John Kenneth Galbraith
| Western economists 20th century economists (Institutional economics) | |
 | |
| Full name | John Kenneth Galbraith |
|---|---|
| Birth | October 15, 1908 Iona Station, Ontario, Canada |
| Death | April 29, 2006 (aged 97) Cambridge, Massachusetts |
| School/tradition | Institutional economics |
| Main interests | Economics, Political economy |
| Notable ideas | Keynesian economics, institutional economics |
John Kenneth Galbraith, OC (October 15, 1908–April 29, 2006) was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and progressivism. His books on economic topics were bestsellers in the 1950s and the 1960s.
Galbraith was a prolific author who produced four dozen books and over a thousand articles on various subjects. Among his most famous works was a popular trilogy on economics, American Capitalism (1952), The Affluent Society (1958), and The New Industrial State (1967). He taught at Harvard University for many years. Galbraith was active in politics, serving in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy and Lyndon B. Johnson; and among other roles served as United States Ambassador to India under Kennedy.
He was one of the few honorees who received the Presidential Medal of Freedom twice. He received one in 1946 from President Truman and another in 2000 from President Bill Clinton.[1] He was also awarded the Order of Canada in 1997[2] and, in 2001, the Padma Vibhushan, India's second highest civilian award, for his contributions to strengthening ties between India and the United States.[3]
Life
Early life and teaching
Galbraith was born to Canadians of Scottish descent, Bruce Alexander Galbraith and Sarah Catherine Kendall, in Iona Station, Ontario, Canada, and was raised in Dunwich Township, Ontario. He went to school at Sugar-Salem High School. His father was a farmer and school teacher and mother a political activist. He was sent to boarding school Appleby College of nearby Oakville, Ontario for the final two years of high school. Both his parents were supporters of the United Farmers of Ontario in the 1920s. After initially studying agriculture, Galbraith graduated from the Ontario Agricultural College (then affiliated with the University of Toronto, and now the University of Guelph) with a B.Sc degree in 1931, and then received an M.Sc (1933) and Ph.D in Agricultural Economics (1934) from the University of California, Berkeley. In 1934, he also became a tutor at Harvard University. In 1937, he became a United States citizen. In the same year, he took a year-long fellowship at Cambridge University, England, where he became influenced by John Maynard Keynes, then lived in Berlin for several months in 1938, attending an international economic conference and developing his ideas. Galbraith was a very tall man, growing to a reported height of 6'9" [206 cm].
Galbraith taught intermittently at Harvard in the period 1934 to 1939.[4] From 1939 to 1940, he taught at Princeton University. From 1943 until 1948, he served as editor of Fortune magazine. In 1949, he was appointed professor of economics at Harvard.
World War II and Price Administration
During World War II, Galbraith, charged with keeping inflation from crippling the war effort, served as deputy head of the Office of Price Administration. Although little appreciated at the time, the actual power he wielded in this position was so great that he joked later that the rest of his career had been downhill. At the end of the war, he was asked to be one of the leaders of the Strategic Bombing Surveys of both Europe and Japan. These reports concluded the costs outweighed the anticipated benefits and did not shorten the war in the case of Germany. However, they found that the war against Japan had proved beyond question the success of bombing and went on to call for additional funding and the creation of an independent American Air Force (AAF). After the war, he became an adviser to post-war administrations in Germany and Japan.
Political posts under Kennedy
During his time as an adviser to President John F. Kennedy, Galbraith was appointed as United States Ambassador to India from 1961 to 1963. His rapport with President Kennedy was such that he regularly bypassed the State Department and sent his diplomatic cables directly to the President.[5] In India, he became an intimate of Prime Minister Jawaharlal Nehru, and extensively advised the Indian government on economic matters; he harshly criticised Louis Mountbatten, the last Viceroy of British rule, for Mountbatten's passive role in the Partition of India in 1947 and the bloody partition of the Punjab and Bengal. While in India, he helped establish one of the first computer science departments, at the Indian Institute of Technology in Kanpur, Uttar Pradesh. Even after leaving office, Galbraith remained a friend and supporter of India and even hosted a lunch for Indian students at Harvard every year on graduation day.
Because of his recommendation, First Lady of the United States Jacqueline Bouvier Kennedy undertook her diplomatic missions in India and Pakistan.
Family
Galbraith married Catherine Merriam Atwater on September 17, 1937, whom he met while she was a Radcliffe student. They resided in Cambridge, Massachusetts, and had a summer home in Newfane, Vermont. They had four sons: J. Alan Galbraith is a partner in the prominent Washington D.C. law firm Williams & Connolly; Douglas Galbraith died in childhood of leukemia; Peter W. Galbraith has been a US diplomat who served as Ambassador to Croatia and is a widely published commentator on American foreign policy - particularly in the Balkans and the Middle East; James K. Galbraith is a prominent progressive economist at the University of Texas Lyndon B. Johnson School of Public Affairs. The Galbraiths also have ten grandchildren. [3]
Later life and recognition
In 1972 he served as president of the American Economic Association.[6]
In 1985, the American Humanist Association named him the Humanist of the Year.
In 1997 he was made an Officer of the Order of Canada[7] and in 2000 he was awarded his second U. S. Presidential Medal of Freedom. Also in 2000, he was awarded the Leontief Prize for his outstanding contribution to economic theory by the Global Development and Environment Institute.
He was awarded an honorary doctorate from Memorial University of Newfoundland at the fall convocation of 1999.[8]
On April 29, 2006, Galbraith died at Mount Auburn Hospital in Cambridge, Massachusetts of natural causes, after a two-week stay in the hospital.
Works
Although he was a president of the American Economic Association, Galbraith was considered an iconoclast by many economists. This is because he rejected the technical analyses and mathematical models of neoclassical economics as being divorced from reality. Rather, following Thorstein Veblen, he believed that economic activity could not be distilled into inviolable laws, but rather was a complex product of the cultural and political milieu in which it occurs. In particular, he believed that important factors such as advertising, the separation between corporate ownership and management, oligopoly, and the influence of government and military spending had been largely neglected by most economists because they are not amenable to axiomatic descriptions. In this sense, he worked as much in political economy as in classical economics.
His work included several best selling works throughout the fifties and sixties. After his retirement, he remained in the public consciousness by continuing to write new books and revise his old works as well as presenting a major series on economics for BBC television in 1977.[9] However, from the Nixon presidency onwards, he was regarded as something of an anachronism, as the public discourse centered more and more around the pro-market, small-government, anti-regulation and low-tax orthodoxies which came to prominence in the 1980s. In addition to his books, he wrote hundreds of essays and a number of novels. Among his novels, A Tenured Professor in particular achieved critical acclaim.
Economics books
In American Capitalism: The Concept of Countervailing Power, published in 1952, Galbraith outlined how the American economy in the future would be managed by a triumvirate of big business, big labor, and an activist government. Galbraith termed the reaction of lobby groups and unions "countervailing power." He contrasted this arrangement with the previous pre-depression era where big business had relatively free rein over the economy.
His 1954 bestseller The Great Crash, 1929 describes the famous Wall Street melt down of stock prices and how markets progressively become decoupled from reality in a speculative boom. The book is also a platform for Galbraith's keen insights, and humour, into human behaviour when wealth is threatened. It has never been out of print.
In his most famous work, The Affluent Society (1958), which also became a bestseller, Galbraith outlined his view that to become successful, post-World War II America should make large investments in items such as highways and education using funds from general taxation.
Galbraith also critiqued the assumption that continually increasing material production is a sign of economic and societal health. Because of this Galbraith is sometimes considered one of the first post-materialists. In this book, he popularized the phrase "conventional wisdom".(Galbraith, 1958 The Affluent Society: Chapter 2 "The Concept of Conventional Wisdom")
Galbraith worked on the book while in Switzerland, and had originally titled it Why The Poor Are Poor but changed it to The Affluent Society at his wife's suggestion.[10]
The Affluent Society contributed (likely to a significant degree, given that Galbraith had the ear of President Kennedy [11]) to the "war on poverty," the government spending policy first brought on by the administrations of Kennedy and Johnson.
In The New Industrial State (1967), Galbraith argues that very few industries in the United States fit the model of perfect competition. A third related work was Economics and the Public Purpose (1973), in which he expanded on these themes by discussing, among other issues, the subservient role of women in the unrewarded management of ever-greater consumption, and the role of the technostructure in the large firm in influencing perceptions of sound economic policy aims.
In A Short History of Financial Euphoria (1990), He traces speculative bubbles through several centuries, and argues that they are inherent in the economic system because of "mass psychology" and the "vested interest in error that accompanies speculative euphoria." Also, financial memory is "notoriously short": what currently seems to be a "new financial instrument" is inevitably nothing of the sort. Galbraith cautions: "The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version." Crucial to his analysis is the assertion that the common factor in boom and bust is the creation of debt to finance speculation, which "becomes dangerously out of scale in relation to the underlying means of payment".
He was an important figure in 20th century institutional economics, and provides perhaps the exemplar institutionalist perspective on Economic Power[12].
Galbraith cherished The New Industrial State and The Affluent Society as his two best.[13] Economist and friend of Galbraith Michael Sharpe visited Galbraith in 2004, on which occasion Galbraith gifted him with a copy of what would be Galbraith's last book, The Economics of Innocent Fraud. Galbraith confided in Sharpe that "[t]his is my best book", an assertion Galbraith delivered "a little mischievously."
Some of Galbraith's Ideas
In The Affluent Society Galbraith asserts that classical economic theory was true for the eras before the present, which were times of "poverty"; now, however, we have moved from an age of poverty to an age of "affluence," and for such an age, a completely new economic theory is needed.
Galbraith's main argument is that as society becomes relatively more affluent, so private business must "create" consumer wants through advertising, and while this generates artificial affluence through the production of commercial goods and services, the public sector becomes neglected as a result. He points out that while many Americans were able to purchase luxury items, their parks were polluted and their children attended poorly maintained schools. He argues that markets alone will underprovide (or fail to provide at all) for many public goods, whereas private goods are typically 'overprovided' due to the process of advertising creating an artificial demand above the individual's basic needs.
Galbraith proposed curbing the consumption of certain products through greater use of consumption taxes, arguing that this could be more efficient than other forms of taxation, such as labour or land taxes.
Galbraith's major proposal was a program he called "investment in men" — a large-scale publicly-funded education program aimed at empowering ordinary citizens. Galbraith wished to entrust citizens with the future of the American republic.
Criticism of Galbraith's Work
Galbraith's work, in general, and The Affluent Society, in particular, have drawn sharp criticism from free-market supporters at the time of its publication. Monetarist Milton Friedman in "Friedman on Galbraith, and on curing the British disease" views Galbraith as a 20th century version of the early 19th century Tory radical of Great Britain. He asserts that Galbraith believes in the superiority of aristocracy and in its paternalistic authority, that consumers should not be allowed choice and that all should be determined by those with "higher minds":
Richard Parker, in his biography John Kenneth Galbraith: His Life, His Economics, His Politics, characterizes Galbraith as more complex. Galbraith's primary purpose in Capitalism: The Concept of Countervailing Power (1952) was, ironically, to show that big business was now necessary to the American economy to maintain the technological progress that drives economic growth. However, Galbraith saw the necessity of "countervailing power," not only including government regulation and oversight, but also collective bargaining, and the suasion that large retailers and distributors could bring to bear on large producers and suppliers. In The New Industrial State (1967), Galbraith argued that the dominant American corporations had created a technostructure that closely controlled both consumer demand and market growth through advertising and marketing. While Galbraith defended government intervention, Parker notes that he also believed that government and big business worked together to maintain stability.[15]
Paul Krugman, the influential, Nobel Prize–winning Princeton University professor and New York Times op-ed columnist, has denigrated Galbraith's stature as an economist. In Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations, he calls Galbraith a "policy entrepreneur" – an economist who writes solely for the public, as opposed to one who writes for other professors, and who therefore makes unwarranted diagnoses and offers over-simplistic answers to complex economic problems. He asserts that Galbraith was never taken seriously by fellow academics, who viewed him as more of a "media personality". For example, Krugman believes that Galbraith's work The New Industrial State is not considered to be "real economic theory", and that Economics in Perspective is "remarkably ill-informed".[16]
Memoirs
The Scotch (published in the UK under two alternative titles as Made to Last and The Non-potable Scotch: A Memoir of the Clansmen in Canada)[17] (illustrated by Samuel H. Bryant), Galbraith's account of his boyhood environment in southern Ontario, was written in 1963.
Galbraith's 1981 memoir, A Life in Our Times[18] stimulated discussion of his thought, his life and times after his retirement from academic life. In 2004, the publication of an authorised biography, John Kenneth Galbraith: His Life, His Politics, His Economics[19] by friend and fellow progressive economist Richard Parker, renewed interest in his career and ideas.
