Department's "United States Strategic Bombing Survey" made Washington rethink the efficacy of its standard war-fighting policy -- staying high in the sky and dropping lots of explosives on all kinds of people far below -- although perhaps the rethinking did not go far enough.

Lots of ideas in the background of contemporary U.S. political and economic thought are Galbraith's. His work as an economist was a scattered but comprehensive attempt to think through the consequences of the transition from a nation of small farms and workshops to one of large factories and superstores. In doing so, he took on many of the questions most central to the new U.S. economic landscape: How much can advertising shape demand? In a world of passive shareholders, autonomous managers and engineers, and firm decisions that emerge out of internal bureaucratic contests, just what are the objectives that drive big firms? How does competition work when its principal dimensions are quality and marketing rather than price? And critically, how do the limits of polite discourse allow the system to hold itself together while constraining its flexibility?

For decades, Galbraith's influence in politics was unmatched by any other economist. The pieces of his advice best remembered are those that went against the "conventional wisdom" (a now ubiquitous phrase that Galbraith coined): strategic bombing did not win World War II; Vietnam was a strategically unimportant quagmire where the United States would do more harm than good; macroeconomic "fine tuning" is likely to blow up in the face of policymakers; the businessman's capacity for self-delusion is nearly infinite. Galbraith sees the United States as a would-be social democracy that has lost its way, assuming that if only the self-serving declarations of the right could be wiped away, the benefits of a bigger, more activist government would become obvious to everyone. The right-wing claim that the most efficient economy is one in which the gales of perfect competition scour the land is, in Galbraith's view, nonsense. Modern industrial and post-industrial production is a large-scale process, large-scale processes require planning, and planning requires stability -- which means that the gales of the market must be calmed.

This political vision, however, has been in retreat since the early 1980s. Nobody wants to hear about the importance of Big Government, Big Bureaucracy, or Big Labor (which hardly even exists). Galbraith's economic views have undergone an even more distressing eclipse. Among economists (excluding economic historians), the 70-year-olds have read Galbraith and think he is very important; the 50-year-olds have read Galbraith and know that the 70-year-olds think he is important but are not sure why; and the 30-year-olds have not even read him.

Parker has an explanation -- a relatively convincing one -- for the retreat of Galbraith's politics. The story behind it is the Democratic establishment's loss of nerve. Too many party intellectuals and politicians drink cocktails on Martha's Vineyard, in Parker's view, and too few spend time on the shop floor learning what issues are important to those sweeping up or manning an assembly line or tending the convenience-store cash register from midnight to six a.m. Thus, the mass base of the Democratic Party has withered, and without a mass base Democratic politicians listen too much to their rich contributors and turn into Eisenhower Republicans -- people who are interested above all in balancing the budget. Galbraith, a committed social democrat, has wielded his pen and his tongue in an effort to halt this decades-long rightward drift. But he has failed: his allies are too few, and the loss of nerve among the party elite is too complete.

Parker also has an explanation -- also a relatively convincing one -- for the eclipse of Galbraith's economic thought. The story here is of the blindness of an academic establishment steeped in Paul Samuelson's Foundations of Economic Analysis. Economists, Parker believes, have sold their birthright for a tasteless pottage of mathematical models. As a result, they can say much about theory but little about reality. And they ignore Galbraith because he is a guilt-inducing reminder of how much broader and more relevant economics can be.

WHAT WOULD GALBRAITH DO?

This explanation, however, is far from complete. Late-twentieth-century American economics centers on the use of mathematical models to reach one of two conclusions: that the market is already doing a good job, or that some imperfection is causing "market failure" and correcting or counterbalancing the imperfection will make everything okay.

Thus there are New Classical macroeconomists, who believe that the market works fine and that even depressions are necessary and inevitable; Monetarists, who believe that recessions result from failures in the banking system, which can be corrected by ensuring stable growth of the money supply; and New Keynesians, who are indistinguishable from Monetarists save for their identification of market failures in the labor market or in the investment decisions of firms. In all these cases, it is clear what an economist must do to belong to a particular school: start underneath the lamppost, take a few steps in one direction by describing a market failure, and then start searching for lost keys. New Classicals master the solutions of "dynamic stochastic general-equilibrium representative-agent models." Monetarists analyze the details of the financial system in an effort to define a "neutral monetary policy." New Keynesians trace the implications of subtle differences in labor- and capital-market failures.

Just what a "Galbraithian" economist would do, however, is not clear. For Galbraith, there is no single market failure, no single serpent in the Eden of perfect competition. He starts from the ground and works up: What are the major forces and institutions in a given economy, and how do they interact? A graduate student cannot be taught to follow in Galbraith's footsteps. The only advice: Be supremely witty. Write very well. Read very widely. And master a terrifying amount of institutional detail.

Harry Johnson, in his superb but not entirely fair critique of Milton Friedman's Monetarists, said that in order to carry out an intellectual revolution in economics, one must propound a doctrine that has three qualities: it can be summarized in a single sentence, it provides the young with an excuse for ignoring the work of their elders, and it tells the young what they can do to further the revolution. John Maynard Keynes and Friedman both offered such doctrines. They said, respectively, that "aggregate demand determines supply" and that "inflation is always and everywhere a monetary phenomenon"; they dismissed their predecessors as obsolete; and they set hundreds of young to the task of estimating consumption, investment, and money-demand functions.

Galbraith propounded no such easily summarized doctrine. The closest we can get is: "the world is complicated, and both right-wing ideology and the conventional wisdom that is this age's self-image are terribly wrong." He offered critiques that required you to read and understand old theories, not new theories that allowed you to dismiss everything prior as irrelevant.

The result? Nearly all economists today are Paul Samuelson's children. Many are Keynes' children. Friedman, Robert Lucas, Robert Solow, and James Tobin all have plenty of descendants. But there are few Galbraithians on the ground. Would economics as a discipline be stronger if the 50-year-old and 30-year-old economists had a better appreciation of Galbraith? Almost surely. Will the winds of economic fashion shift and cause economists to appreciate Galbraith once again? For that to happen, an astute young economist would have to devote himself to "mathing up" chapters of The Affluent Society and The New Industrial State and publishing them in journals -- not a likely prospect in today's risk-adverse academic environment.

ALGER LIVES

Galbraith's life traces an arc through an age in which three gigantic shocks appeared to transform U.S. politics. The Great Depression convinced the upwardly mobile that they could be downwardly mobile too, the middle class that it and the working class had common interests, and high-wire entrepreneurs that even they needed government to provide a strong safety net -- hence Franklin Roosevelt's New Deal. Then the self-destruction of the Republican Party in the wake of its takeover by Barry Goldwater led to a decade of Democratic dominance that brought forth Lyndon Johnson's Great Society. And finally, with the advent of Richard Nixon's "southern strategy," the base of the northern Democratic Party moved to the left, leading to a decade of southern conservative Democrats voting for northern Democratic liberals to chair committees and run Congress. This was the age of Galbraith's ascendancy -- an age during which the United States looked to be moving ever closer to his vision of the good society.

But all these shocks turned out to be temporary. The middle class no longer fears impoverishment at the hands of another Great Depression, as it did in the 1950s, and it is less certain that it shares interests with the working class. Republican legislators may still feel that extremism in the defense of liberty is no vice, but they are now smart enough to keep quiet about it. The Democratic South has morphed into the Republican South, and enough electricity to power Illinois and New York could be produced if only one could attach magnets to Abraham Lincoln and William Seward as they spin in their graves.

What has survived throughout is the American myth of rugged individualism, and it is this that Parker's political story neglects. The power of this myth has meant that the United States is not, and never will be, a European-style social democracy. People may come together for barn raisings, but America is still the land of upward mobility and opportunity, where the most common questions are, I've done it, so why haven't you? and Doesn't this social solidarity stuff mean that I've got to pull more than my share of the weight? In spirit, it is still a nation of upwardly mobile immigrants blessed with an abundance of resources (free land) and an absence of government constraints (free labor).

Galbraith would say, sardonically, that this national self-image is just another fraudulent piece of conventional wisdom -- nurtured by the delusional, who cannot see reality, and the rich, who see it all too well but know that such delusions make them richer and more powerful. And Galbraith would be more than half right. But this self-image is also a very powerful social fact, and this more than anything else explains his waning influence on U.S. politics. It is not that the Democratic establishment has lost its nerve or been seduced by law firms and lobbyists; it is that the old Horatio Alger myth has proved extraordinarily durable.

At the beginning of the twenty-first century, it has become clear who John Kenneth Galbraith really is: Sisyphus, constantly pushing the boulder of social-democratic enlightenment up the hill. But the hill, it turns out, is too steep, and Galbraith not mighty enough.

---

And here's a genuinely bad passage from Holcomb Noble and Douglas Martin's obituary of John Kenneth Galbraith. Embarrassing:

John Kenneth Galbraith, 97, Dies; Economist, Diplomat and Writer - New York Times: Mr. Galbraith argued that technology mandated long-term contracts to diminish high-stakes uncertainty. He said companies used advertising to induce consumers to buy things they had never dreamed they needed.

Other economists, like Gary S. Becker and George J. Stigler, both Nobel Prize winners, countered with proofs showing that advertising is essentially informative rather than manipulative.

Proofs? I know many people who find Becker's and Stigler's arguments powerful ones. I know nobody who would call them "proofs."

Many viewed Mr. Galbraith as the leading scion of the American Institutionalist School of economics, commonly associated with Thorstein Veblen... [which] deplored the universal pretensions of economic theory, and stressed the importance of historical and social factors in shaping "economic laws." Some therefore said that Mr. Galbraith might best be called an "economic sociologist." This view was reinforced by Mr. Galbraith's nontechnical phrasing, called glibness by the envious and antagonistic...

I thought the rule in an obituary was that it was the one time when it was profoundly uncool to cite those critics who are too cowardly to name themselves...

Ironically, Mr. Galbraith's pride in following in the tradition of Veblen was challenged by the emergence of what came to be called the New Institutionalist School. This approach, associated with the University of Chicago, claimed to prove that economics determines historical and political change, not vice versa.

Huh?

Some suggested that Mr. Galbraith's liberalism crippled his influence. In a review of "John Kenneth Galbraith: His Life, His Politics, His Economics" by Richard Parker (Farrar, 2005), J. Bradford DeLong wrote in Foreign Affairs that Mr. Galbraith's lifelong sermon of social democracy was destined to fail in a land of "rugged individualism." He compared Mr. Galbraith to Sisyphus, endlessly pushing the same rock up a hill that always turns out to be too steep.

That's not what I said.

Comments

[Tyrone Slothrop]

Thanks for posting this.

I think there's a minor but material formatting error creating confusion in the excerpt from the NYT obituary -- the text where Becker and Stigler are mentioned first looks like it's part of the NYT obit and wants to be indented.

[Jim Dandy]

"Rugged individualism" may well be part of the story. But that in turn is reinforced by something else: racism.

From the start, America has always had a large black underclass, first as slaves, then freed blacks, who served as the “other”. As long as economic and social policies could be viewed or painted as benefiting those “others” at the expense of “us” (meaning whites, poor or not), those policies could never achieve permanence outside of crisis periods associated, for instance, with the Great Depression or with the Great Awakening of the struggle over Civil Rights.

[robd]

In contrast to the US, Galbraith has always been a popular economist in the Netherlands.

Probably because we are a bunch of lefties.

My favorite JKG quote:
"Economics is extremely useful as a
form of employment for economists."

[Kate G]

I am not an economist, so before others weigh in on Galbraith I want to say that I admired him tremendously. There is a personal side to that, of course. My grandfather worked with him at the Office of Price Controls during WWII. But there is another side to it. What I want to say though refers really to an entire, to my mind, lost generation of economists and economic thinking epitomized by this brief anecdote. It used to be that whenever I travelled through the Delhi Airport if I saw a white man over the age of sixty it would turn out that he was an economist who had worked with my grandfather. One such man, a dutch economist, once told me that the *entire reason* he had become an economist was because as aboy he had been imprisoned, by the Japanese, and had suffered and seen others suffer terribly from starvation. He said that he had resolved then to dedicate his life to trying to eradicate hunger and the suffering it causes *by becoming an economist*.

I never met any economists like that when I was at Harvard (where my grandfather had taught many years before).

Kate G.

[vtconomist]

Thanks for posting this. I was just about to look up your review after reading the NYTimes obit.

One question: Wouldn't it be ironic and anti-Galbraithian to try to popularize his views via "mathing up" his writing?

[Jim 7]

John Kenneth Galbraith Quotes

In the choice between changing ones mind and proving there's no need to do so, most people get busy on the proof.

There are times in politics when you must be on the right side and lose.

The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.

We can safely abandon the doctrine of the eighties, namely that the rich were not working because they had too little money, the poor because they had much.

All successful revolutions are the kicking in of a rotten door.

[jerry]

Two thoughts:

One: "Parker also has an explanation -- also a relatively convincing one -- for the eclipse of Galbraith's economic thought. The story here is of the blindness of an academic establishment steeped in Paul Samuelson's Foundations of Economic Analysis. Economists, Parker believes, have sold their birthright for a tasteless pottage of mathematical models. As a result, they can say much about theory but little about reality. And they ignore Galbraith because he is a guilt-inducing reminder of how much broader and more relevant economics can be."

This is why you are a free trader, and not a fair trader. And it is why I say that economists must renounce tenure in the economics department.

Two: If what you say is accurate about Galbraith ("the businessman's capacity for self-delusion is nearly infinite"), I think the entirety of the Haas MBA program (econ, finance, marketing) could be much better used by focusing each class on Galbraith's views towards the particular subject. It would have been much better in macro to study how Galbraith "helped run the Office of Price Administration, working to square the growth-inflation circle by pushing production far above economists' measures of potential output without sparking runaway price increases that would threaten the economic mobilization. And after the war, his work on the Defense Department's "United States Strategic Bombing Survey" made Washington rethink the efficacy of its standard war-fighting policy -- staying high in the sky and dropping lots of explosives on all kinds of people far below -- although perhaps the rethinking did not go far enough", than it would have been to sit through Andy Rose's literally hand-waving explanations of the ISLM curve. (In appropriate and inappropriately timed pun, I now realize that Andy Rose was an islmofascist.)

Thanks.

[Stephen Lepp]

"Proofs" struck me as absurd as well. Also the premise seems odd, if advertising serves primarily an informative purpose, why do the vast majority of the ads contain so little information.

My favorite recent quote is from a Gaurdian profile in August 2004 the reporter asks him:

Has not Bush's presidency, I suggest, been characterised by tax cuts for the rich, an explosion in directors' pay and, of course, the Iraq war?

"I would respectfully disagree," he says with a twinkle in his eye. "George Bush's political, intellectual and other shortcomings cannot be restricted to a single sentence or two. He presides over a context far more complex and authoritative than he could possibly understand."

[Sam Taylor]

As one of the 70 year olds who has actually read and admired Galbraith, I found your article quite insightful.

Like the rooster who crows and boasts that he has caused the sun to rise, we continue to create our own faux reality, ignoring the unusual if not unique circumstances that have lead to our current relative prosperity and social civility.

Gaibraith was wise enough to call our attention to such nonsense and in the long run, may well be ruefully admired for his prescience.

In the interim, he simply reminds us of the truth of Keyne's most famous axiom.

[RKKA]

I too mourn the passage of a true intellectual giant, one who did far more good for mankind during the Great Depression and World War II than Milton Friedman and all his followers have done harm.

Although they're still at it, and the "Borrow and Spend" crowd may yet wreck this country.

[tedb]

re "proofs" of Becker and Stigler: I am not familiar with their work; based on the summary provided concerning the informative content of advertising, I assumed that the author actually meant to write "spoofs." -:)

As to your concluding complaint, Brad, aside from the liberalism dooming G's influence part, the rest (re "rugged individualism" and Sisyphus) seems to me to be a pretty fair paraphrase of what you wrote.

[joe]

"Modern industrial and post-industrial production is a large-scale process, large-scale processes require planning, and planning requires stability -- which means that the gales of the market must be calmed."

Thank goodness that F.A. Hayek, in hs magnum opus The Road To Serfdom, demolished such utter nonsense.

[masaccio]

I remember from my college econ courses (micro and macro, 1965) that the models were too simple. I asked my teacher this: if I read your model and predict what will happen, and make my decision based on how you will interpret my action, can't I outsmart you? But you could do the same, and so on, so what is the meaning of the model?

Later I learned to call this process iterative, but I never learned the answer.

If I had read Galbraith then, I might have gone into economics. As a math major, I might not have been so easily seduced by models.

[Lee A. Arnold]

It seems unlikely to me that you can "math-up" Galbraith, and it may not finally be necessary. His type of institutional economics is of a certain line of thought that runs through parts of Aristotle, Bruno, Leibnitz, Smith, Mill, Darwin, Brouwer, Whitehead, Schumpeter, Hayek, Coase, L.L. Whyte, and G. Bateson, which looks at "organism" and "organization" as composed of single-step hierarchisms, to be unitized as a pattern -- but not quantifiable, beyond power-laws or income-distributions and the like, and not allowing precise prediction. The last best hope for the quantifiers appears to have been logical positivism, which was laid to rest by Godel--who used, indeed, a clever bit of logical hierarchism. Further on, the use of massive computer power to model these systems has led us to duelling probability-scenarios, e.g., economy vs. climate, and this leads us right back to institutional questions, such as free markets vs. government regulation. About the only positive thing we know is that freedom promotes creativity and therefore possible innovations -- but we don't know if that always outruns or stays ahead of population explosion. Now we have the not-so-little circumstances that much of economics has desertified into mathematical aridity, that the distribution of income is not much changed in the aggregate by globalization, and that we are coming up against environmental constraints on spread (or scale) of human habitat and available waste-sinks to handle pollution and heat. Its seems likely to me, therefore, that the institutional view may begin to predominate, and perhaps prevail for several generations. Unless, after Penrose, new mathematical laws are found at the quantum level which shed light on how consciousness is constituted--though this seems again to put the cart before the horse.

Favorite Galbraith quote: "One of the largest and most important questions facing the governments of the industrial countries is that the economics profession--I choose my words with care--is intellectually bankrupt. It might as well not exist."

[RW]

There will doubtless be a lot of pro- and con- comments on Galbraith, he did have some talent for controversy and loved sticking pins in the, um ...sensitive places of the complacent or high and mighty. And lord knows if we're going to post favorite (or despised) Galbraith quotes and commentary we could be here for awhile but no complaint - he was an astonishingly good writer and I suppose could at times appear glib even to the non-envious but he could parse and restate highly complex topics so successfully that imminently quotable ideas simply spun off the wheel in the process whether you found yourself agreeing with them or not.

For those who would like to see what good socioeconomic commentary looks like - at least to those of us who are not highly accomplished in the subject but (while attempting to understand its more arcane apocrypha) would above all else really like to know what it all means - I heartily recommend the collection of Galbraith's shorter pieces, A view from the stands (1986). It's out of print AFAIK but should be available at used book outlets or, one would hope, your local library.

One of my favorite quotes was from his 1984 commencement address at American University (repeated in A view from the stands and titled "The Convenient Reverse Logic of Our Time"):

"Increasingly in recent times we have come first to identify the remedy that is most agreeable, most convenient, most in accord with major pecuniary or political interest, the one that reflects our available faculty for action; then we move from the remedy so available or desired back to a cause to which that remedy is relevant."

One could question the first phrase - "recent times" - but think of a major policy decision, any one, and peruse its underlying rationale as well as the history of its implementation. Then come back to Galbraith's statement and see if it sufficiently explains the policy and its articulation in a considerably more simplified form; I can think of a fairly recent war that it describes far better than anything I have yet heard.

[Charles]

The New York Times had to wait until after he was dead to print such a dismissive and fundamentally dishonest obituary.

Otherwise Galbraith would have countered with a multi-volume series of stupid statements by The Times.

They've had at least 50 years to hone this obituary, and they couldn't even get DeLong's comment straight.

The Times is such a smug pile of ... what Galbraith's father called "the Tory platform." One minor example: where were they on Vietnam, when Galbraith was warning it was a dangerous quagmire?

Galbraith's problem was that he was 100 years ahead of his time. Maybe more.

[piotr]

When I came to this country 26 years ago, my command of English was rather rudimentary. I could comprehend British newspapers, but large areas of real-life English were blank. Probably I should compile a book "100 basic facts I learned from TV ads".

Fact number 8: "feminine napkin" is a never shown implement indispensible if you are a female in urge to run through green lush meadows or play tennis.

Fact number 5: "beer" is a liquid, usually amber in color, used to spill it on the ground, or into a swimming pool, which acts cause a lot of hilarity. Beet juice would probably be even funnier, but probably too expensive to make much profit.

Fact number 2: everything they taught you in the driving school is wrong.

Fact number 4: as soon as possible, you should talk with your doctor (how one acquires a doctor?) to obtain assorted pills, so you can enjoy occasional diarrhea, headeaches, cramps, liver problems.

[John Emerson]

If Galbraith were still considered a major economist by professionals in the field, I would not despise the profession the way i do. Defenders of the profession always point to lone survivors and isolated exceptions to prove that the biz is not totally corrupt.

[anne]

Kate

"It used to be that whenever I travelled through the Delhi Airport if I saw a white man over the age of sixty it would turn out that he was an economist who had worked with my grandfather. One such man, a dutch economist, once told me that the *entire reason* he had become an economist was because as aboy he had been imprisoned, by the Japanese, and had suffered and seen others suffer terribly from starvation. He said that he had resolved then to dedicate his life to trying to eradicate hunger and the suffering it causes *by becoming an economist*."

Amid the lovely comments, such a story tells us of the hoped for though now muted legacy of John Kenneth Galbraith. What I have argued is that Galbraith allowed for a modern more subtle and compelling philosophy of economics such as Brad DeLong argues is necessary and wanting.

Economics research has a utilitarian base, through which researchers can offer themselves as dispassionate observers and analysts. Utility of subjects is tradeable or changeable, so that your utility and mine are similar and changeable beyond our starting conditions. Notice an economic change, sum to find if utility is increased in general and the well being of individuals is all but a matter of indifference.

The well being of individuals was always an important matter for Galbraith, and the philosophical base found through the writings was of Kant or Rawls rather than Bentham. Well being takes on the aspect of equity for Galbraith, much as DeLong understands Benjamin Friedman to have extended economic philosophy. My well being cannot be equitable if it simply diminshes yours. Narrative in analysis then becomes as essential as model building in understanding development advances if there are to be any.

[anne]

http://www.harvardmagazine.com/on-line/010678.html

January, 2006

An Economist's Take On the Moral Consequences Of Material Progress
By J. Bradfold Delong

The Moral Consequences of Economic Growth
By Benjamin M. Friedman

Economists have always been very good at detailing the material consequences of modern economic growth. It makes us taller: we are perhaps seven inches taller than our preindustrial ancestors. It makes us healthier: babies today have life expectancies in the seventies, not the twenties (and more than half that improvement is not directly related to better medical technology, narrowly defined). It provides us with leisure: eight-hour workdays (rather than "Man's work is from sun to sun, and woman's work is never done.") It provides us with enough clothing that we are not cold, enough shelter that we are not wet, and enough food that we are not hungry. It provides us with amusements and diversions, so that there is more to do in the evenings than huddle around the village campfire and listen yet again to that blind poet from the other side of the Aegean tell the only long story he knows—the one about Achilles and Agamemnon. As time passes, what were luxuries become, first, conveniences, and then necessities; what were utopian dreams become first luxuries and then conveniences; and what was unimagined even in wild fantasy becomes first utopian dreams and then luxuries.

Economists have been less good at detailing the moral consequences of economic growth. There are occasional apothegms: John Maynard Keynes observed that it is better for a man to tyrannize over his bank balance than his fellows (a rich society has an upper class that focuses on its wealth as power-over-nature, rather than on its power as power-over-people). Adam Smith wrote about how wealth made it attractive for the British aristocracy to abandon their feudal armies and private wars and move to London to take up positions in society and at court. Voltaire (who not even I can claim was an economist) observed that people who in other circumstances would try to kill each other for worshipping the wrong god (or the right god in the wrong way) were perfectly polite and civil when they met each other as potential trading partners on the floor of the London Exchange. Albert Hirschman (who is an economist) wrote a brilliant little book, The Passions and the Interests, about the eighteenth-century idea that commercial society made humans "sweet": polite, courteous, and civilized, viewing one another as potential partners in mutually beneficial market exchanges, rather than as clan members to be helped, clan enemies to be killed, or strangers to be robbed. But focus on the moral consequences of economic growth has—from the economists' side, at least—been rare....

[dale]

"Narrative in analysis"

I would love to here you expand on that anne.

[anne]

Well, then, what is "narrative in analysis," for you assume I know :) Suppose it's stories that we're made of, or so I suggest at times. We are made of the stories of our experience, that make us each unique, and that in turn must be told now and then to understand how we are faring in the midst of social change and to evaluate the change.

[anne]

Research in economics at the core involves combining our narratives and generalizing, but the combining and generalizing become abstractions. Where then are the narratives to ground what is otherwise abstract? In history Leo Tolstoy suggested this idea and problem to Isaiah Berlin, and in one of the striking essays of the century, "The Fox and the Hedgehog," Berlin set down a theory of history that calls for always grounding analysis in individual narrative.

[gordon]

My favorite JKG quote: "The trouble with competition is that in the end somebody wins."

[JohnLopresti]

Sometimes it seems to me the difficulty in seeing the 'ism in Galbraith-ism is the breadth of his perceptiveness encompassed influences whose contentious interaction has continued with only slight variance from the condition into which he was introduced to those factors, the very determinants of what constitutes the condition of modern socioeconomic interaction; that, and his glee in depicting the most unanswerable conundra fairly straightforwardly by replying that he could see the problem but only part of the answers.
Although he kept his distance from the most liberal administration in the latter part of the century XX in the US while serving it in a diplomat capacity, the understanding of his accomplishments continuously is diminished by the contexts which followed, i.e., the anticivil rights regressions and allied foreign policy, including economic policy, which ensued.
I had the experience of doing grad work in a country which had at the time a waning dictatorship though the transition to democracy had occurred transitorily a few decades prior, and, clearly a democratic form of government was about to take hold again there. In that country when I was there, it was the economists who had the greatest freedom of speech and association, as theirs was an abstruse vocabulary little likely to endanger longterm power centers; i.e., it was unlikely to motivate popular sentiment. But the college of economy on the national university campus was the first division of that educational institution to erupt in chaos when social upheavals washed over Europe during the next decade.
Not that this was at all similar to the Galbraithian experience as a young professional.
But it is only to illustrate that the economists are first to grasp the directions of a society.
It is true enough that modern technology tools are raising insight to new levels of micromanageability while protecting the macroeconomic containers which serve as the universe in which commerce and nations interchange their goods.
But I find the best of Galbraith was his contemporaneousness, and his readiness to address that sphere of influence which was demonstrably commensurate with his reach; call it temperate economics. And though short on slogans, he always provided a neat quip to recall his passage, whether a speech, or an entire life.
It seems to me a lot of the social change he supported is likely to form the basis of many new kinds of policy and economic yardsticks for its interpretation. So his efforts were eclectically deployed, and the rewards well may be easier to attain thanks to his arduous work in the field. Which is to say I remain hopeful that his instincts, my own vision, and the future history of our country in this world will approach some of the goals which he articulated.

[Rebecca Allen, PhD, ARNP]

It's not only the "rugged individualism" myth, it's also the related one that any American can get rich if s/he just works hard enough. This was never really true, and is becoming less and less true with widening income inequality and diminishing economic mobility, but a lot of Americans still believe it. These myths make political solutions to class-based problems unpopular.

[anne]

http://www.commondreams.org/cgi-bin/print.cgi?file=/views05/0118-29.htm

January 18, 2005

Democracy's Keeper
By James Carroll - Boston Globe

John Kenneth Galbraith coined the phrase "conventional wisdom," and again and again, across a lifetime, he has shown how to transcend it. I have just read an early copy of "John Kenneth Galbraith: His Life, His Politics, His Economics" by Richard Parker, and the story of this man's life and work, wonderfully rendered in this magnum opus, offers an antidote to the public ennui, economic cruelty, and government malfeasance that poison life in America today.

I have known Parker for years and have discussed his work with him often. Like many writers, I have had the benefit of professor Galbraith's encouragement and remain amazed to realize that we are friends. But in reading Richard's book, those intimate relationships fell away as I saw with a first full clarity the scope of Galbraith's significance.

As a member of the US Strategic Bombing Survey immediately after World War II, for example, the young economist was one of those charged with evaluating the effect of the Allied air campaigns against Germany and Japan. Against claims made for air power at the time (and against Pentagon assumptions that still privilege strategic bombing), Galbraith's team showed that neither enemy manufacturing capacity nor morale were significantly hampered by bombing.

Most unconventionally, the agency's report on the effects of the atomic bombings of Hiroshima and Nagasaki concluded that "Japan would have surrendered even if the atomic bombs had not been dropped, even if Russia had not entered the war, and even if no invasion had been planned or contemplated." In 1945, Galbraith was left with a lifelong skepticism about bombing, which, alas, his country would not share.

Galbraith was John Kennedy's ambassador to India, and at a crucial point in 1962, to take another example, he drafted a blistering memo about incipient American involvement in Vietnam. The best argument that Kennedy might have pursued a different course in Vietnam is that, in Galbraith, he had a trusted adviser who argued against the folly of military intervention.

Galbraith's 1962 memo, in particular, remains a prophetic affirmation of the primacy of war prevention (aka diplomacy) over unfettered war preparation. If Galbraith's vision in the early 1960s had been enshrined in US foreign policy, America would not have been lost in the trek through the wilderness from which, despite the passage of a mythic 40 years, the nation has yet to emerge.

As an economist, Galbraith defined the structures of humane social and financial organization with more brilliance and influence than anyone else of his era. His savage critiques of greed, and government's capitulations to its captains, informed the nation again and again, both through his Democratic Party activism and through hugely popular books like "The Affluent Society" and "The New Industrial State."

At Harvard, he reinvented the role of scholar and teacher and became the beau ideal of the public intellectual. A man obsessed with details of what makes for efficient economic performance and equitable distribution of wealth, he never confused the making or accumulation of "goods" with the Good Society. For Galbraith, as Parker puts it, "what lay beyond the mere production and possession of things was always more important." ...

[Bruce Wilder]

I take a dim view of Galbraith's intellectual contributions. He was a critic of economics and society at a time, when both needed an astute critic, and he muffed the job.

The mainstream of economics in the late 1930's thru to 1960 was the mathematical codification of price theory, which reached its high points in Paul Samuelson's Ph.D. thesis and textbook, and, a bit later, in the Nobel work of Arrow and DeBreu. Keynes's work, with a little help from J.R. Hicks, Alvin Hansen, and Franco Modigliani was given a suitably mathematical formulation as a system of simultaneous equations, which made its inclusion into the mainstream of post-WWII economics seem very natural.

Galbraith's self-appointed role, beginning in the 1950's, was as a witty, popular critic. He liked to think he was the heir to Veblen, and attempted witty coinages and sociological observation, but he was not the deep thinker Veblen was, and, though there's lots of vague hand-waving in promising directions in his books, they are neither comprehensive nor coherent. He would talk at length about the importance of giant corporations and management and planning -- both private and public -- but, he was not the kind of economist, who could take that critique to root. Economics needed to come to grips, for example, with the reality that price theory cut economics off from the important issues of identifying what the economic functions of management are. Galbraith would never stoop to question some theoretical fundamental, like the production function, no matter how relevant it might be to his more sweeping, descriptive generalizations about profit-maximizing and corporate management and management of demand by marketing. No one was better placed by experience to insist that price theory reconcile itself with Berle and Means, but Galbraith was not the man for the job.

People at the time thought he was very important, and he was; he filled a critical space to overflowing with his personality, but not (unfortunately) his intellect. Economics needed to identify new territories to conquer in the late 1950's and 1960's. And, liberalism needed to re-formulate the doctrines of the New Deal for a stable, middle-class society.

Galbraith touched on some of the fundamental issues, but he was never willing to do the heavy lifting. That's a pity, because he really did not do a very good job, and left liberalism and progressivism weak and intellectually flabby, while economics, after more than a generation doing nothing, has resumed his right-ward drift.

[Aniruddha G. Kulkarni]

Everytime I read something touching by Krugman, DeLong or Amartya Sen, I wonder aren't they all 'children' of Galbraith?

[anne]

Galbraith, Schlesinger, Reinhold Neibuhr, Isaiah Berlin are among the monuments of the century:

http://www.nytimes.com/2005/09/18/books/review/18schlesinger.html?ex=1284696000&en=c7225b818a2f5ced&ei=5090&partner=rssuserland&emc=rss

September 18, 2005

Forgetting Reinhold Niebuhr
By ARTHUR SCHLESINGER JR.

THE recent outburst of popular religiosity in the United States is a most dramatic and unforeseen development in American life. As Europe grows more secular, America grows more devout. George W. Bush is the most aggressively religious president Americans have ever had. American conservatives applaud his "faith-based" presidency, an office heretofore regarded as secular. The religious right has become a potent force in national politics. Evangelicals now outnumber mainline Protestants and crowd megachurches. Billy Graham attracts supplicants by the thousand in Sodom and Gomorrah, a k a New York City. The Supreme Court broods over the placement of the Ten Commandments. Evangelicals take over the Air Force Academy, a government institution maintained by taxpayers' dollars; the academy's former superintendent says it will be six years before religious tolerance is restored. Mel Gibson's movie "Passion of the Christ" draws nearly $400 million at the domestic box office.

In the midst of this religious commotion, the name of the most influential American theologian of the 20th century rarely appears - Reinhold Niebuhr. It may be that most "people of faith" belong to the religious right, and Niebuhr was on secular issues a determined liberal. But left evangelicals as well as their conservative brethren hardly ever invoke his name. Jim Wallis's best-selling "God's Politics," for example, is a liberal tract, but the author mentions Niebuhr only twice, and only in passing.

Niebuhr was born in Missouri in 1892, the son of a German-born minister of the German Evangelical Synod of North America. He was trained for the ministry at the Synod's Eden Theological Seminary and at the Yale Divinity School. In the 1920's he took a church in industrial Detroit, the scene of bitter labor-capital conflict. Niebuhr's sympathies lay with the unions, and he joined Norman Thomas's Socialist Party. Meanwhile, New York's Union Theological Seminary, impressed by the power of his preaching and his writing, recruited him in 1928 for its faculty. There he remained for the rest of his life. He died in 1971.

Why, in an age of religiosity, has Niebuhr, the supreme American theologian of the 20th century, dropped out of 21st-century religious discourse? Maybe issues have taken more urgent forms since Niebuhr's death - terrorism, torture, abortion, same-sex marriage, Genesis versus Darwin, embryonic stem-cell research. But maybe Niebuhr has fallen out of fashion because 9/11 has revived the myth of our national innocence. Lamentations about "the end of innocence" became favorite clichés at the time.

Niebuhr was a critic of national innocence, which he regarded as a delusion. After all, whites coming to these shores were reared in the Calvinist doctrine of sinful humanity, and they killed red men, enslaved black men and later on imported yellow men for peon labor - not much of a background for national innocence. "Nations, as individuals, who are completely innocent in their own esteem," Niebuhr wrote, "are insufferable in their human contacts." The self-righteous delusion of innocence encouraged a kind of Manichaeism dividing the world between good (us) and evil (our critics).

Niebuhr brilliantly applied the tragic insights of Augustine and Calvin to moral and political issues. He poured out his thoughts in a stream of powerful books, articles and sermons. His major theological work was his two-volume "Nature and Destiny of Man" (1941, 1943). The evolution of his political thought can be traced in three influential books: "Moral Man and Immoral Society" (1932); "The Children of Light and the Children of Darkness: A Vindication of Democracy and a Critique of Its Traditional Defense" (1944); "The Irony of American History" (1952).

In these and other works, Niebuhr emphasized the mixed and ambivalent character of human nature - creative impulses matched by destructive impulses, regard for others overruled by excessive self-regard, the will to power, the individual under constant temptation to play God to history. This is what was known in the ancient vocabulary of Christianity as the doctrine of original sin. Niebuhr summed up his political argument in a single powerful sentence: "Man's capacity for justice makes democracy possible; but man's inclination to injustice makes democracy necessary." (Niebuhr, in the fashion of the day, used "man" not to exculpate women but as shorthand for "human being.")

The notion of sinful man was uncomfortable for my generation. We had been brought up to believe in human innocence and even in human perfectibility. This was less a liberal delusion than an expression of an all-American DNA. Andrew Carnegie had articulated the national faith when, after acclaiming the rise of man from lower to higher forms, he declared: "Nor is there any conceivable end to his march to perfection." In 1939, Charles E. Merriam of the University of Chicago, the dean of American political scientists, wrote in "The New Democracy and the New Despotism": "There is a constant trend in human affairs toward the perfectibility of mankind. This was plainly stated at the time of the French Revolution and has been reasserted ever since that time, and with increasing plausibility." Human ignorance and unjust institutions remained the only obstacles to a more perfect world. If proper education of individuals and proper reform of institutions did their job, such obstacles would be removed. For the heart of man was O.K. The idea of original sin was a historical, indeed a hysterical, curiosity that should have evaporated with Jonathan Edwards's Calvinism....

[Tom]

"My favorite JKG quote: "The trouble with competition is that in the end somebody wins.""

The fallacy of the zero sum economy is the biggest problem of the more 'liberal' economists.

In such a competition one does win, but both are better off. Individual A produces 2x his original production and wins while Individual B only produces 1.5x. The loser is still 50% better off for having competed. In America, the poor live in larger houses, have more 'things' than the median in Europe because of such competition.

[anne]

"In America, the poor live in larger houses, have more 'things' than the median in Europe because of such competition."

Like, say, health insurance, um, free university schooling, well, where are these larger houses of the American poor with things, like, say, New Orleans? Competition, however, "not that there's anything wrong with it" :)

[anne]

Again, why, I wonder, are European companies so darned competitive with American? Care to look at stock returns in Sweden, Denmark, France, really, France, Norway, Finland, well, Finland will make you cry for not having owned the index so avoid looking at Finland :) French companies, you mean, are competitive? Really? Really. Please avoid Finland for fear of social shock :)

[anne]

Please, tell me what Finland has done all these years to deserve such a stock market? Surely the Finns have no sense of competition, and they are the worst golfers :)

[anne]

Yes, yes, the Finns live in terribly small homes, and, oh, the snow, the snow, the snow....

[kevin quinn]

Thank you, Brad. Eloquent in the service of truth. One of the tallest trees in the forest has been felled.

Kevin Quinn

[MarkC]

The inability of Galbraith to take root in a land of "rugged individualism" is rather Weberian.
I sort of picture Brad in a cowboy hat, setting next to J.K.G. on a porch and saying:
"Not in the US of A, John Kenneth. That social democracy dog jess won't hunt."
Okay, I know it is a lie, but it is one of the better kind of lies, the kind that conjure up a picturesque narrative.

[Tom]

Anne,

Sweden purchasing power parity - $25,400 (2002 est.)
Denmark purchasing power parity - $29,000 (2002 est.)
France purchasing power parity - $25,700 (2002 est.
Norway purchasing power parity - $31,800 (2002 est.)
Finland purchasing power parity - $26,200 (2002 est.)
US purchasing power parity - $36,300 (2001 est.)

[Fluffy Economist]

You may be heartened, Bradley, that there are undergraduate economists out there who read Galbraith. This, however, is no thanks to our departments who teach economics as a unified theory instead of one way of understanding the world. We are indeed steeped in Samuelson.

Institutional economics, however, is making a resurgence. Its use of evolutionary theory and interdisciplinary nature, even at this nascent stage, shows a remarkable aount of innovation. Its strength is the recognition that a socially situated economy cannot be reduced to mathematical formulae, that the answers to economic questions often need a more qualitative than quantitative explanation.

I think Galbraith's are ideas whose time is yet to come. Which is a shame, because it would be nice if I had a graduate course in economics to go to.

[Fluffy Economist]

The last sentence was meant to read: "Which is a shame, because it would be nice if I had a graduate course in institutional economics to go to."

Would have sounded so slick too.

[Phil from New York]

I'm 57, so like all those 70-year-olds you mentioned, I remember Galbraith in his heyday. Several comments:

1. If we can get rid of Bush and save our democracy, historians, journalists, and thoughtful people 100 years from now will look back on Galbraith's work and wonder why nobody seemed to listen to him.

2. Even back in the '60s, my professors criticized him as a great writer but not a great economist. But he influenced more regular people than probably any economist other than Keynes. He made economics understandable and even enjoyable and helped normal people (i.e., non economists) relate economics to the real world.

3. Sadly, in today's America run by idiots and christo-fascists, he is, indeed, anachronistic. But don't blame him for failing to be influential enough. When I was in college in the '60s, I thought he was one of the visionaries helping us to shape the future. That this is indeed not the case is not Galbraith's fault for failing to be academic enough -- it is our fault for not building on his vision and allowing America to deteriorate into a society that has ceased being the America that he loved.

He saw America as it could become. To borrow from Shaw and Robert Kennedy, John Kenneth Galbraith dreamed things that never were and asked why not. How many people in public life today could garner that accolade? Not many.

[ob]

You don't think those PPP numbers have anything to do with dollar price distortions do you? :)

I wouldn't want to be making claims about relative national welfares myself, but PPP certainly yeilds an incomplete picture (much like stock market returns).

[Ari]

John Kenneth Galbraith was a towering presence about campus, and there will come a time again when the strength of his work is fully understood.

Why Americans so often use Europe as a negative example is beyond me, but try living in Paris or Amsterdam for a for months and will you ever change attitudes. Anne is right, and European companies are competitive and stock prices changes show this clearly. As for purchasing power, simply remember health care or no university tuition and the numbers look a lot different. Remember also the much narrower income distribution.

[gordon]

Tom might like to explore the Oligopoly Watch site at http://www.oligopolywatch.com/

[Gray]

"Economics is extremely useful as a form of employment for economists" JKG

[Charles]

Tom, if you've ever lived in Europe, you know that all you're really sacrificing is some square footage on your home and (maybe) a car. In return, you get guaranteed health care, a secure retirement, good rapid transit, many weeks of extra vacation, a real 40 hour (or less) week and-- surprisingly-- more opportunity (there's a good paper over at Center for American Progress showing the latter).

For quality of life, Europe is very hard to beat.

[AE]

Tom Ashbrook of NPR's On Point found the following quote by JKG which I don't see above:

JKG was denounced as an economist of more powerhouse style than substance. He responded "If you can't comfort the afflicted, then afflict the comfortable."

[James Galbraith]

This is a bit late, but I have only this to say.

Thank you, Brad.

James Galbraith

[James Galbraith]

This is a bit late, but I have only this to say.

Thank you, Brad.

James Galbraith

[anne]

http://www.calvorn.com/gallery/photo.php?photo=6513&u=99|1|...

Ovenbird Perched on a Branch
New York City--Central Park, The Ramble.

Ah, the wonderful Galbraiths :)

[dlw]

I agree that the failure to change the way many USAmericans see themselves and the Economy is at root of the decline of Galbraithian's Institutionalism.

I think though it would behoove you to mention a bit of work like that of Geoffrey Hodgson and Warren Samuels. Institutionalists of the Ayres-Veblen stock declined for some pretty good reasons. And one could say that Galbraith did not do as much as he might have done to help out other institutionalists.

I also think that the sorts of world-view changes needed in the US failed in part because of persistent cultural conflicts and a failure to seek more culturally conservative approaches to making changes.

The very tone of Galbraith comes across easily as elitist and goes against the more down-to-earth approach of activists like Saul Alinsky, who was imminently more adaptable and flexible in fostering changes among groups.

dlw

[Methinks]

Why Americans so often use Europe as a negative example is beyond me, but try living in Paris or Amsterdam for a for months and will you ever change attitudes. - Ari

What do you like best about Europe? The constant riots in Paris? The 23% youth unemployment rate? Endless strikes? Smaller houses? The higher death rate from cancer? Perhaps the derth of competent doctors? How about high barriers to entry in almost every business?

There's a reason Europeans, like me, come here. This is a short list. Visiting Europe for a few months is really not the same as living there.