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John Kenneth "Ken" 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 from the 1950s through the 1970s and he filled the role of public intellectual in this period on matters of economics.
Galbraith was a prolific author who produced four dozen books and over a thousand articles on various subjects.
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Quotations
But now, as throughout history, financial capacity and political perspicacity are inversely correlated.
The Great Crash 1929 (1954)
By all but the pathologically romantic, it is now recognized that this is not the age of the small man.
The New Industrial State (1967)
If all else fails immortality can always be assured by adequate error.
Money: Whence It Came, Where It Went (1975)
In any great organization it is far, far safer to be wrong with the majority than to be right alone.
In the autumn of 1929 the mightiest of Americans were, for a brief time, revealed as human beings.
The Great Crash 1929 (1954)
In the United States, though power corrupts, the expectation of power paralyzes.
ibid.
Encyclopedia
John Kenneth "Ken" 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 from the 1950s through the 1970s and he filled the role of public intellectual in this period on matters of economics.
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. He was also awarded the Order of Canada in 1997 and, in 2001, the Padma Vibhushan, India's second highest civilian award, for his contributions to strengthening ties between India and the United States.
Life
Early life and teaching
Galbraith was born to Canadians of Scottish descent, Archibald "Archie" Galbraith and Sarah Catherine Kendall, in Iona Station, Ontario, Canada, and was raised in Dunwich Township, Ontario. He had three siblings: Alice, Catherine and Archibald William (Bill). His early school years were spent at a one room school on Willy's Sideroad, which is still standing. The family farm is on Thomson Line. He went to school at Dutton High School. His father was a farmer and school teacher and mother a political activist. By the time he was a teenager, he had adopted the name Ken, and later disliked being called John. 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 traveled in Europe 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. 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. Because wartime production needs mandated large budget deficits and an accomodative monetary policy, the outbreak of inflation and a runaway wage-price spiral was seen as a very real possibility. In 1942, Roosevelt issued a General Maximum Price Regulation, followed a year later by a "Hold the Line Order" which froze prices and gave the OPE power to keep prices in check. The OPA itself - through its Consumer Division - mobilized the public on behalf of these guidelines, reducing the likelihood of "cheating" by those who would seek higher wages or prices. The result was that wages and prices were kept in check, and the U.S. enjoyed rapid growth and price stability through the war.
Although little appreciated at the time, the actual power Galbraith wielded in this position was so great that he joked later that the rest of his career had been downhill. Indeed, congressional and business backlash against the OPA meant that Galbraith would be forced out in 1943, eventually replaced by advertising executive Samuel Bowles.
At the end of the war, Galbraith 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. 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.
Later life and recognition
In 1972 he served as president of the American Economic Association. The Journal of Post Keynesian Economics benefited from Galbraith's support, and he served as the chairman of its board from its beginning.
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 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.
The library in Dutton was renamed the John Kenneth Galbraith Reference Library in honour of Ken, his attachment to the library and his contributions to the new building.
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. While some considered his views anachronistic during the pro-market, small-government, anti-regulation and low-tax orthodoxies which came to prominence in the 1980s, the downfall of those ideas' popularity with the late 2000's economic crisis has awoken interest in his theories once again.
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 coined and 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.
The Affluent Society contributed (likely to a significant degree, given that Galbraith had the ear of President Kennedy ) 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 (1994), 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.
Galbraith cherished The New Industrial State and The Affluent Society as his two best. 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
Galbraith's main ideas focused around the influence of the market power of large corporations. He believed that this market power weakened the widely-accepted principle of consumer sovereignty, allowing corporations to be price makers, rather than price takers. allowing corporations with the strongest market power to increase the production of their goods beyond an efficient amount. He further believed that market power played a major role in inflation and argued that corporations and trade unions could only increase prices to the extent that their market power allowed them to. He argued that in situations of excessive market power, price controls effectively controlled inflation, but cautioned against using them in markets that were basically efficient such as agricultural goods and housing. He noted that price controls were much easier to enforce in industries with relatively few buyers and sellers. Galbraith's view of market power was not entirely negative; he also noted that the power of US firms played a part in the success of the US economy.
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. 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. This emphasis on the power of advertising and consequent overconsumption may have anticipated the drop in savings rates in the USA and elsewhere in the developing world.
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.
of the Review of Political Economy was dedicated to to John Kenneth Galbraith's ideas.
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":
Many reformers – Galbraith is not alone in this – have as their basic objection to a free market that it frustrates them in achieving their reforms, because it enables people to have what they want, not what the reformers want. Hence every reformer has a strong tendency to be averse to a free market.
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.
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".
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) (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 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 by friend and fellow progressive economist Richard Parker, renewed interest in his career and ideas.
Bibliography
- Modern Competition and Business Policy, 1938.
- A Theory of Price Control, 1952.
- American Capitalism: The Concept of Countervailing Power, 1952.
- The Great Crash, 1929, 1954.
- Economics and the Art of Controversy, 1955.
- The Affluent Society, 1958.
- Perspectives on conservation, 1958. (Editor)
- The Liberal Hour, 1960
- Economic Development in Perspective, 1962.
- The Scotch, 1963
- The McLandress Dimension, 1963 (pseudonym Mark Epernay)
- Economic Development, 1964.
- The New Industrial State, 1967.
- Beginner's Guide to American Studies, 1967.
- How to get out of Vietnam, 1967.
- The Triumph (a novel), 1968.
- Ambassador's Journal, 1969.
- How to control the military, 1969.
- Indian Painting (with Mohinder Singh Randhawa), 1969.
- Who needs democrats, and what it takes to be needed, 1970.
- American Left and Some British Comparisons, 1971.
- Economics, Peace and Laughter, 1972.
- Power and the Useful Economist, 1973, AER
- Economics and the Public Purpose, 1973
- A China Passage, 1973.
- John Kenneth Galbraith introduces India, 1974. (Editor)
- Money: Whence It Came, Where It Went, 1975.
- Socialism in rich countries and poor, 1975.
- The Economic effects of the Federal public works expenditures, 1933-38, (with G. Johnson) 1975.
- The Age of Uncertainty (also a BBC 13 part television series), 1977.
- The Galbraith Reader, 1977.
- Almost Everyone's Guide to Economics, 1978. (With Nicole Salinger.)
- Annals of an Abiding Liberal, 1979.
- The Nature of Mass Poverty, 1979.
- A Life in Our Times, 1981.
- The Voice of the Poor, 1983.
- The Anatomy of Power, 1983.
- Essays from the Poor to the Rich, 1983.
- Reaganomics: Meaning, Means and Ends, (with Paul McCracken)1983.
- A View from the Stands, 1986.
- Economics in Perspective: A Critical History, 1987.
- Capitalism, Communism and Coexistence (with Stanislav Menshikov), 1988.
- Unconventional Wisdom: Essays on Economics in Honour of John Kenneth Galbraith, 1989. (Editor)
- A Tenured Professor, 1990.
- A History of Economics: The Past as the Present, 1991.
- The Culture of Contentment, 1992.
- Recollections of the New Deal: When People Mattered, 1992. (Editor)
- A Journey Through Economic Time, 1994.
- The World Economy Since the Wars: A Personal View, 1994.
- A Short History of Financial Euphoria, 1994.
- The Good Society: the humane agenda, 1996.
- Letters to Kennedy, 1998.
- The socially concerned today, 1998.
- Name-Dropping: From F.D.R. On, 1999.
- The Essential Galbraith, 2001.
- The Economics of Innocent Fraud, 2004.
- John Kenneth Galbraith and the future of economics, 2005.
See also
Footnotes
External links
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- Alternate AP obituary
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- from the Medal of Freedom website, on the 2004 award of his second medal.
- Dollars & Sense, May 3, 2006.
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