Interview: Out of the Bedroom
Industrial: Cloak and Dagger
Legal: The Fantasy of Choice
Politics: Labor Pains
Economics: Economics and the Public Purpose
Corporate: House of Horrors
History: Clash Of Cultures
International: Childs Play
Culture: Folk You Mate!
Review: Last Holeproof Hero
The Locker Room
Contract With Australia
Economics and the Public Purpose
J K Galbraith slipped his mortal coil a couple of days ago, only a few years short of a century innings. And compus mentis almost right to the last.
Galbraith was a phenomenon in his own right, an author of prodigious output, an almost unparalleled stylist on matters economic, a major public figure.
As an intellectual he was an extraordinary if flawed talent. He was a 'big picture' thinker, with incisive grand generalisations, but also a little too glib. He was a big picture historian (The Great Crash, 1954; Money, 1975), showing the same capacity.
He was also competent with fine empirical detail, although that talent was irregularly used and often disguised. A merging of detail and big picture was displayed, for example, in a masterly analysis of the Savings and Loan debacle in the New York Review of Books in 1990.
Mainstream economists despised or belittled him, but having slipped into Harvard when no-one was noticing, and slipped into a position of considerable influence in the Democrat Party, and having a superior turn of phrase to all his adversaries, the denigration was water off a duck's back.
The obituaries have been fair to middling. The obit in the UK Guardian, by Michael Stewart (author of probably the most user-friendly exposition of Keynesian economics), is decent on the economic dimension. The obit in the Sydney Morning Herald, reproduced from the tediously mainstream Washington Post, is tolerable on the facts, irritating to stupid on the interpretation.
The obituaries label Galbraith as a 'Keynesian'. Which is true in a way. Galbraith and Keynes were both political progressive liberals (Galbraith more so than Keynes). And, like Keynes, Galbraith was skeptical of the monetary authorities and their inflated status - in possession of instruments limited to fulfil progressive ends and hiding reactionary class agendas.
But Galbraith's attraction to Keynes was probably more for ideological affinity than for Keynes' analytical apparatus and its policy byproducts.
As Galbraith later declaimed of the atmosphere in 1945 - 'Keynes had a solution without a revolution; it seemed a miracle'. We could fix up capitalism without altering its modus vivendi, without having to face the cataclysm of overthrowing the established order.
Keynes and Keynesianism float at the 'macroeconomic' domain of the economy, national and global. Galbraith's preoccupations and competence were more at the level of structure.
Galbraith hailed from rural Ontario and started life as an agricultural economist, slap bang in the 1930s Depression. This location and experience is crucial to understanding his later intellectual trajectory.
His then research focused on the devastation that the Depression wrought on farming communities. Galbraith confronted that agricultural prices had plummeted but prices of manufactured commodities had not. There was a profound asymmetry in the degree of price deflation, a structural transformation obliterated by a purely macroeconomic analysis.
The explanation was that many manufactured products emanated from now concentrated industries, dominated by a handful of large corporations. After World War I, such companies increasingly adopted the practice of 'administered pricing', through which price became a strategic variable (in conjunction with market control) as a vehicle to stabilise revenues. When the Depression hit, the corporations preferred to cut output rather than prices, in the interests of relative price stability.
In confronting the core importance of the large corporation, Galbraith fell in with the American economists who came under the loose label of 'Institutionalists', many of whose members played important roles in the Roosevelt 'New Deal' Administration. The Institutionalists' Temporary National Economic Committee was charting in minute detail the contemporary structure of American industry. Adolf Berle and Gardner Means were emphasising the new layered duality of ownership and management in the large corporation.
Galbraith then had the accidental 'good fortune' of seeing the whites of the corporate eyes in the Office of Price Control during the Second World War.
Galbraith from then on faced the conundrum common to all progressive liberals. He wanted the 'market' economic system to work for the good of all, but he confronted that the large corporation was the elephant in the room. It broke the rules, and, here is the crunch, it was never going to go away.
Galbraith's early attempt to rationalise the liberal dilemma was manifest in the 1952 American Capitalism, in which the power of the corporation was not dissolved (now impossible), but offset ('countervailed') by other rising sources of economic power - giant retailers and workers' unions. This resolution was a sleight of hand, product of a morsel of institutional trends, but mostly wishful thinking and a good deal of borrowing from the then totally ideological current of 'pluralism' emanating from the political scientists playing public relations fronts for the new monopoly capitalism.
In the 1967 The New Industrial State, Galbraith honed in on the 'technostructure', a new ruling managerial class who ran the large corporations in their own interest of self perpetuation. It was this crude class analysis that had the American Marxist Paul Sweezy (also a sometime Harvard economist) taking an uncharacteristically acerbic swipe at the affable Galbraith (as in the New York Review of Books in 1973).
By the time of the 1973 Economics and the Public Purpose, Galbraith's 'liberal' optimism had worn thin. The large corporation was a power to itself - it dominated consumers, workers, small businesses, communities, the state apparatus itself.
Galbraith retired in 1975, and the last thirty years has witnessed a continuing stream of invective, if camouflaged in caustic wit, that refined the message in Economics and the Public Purpose as variations on a constant theme.
How much influence Galbraith exerted in the public domain is unclear. But on the larger trajectory, it doesn't appear to have been substantial.
Immediately the War ended, a coalition of a newly powerful business class with a Congress dominated by a conservative/reactionary majority marginalised progressive bureaucratic forces. Those who wanted to forge a better world under the rubric of 'full employment' were symbolically and tangibly eviscerated in the emasculation of the Employment Act in Congress. The progressive instincts of President Truman (reflected in his cut-down 'Fair Deal' copy of Roosevelt's New Deal) were crushed under the eruption of Cold War anti-communism. And the Eisenhower administration ushered in economic growth on military industrial principles.
Even on the inside in the Kennedy/Johnson administrations, Galbraith was on the losing side in the fight over how to stimulate the economy. He was rooting for spending on progressive causes, while the Democrat Right was arguing for corporate tax cuts. The latter won. Johnson's Great Society program was forged from cynical pragmatism (buying off the rebellious black communities) rather than principle.
Galbraith was an early visionary in seeing the debacle that could ensue (financial and warped priorities) if the US escalated its involvement in Vietnam. He was on the losing side on that one too.
But his books sold millions and educated millions. The Right had to crank up Milton Friedman as an ideological antidote to Galbraith. Friedman could turn the odd phrase, but even with all that corporate money behind him and access to the corporate media, Milton never made it into the same league of economist celebrity.
A gentle man was Galbraith, who had come a long way from the back blocks of Ontario. The system deserved, deserves, a harsher critic. They exist, in large numbers, and many articulate. But there is a trade-off between being cogent and being heard.
Evan Jones teaches political economy at the University of Sydney. For a regular look at where the political economy of Australian capitalism is heading check out http://alertandalarmed.blogspot.com
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