Tuesday, May 02, 2006

John Kenneth Galbraith, 1908-2006

The political economist, social critic, and public intellectual John Kenneth Galbraith died on April 29, 2006. I agree with Brad DeLong that one of the most interesting and intellectually substantial obituaries is the one by Stephanie Flanders in the Financial Times, which begins:
Asked to name an economist, many Americans over the age of 30 would think of John Kenneth Galbraith, who has died at the age of 97. But he was both somewhat less and much more than a professional economist: he was an institution of postwar US life.
The rest is below.

=> This is also a good occasion to review and ponder what Brad DeLong himself wrote about Galbraith in 2005, "Sisyphus as Social Democrat" (Foreign Affairs, May/June 2005).
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. [....]

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. [....]
[Having considered how this might have come about, and what it tells us about American political culture, DeLong concluded:]
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.
Perhaps. But read the whole thing.

--Jeff Weintraub

Financial Times
April 30, 2006

Obituary: John Kenneth Galbraith
By Stephanie Flanders

Asked to name an economist, many Americans over the age of 30 would think of John Kenneth Galbraith, who has died at the age of 97. But he was both somewhat less and much more than a professional economist: he was an institution of postwar US life.

“After visiting Concord, Lexington, the Old North Church and Harvard, travellers are moved, however oddly, to view Galbraith,” he once wrote. The elder statesman of the Harvard economics department, Galbraith was much else: a New Deal bureaucrat, war-time planner, journalist, adviser of presidents and presidential hopefuls, diplomat, novelist. And, always and until the last, a committed polemicist. “If you can’t comfort the afflicted,” he told Harvard graduands, “then afflict the comfortable.”

Liberal activists who believed, with Galbraith, that economies neither could nor should be left to an invisible hand lost almost every major political battle of the 1970s and 1980s. Yet while the triumph of free-market economics took his ideas further from the political mainstream, they did not make them irrelevant.

Indeed, many of the dangers of untrammelled markets he had described in the 1950s and 1960s, not least the coexistence of “private opulence and public squalor”, seem rather more obvious in George W. Bush’s America than they had been in Eisenhower’s or Kennedy’s. The return of an income distribution that looks increasingly similar to that of a century ago must make his work increasingly relevant.

Galbraith’s persistent criticisms of Ronald Reagan’s (and Margaret Thatcher’s) policies culminated in the publication, in 1992, of a surprisingly influential book, The Culture of Contentment. It described how the emergence of a contented, voting majority in the US and elsewhere was hastening the emergence of a new and dangerously marginalised underclass; offering, in the words of one reviewer, “both a compelling logic and a tempting vindication of those disillusioned by electoral defeat”.

In many ways, however, the 1992 book was a follow-up to an earlier, far more influential, polemic, The Affluent Society, published in 1958. No other academic title of that era, (with the exception, perhaps, of the sociologist, David Reisman’s The Lonely Crowd) moved so effortlessly on to the bestseller lists, or had such a lasting impact on contemporary debate.

Today it is largely remembered for introducing phrases such as “the conventional wisdom”, or “the bland leading the bland” into common circulation. Yet it is important to stress the novelty of some of the underlying ideas. Few had spoken before of a “consumer society”, or worried about the implications of structuring an economy solely round consumption. These days, the notion that more may not always be better for the environment, or for the balance between private and public goods, is commonplace.

Time has been less kind to some of his other books: The New Industrial State, for example, a paean to economic planning by government and large-scale corporations, written in 1967, became outdated in the turbulent 1970s and 1980s.

But at least two of his historical books, The Great Crash, a layman’s guide to the stock market crash of 1929, and his later short compendium of booms and busts throughout history, A Short History of Financial Euphoria, published in 1990, have become classics of the genre, admired by readers on all sides of the political divide. Both works exemplified an abiding feature of Galbraith’s writings: a fascination with the power of conventional ideas, especially economic ones (or mass lunacy, in the case of financial booms).

Born in 1908 in Iona Station, a Scottish farming community of 23 souls in Ontario, Galbraith began his academic career inauspiciously, studying animal husbandry and soil management at Ontario Agricultural College in a lonely town called Guelph.

After graduating in 1931, he went on to complete a PhD in agricultural economics at the University of California, Berkeley, followed by a series of teaching and research positions at Harvard, Cambridge University, and Princeton.

When Galbraith went to Washington in 1934 to work for the Agricultural Adjustment Administration he was one of many flocking to the capital to join the early days of the New Deal. Few, however, stayed so closely connected to the world of public policy for so long.

He moved on to the American Office of Price Administration, where he ran the war-time system of price controls. Later, critics often claimed that he had deduced false lessons from this experience about the efficiency of government planning. At the time, however, the controls were deemed to have been very successful. His spell at the AOPA and, later, at the State Department running both the Strategic Bombing Survey and Office of Economic Security earned him both the Medal of Freedom and the President’s Certificate of Merit.

It was after running Kennedy’s successful 1960 campaign that Galbraith spent a controversial time in India as US Ambassador. He later claimed, only half jokingly, that the job kept him occupied for about an hour a day. (This in a country then constantly on the brink of war with at least one if its neighbours.)

After Kennedy’s death, Galbraith remained in the Johnson administration, before resigning over Vietnam to become a leading opponent of the war. “There are times in politics,” he said in 1968 “when you must be on the right side and lose.” He was rarely out of such times thereafter.

Galbraith was not a modest man: he did not suffer fools gladly, and, at 6ft 8½, was able to make those who did not measure up feel very small indeed. But it is fair to say that he was always more concerned with the role of economists and economic ideas in the world than with his own place in economics.

Galbraith often berated his academic colleagues for not perceiving how mainstream economic instruction both concealed and supported the “real” forces guiding economic and social affairs. “All economic history, including Galbraith himself, has been the expression of vested interest.”

His own vested interest is best illustrated by the quotation from the 19th century economist, Alfred Marshall, with which he introduced The Affluent Society: that “the economist, like everyone else, must concern himself with the ultimate aims of man”.

“Economics is not a science,” he argued in a 1987 book, but a “continuing interpretation of current circumstances. All its useful propositions can be stated in clear, unembellished and generally agreeable English”.

Galbraith’s numerous books tended to be all these things; and, even rarer in economic writing, they were funny.

The first line of The Affluent Society is typical: “wealth is not without its advantages and the case to the contrary, although it has often been made, has never proved widely persuasive.” Though his influence waned in later years, Galbraith’s “fatal fluency”, as he called it, and wry sense of humour ensured that people would pay attention to what he said, even if they seldom paid heed.

Galbraith was formidably productive, continuing to write articles and books into his mid-90s; The Economics of Innocent Fraud appeared in 2004. People also continued to read what he wrote. Of his contributions to American public life over the years, his rare urge, and even rarer ability, to make important economic ideas both comprehensible and amusing will be most missed.