Sunday, April 30, 2006

John Kenneth Galbraith (1908-2006)

A famous author; a coiner of phrases that have become common currency among educated Americans; a shaper of the way those educated Americans viewed society, including the economy, for at least a generation; in charge of setting prices throughout the United States during World War II; a major contributer to the United States Strategic Bombing Survey; an inspiration for Kennedy/Johnson anti-poverty schemes; an Ambassador to India; a president of the American Economic Association; a president of the American Academy of Arts and Letters; a Harvard professor with an endowed chair; a recipient of many honorary degrees - Galbraith overtowered almost any other economist in the United States in the last fifty years.

In directing his countrymen and women's attention to - or persuading them of - the coexistence of private affluence and public squalor, Galbraith attempted to both describe an aspect of the world and to improve matters. This coexistence has something to do with such distinctions as between goods tending to be invididually consumed and those collectively consumed, between those goods which are easily sold on markets and those which are not. Here is a well-known passage from Galbraith's pen:

"The family which takes its mauve and cerise, air-conditioned, power-steered, and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards, and posts for wires that should long since have been put underground. They pass on into a countryside that has been rendered largely invisible by commercial art. (The goods which the latter advertise have an absolute priority in our value system. Such aesthetic considerations as a view of the countryside accordingly come second. On such matters we are consistent.) They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius?" -- John Kenneth Galbraith (1958). The Affluent Society

This problem of social balance fits into a larger Galbraithian thesis. Galbraith argued that certain habits of thought were adapted to a period when goods were primary necessities, when the importance of production was in the output. Nowdays in, say, the United States, he argued, production is of importance more for providing employment, the income to purchase goods, feelings of self-worth of the producers, etc. When he propounded this thesis, and perhaps even today, conventional wisdom still reflects the former situation.

Galbraith's concept of the "Conventional wisdom" parallels, in some sense, Gramsci's concept of hegemony. Galbraith looked at whose needs economists serve:

"The most commonplace features of neo-classical and neo-Keynesian economics are the assumptions by which power, and therewith political content, is removed from the subject. The business firm is subordinate to the instruction of the market and, thereby, to the individual or household. The state is subordinate to the instruction of the citizen...

The decisive weakness in neoclassical and neo-Keynesian economics is not the error in the assumptions by which it elides the problem of power. The capacity for erroneous belief is very great, especially where it coincides with convenience. Rather, in eliding power - in making economics a nonpolitical subject - neoclassical theory by the same process destroys its relation with the real world...In consequence neoclassical and neo-Keynesian economics is relegating its players to the social sidelines where they either call no plays or urge the wrong ones...

This is what economics now does. It tells the young and susceptible and the old and vulnerable that economic life has no content of power and politics...Such an economics is not neutral. It is the influential and invaluable ally of those whose exercise of power depends on an acquiescent public. If the state is the executive committee of the great corporation and the planning system, it is partly because neoclassical economics is its instrument for neutralizing the suspicion that this is so. I have spoken of the emancipation of the state from economic interest. For the economist there can be no doubt as to where this task begins. It is with the emancipation of economic belief." -- J. K. Galbraith (1973). "Power and the Useful Economist", American Economic Review. V. LXIII, 1, (March).

In studying corporate power, Galbraith built on the work of a diverse set of economists, including Gardiner and Means, Michel Kalecki, John Maynard Keynes, Robin Marris, Edith Penrose, and Thorstein Veblen. One can see in Galbraith theories of dual markets and administered prices, theories that correspond to the realities of modern industrial economies.

Some of Galbraith's work, like Veblen's, is important to Feminist Economics.

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