The Abiding Economics of John Kenneth Galbraith

to read the 10-page article by Marc Lee and James Galbraith, June 7, 2007, click on

http://www.progressive-economics.ca/2007/06/04/the-inaugural-john-kennet...

I want however to speak about Galbraith the economist, and to go a bit beyond the comment I made at his 90th birthday almost nine years back. On that occasion I asserted — what I believe to be true – that as an economist he transcends fame. In the long run, his name will be recorded alongside those of Adam Smith, Karl Marx, Thorstein Veblen, and John Maynard Keynes, among the greatest reform economists of all time...

Like Veblen, Galbraith in my view deserves to be recorded as a transforming figure. Like Veblen, he offers an approach, a manner of thought, a structure — to an economics that manifestly still waits, and greatly needs, to be transformed...

1. From The Great Crash, we have of course the conviction that financial panics affect real activity. No one in the 19th century or with experience of agriculture ever seriously doubted that the economy runs on credit or that real activity depends on banks. Only in the higher reaches of academic life could such a thing be denied. The denial, nevertheless, took powerful hold. The Great Crash is a wonderful corrective. It has remained continuously in print for over fifty years – outselling all of Galbraith’s books into the bargain...

2. The Affluent Society is now remembered for its endearing, enduring phrases, above all the “concept of the conventional wisdom,” and for its evocative passages on private opulence and public squalor, such as the one about the “family which takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour [and] passes through cities that are badly paved, made hideous by litter, blighted buildings, and posts for wires that should long since have been put underground…” before going on to “picnic on exquisitely packaged food from a portable icebox by a polluted stream [and spending] the night at a park which is a menace to public health and morals.”...

3. Then we have the theory of economic organization in The New Industrial State. Here Galbraith built on the foundation of Berle and Means, on Joseph Schumpeter and to some extent on Max Weber, on the behavioral formalisms of Herbert A. Simon, and on his own American Capitalism of 1952 and its concept of countervailing power. I love the opening lines of American Capitalism, and used them to open my father’s memorial service a year ago:

“It is told that the such are the aerodynamics and wing-loading of the bumble-bee that, in principle, it cannot fly. It does, and the knowledge that it defies the august authority of Isaac Newton and Orville Wright must keep the bee in constant fear of a crack-up. One can assume, in addition, that it is apprehensive of the matriarchy to which it is subject, for this is known to be an oppressive form of government. The bumblebee is a successful but an insecure insect.”