[Paleopsych] NYTDBR: 'John Kenneth Galbraith': An Economist Who Didn't Just Play by the Numbers

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'John Kenneth Galbraith': An Economist Who Didn't Just Play by the Numbers

[The Sunday review follows.]

February 16, 2005

JOHN KENNETH GALBRAITH: His Life, His Politics, His Economics
By Richard Parker
Illustrated. 820 pages. Farrar, Straus & Giroux. $35.

    There was a time when John Kenneth Galbraith was the most famous
    economist in America, a man whose books regularly became best sellers.
    But today he is little honored in the economics profession, where, as
    Richard Parker remarks in his engaging and exhaustive biography, Mr.
    Galbraith is regarded as something of an outsider, a fine writer who
    never became comfortable with the detailed mathematical formulas that
    came to dominate economics.

    When a Galbraith book, "The Affluent Society," spent months on the
    best-seller list in 1958, George J. Stigler, the University of Chicago
    economist who would eventually win the Nobel Prize in economics for
    his work on the economic effects of government regulation, was
    outraged. He called it "shocking that more Americans have read 'The
    Affluent Society' than 'The Wealth of Nations,' " the classic work by
    Adam Smith.

    Mr. Galbraith's response was typical, witty and anything but
    self-deprecating. "Professor Stigler's sorrow," he suggested, "may be
    not that so many read Galbraith and so few read Smith but that hardly
    anyone reads Stigler at all." A man who grew up on a Canadian farm and
    who spent formative years trying to control wages and prices during
    the New Deal, and then did pioneering work assessing the effectiveness
    of strategic bombing at the end of World War II, Mr. Galbraith was
    acutely aware of the role of power in society at a time when many
    economists preferred to step around that issue.

    How does his work stand up now? Mr. Parker - like Mr. Galbraith, a man
    who was trained in economics and who taught at Harvard while active in
    both journalism and Democratic politics - is generally supportive. He
    praises Mr. Galbraith's ability to analyze how the economy really
    worked, as opposed to how models said it should work, and sees in his
    writing a precursor to behavioral economics, which has become a major
    force in the profession by moving away from assumptions that investors
    and consumers can be expected to act rationally. His early work showed
    that large companies in mid-20th-century America were run more for the
    benefit of their managers, who seldom owned much stock, than for the
    benefit of their shareholders, and were not as interested in
    maximizing profits as conventional economists assumed. But he did not
    see the renewal that was coming, as the threat of takeovers and new
    technologies revolutionized American business.

    Mr. Galbraith, 96, leaves no Galbraithian school of economists,
    although Mr. Parker quotes Amartya Sen, the Indian economist and Nobel
    Prize winner, as saying his work will endure. Reading "The Affluent
    Society" now, Mr. Sen said, is "like reading 'Hamlet' and deciding it
    is full of quotations."

    "You realize," he continued, "where they came from."

    Mr. Galbraith's early days did not signal great academic success.
    After repeating 12th grade at a high school in rural Ontario, he
    graduated from Ontario Agricultural College, an institution whose
    entrance requirements did not include a high school diploma. Years
    later the college gave him an honorary degree, then considered taking
    it back after Mr. Galbraith described it as "not only the cheapest but
    probably the worst college in the English-speaking world."

    Such a comment bespoke a haughtiness that would characterize his
    career as he earned a doctorate at the University of California at
    Berkeley and then arrived at Harvard as an agricultural economist, a
    field that has largely died out but one that clearly influenced the
    critiques of the larger economy that made him famous.

    Mr. Galbraith had a way of getting under conservatives' skins. In
    1954, on the 25th anniversary of the 1929 crash, he testified before
    Congress on the dangers of excessive speculation, and the stock market
    promptly stumbled - a move for which some blamed him. Homer E.
    Capehart, a Republican senator from Indiana, saw evidence of Communism
    in the idea, and then another of Mr. Galbraith's opponents, Secretary
    of Commerce Sinclair Weeks, demanded that J. Edgar Hoover conduct an
    F.B.I. investigation.

    In due course, the report came back to Mr. Hoover, and was forwarded
    to Mr. Weeks: "Investigation favorable except conceited, egotistical
    and snobbish." Republican enmity toward Mr. Galbraith - which was
    richly reciprocated - endured for decades. In 1971 he testified before
    Congress that the government should consider wage and price controls.
    President Richard M. Nixon told his treasury secretary that the
    testimony had "unmasked" the real aim of "all these bright New
    Dealers" and could be used to destroy Mr. Galbraith. "Make the
    Democratic candidates and spokesmen repudiate him," he said. Less than
    three weeks later, Nixon announced his New Economic Policy, which
    featured wage and price controls. Mr. Galbraith told a reporter he
    felt "like the streetwalker who had just learned that the profession
    was not only legal but the highest form of municipal service."

    His own service to the government came as President John F. Kennedy's
    ambassador to India. Mr. Parker credits him with doing excellent work
    to defuse a war that broke out between China and India in 1962, just
    as the Cuban missile crisis was preoccupying Washington. He was also
    an early critic of the Vietnam War inside - and later outside - the

    It was characteristic of Mr. Galbraith that his nomination to the
    Indian post was threatened by his willingness to speak what he saw as
    common sense but that others saw as "virtual treason," as Mr. Parker
    puts it. At his confirmation hearing in 1961, he suggested that the
    United States might consider offering diplomatic recognition to the
    Chinese government in Beijing if that government would accept the
    right of Taiwan to exist independently. When the United States finally
    did recognize China, it made no such demand, and today China threatens
    war if Taiwan formally proclaims an independence that has in fact
    lasted more than half a century.

    This book may tell some readers more than they want to know about the
    details of politics, economics and public policy in the mid-20th
    century. But it also shows how good Mr. Galbraith was at both
    assessing problems and dealing with them.

    It was 52 years ago, after Adlai E. Stevenson lost to Dwight D.
    Eisenhower despite witty speeches written by Mr. Galbraith, that this
    economist summed up the problem in words that sound as if they could
    have been written last year. "American liberals have made scarcely a
    new proposal for reform in 20 years," he wrote. "It is not evident
    that they have had any important new ideas." In the following years,
    Mr. Galbraith helped to provide the ideas that shaped the Kennedy and
    Johnson administrations. Liberals could use a new Galbraith now.

The New York Times > Books > Sunday Book Review > 'John Kenneth
Galbraith': The Presidents' Man
February 27, 2005


    Correction Appended

    OPTIMISTIC superstition with regard to all things economic is a
    typically American folly, as vigorous and unrepentant today as it was
    in 1929. We shower high honors on any author who can repackage the
    comforting idea that the free market is a democratic expression of the
    popular will; we pay an army of lecturers to persuade us that each new
    corporate cost-cutting initiative is an unprecedented victory for the
    little guy; and we support an entire cable news channel that limns the
    wonders of the New York Stock Exchange and the Nasdaq.

    Wherever this superstitious mind is at work, there you will also find
    John Kenneth Galbraith deplored and reviled. I ran across his name
    repeatedly while researching a book on the origins of the new economy,
    that fevered epilogue to the last century. Tom Peters, to take just
    one example, assailed Galbraith as the patron saint of the large,
    vertically integrated corporation, a form of organization that Peters
    characterized as a ''hubristic exercise'' in defying market forces.

    Peters wasn't alone. Galbraith infuriated the faithful for a large
    part of the 20th century. The conclusions he drew when working on the
    United States Strategic Bombing Survey in the closing days of World
    War II -- specifically, that the massive aerial bombardment of Germany
    was without significant military effect -- caused terrific problems
    for officials who wanted the study to prove that bombing had won the
    war. Testifying before a Senate committee in 1955 on the nature of
    stock market bubbles, Galbraith incurred the wrath of investors
    everywhere; they'd noticed that the market fell while he spoke and
    naturally concluded cause and effect.

    None of this was a matter of chance. Galbraith's formal subject may
    have been economics, but his work can just as well be read as a long
    meditation on business's genius for self-deception, its consistent
    preference for flattering theory over troublesome reality. Galbraith
    is, after all, the originator of the familiar term ''conventional
    wisdom'' and his book on the bull market of the 1920's, ''The Great
    Crash, 1929,'' emphasized the role of ''incantation'' and ''mass
    escape into make-believe'' in that great orgy of speculation.

    The tension between theory and reality runs throughout Richard
    Parker's ''John Kenneth Galbraith: His Life, His Politics, His
    Economics.'' It defines as well Galbraith's relationship to his
    profession, which like so many other academic fields spent much of the
    20th century insulating itself behind an impenetrable language -- in
    the case of economics, a language of equations and models and
    perfectly rational actors. Galbraith went in the opposite direction,
    becoming a public intellectual who spent his life advising
    politicians, honing his famously aphoristic style, even working as a
    journalist. His economics, as Parker, a senior fellow of the
    Shorenstein Center at Harvard's Kennedy School of Government,
    explains, ''integrated politics, power, ideology and historical
    circumstance to explain the actually lived economic world.'' Reality
    is messy. Or, as Galbraith himself put it with his typical pithiness:
    ''Specialization is the parent not only of boredom but also of
    irrelevance and error.''

    Thus Parker's book is both a biography and a treatise on the
    misinterpretations and disastrous mistakes -- the mystery of
    stagflation, the bubble of the 90's, Vietnam -- that theoretical
    rigidity and deference to experts have brought over the last hundred
    years. It is also, thanks to Galbraith's longevity, his work in so
    many administrations and his battles with so many other economic
    thinkers, a fine one-volume history of economic thought in the 20th
    century. First came the smashup of classical economic theory during
    the Depression, when steadily worsening conditions exposed the
    free-market faith in naturally occurring equilibrium for the
    superstition that it was. (The leading lights of the Harvard economics
    department, where Galbraith was then a lowly instructor, were slow to
    catch on. ''These orthodox men believed in markets with a faith
    bordering on religion,'' Parker writes, in 1934 opposing the early
    recovery efforts of the Roosevelt administration, ''not on 'political'
    but on 'scientific' grounds.''

    Free-market orthodoxy was soon brushed aside by the theories of John
    Maynard Keynes, whose American disciples -- Galbraith prominent among
    them -- saw a central role for government in managing the economy,
    thus furnishing theoretical justification to remedies long advocated
    by liberal reformers. Keynesianism conquered the corporate mind as
    well, and the nation heeded the advice of a new set of experts who
    promised to deliver growth and prosperity, mainly through military
    spending. So complete was its triumph that even Milton Friedman, still
    the standard-bearer of economic conservatism today, was moved to say
    in 1965, ''We're all Keynesians now.'' In the 70's, though,
    free-market orthodoxy returned, this time as an insurgent out of the
    University of Chicago, armed with an idea called rational
    expectations, whose ''sheer theoretical beauty and rigorous internal
    consistency'' had soon captured economics departments nationwide.
    Committed partisan though he was, Galbraith retained his critical
    edge, pointing out even during the Keynesian heyday that our affluence
    concealed a certain absurdity as well as a dangerous militarism.

    To this story of clashing ideas Parker adds farmer uprisings and
    student revolts, along with the minutiae of World War II price
    controls. I will confess that I was initially skeptical about the
    book's 820 pages of dense type, but every detail is justified and
    every digression fascinating. If the book has a failing, it is that
    Galbraith's dry, Anglified wit and his big Keynesian ideas seem to
    shrink when placed alongside his amazing doings.

    After all, John Kenneth Galbraith was not merely another Harvard
    professor. He was born in a remote corner of Ontario in 1908, when it
    was often the farmers who were the radicals and the Harvard professors
    who were the guardians of the status quo. Galbraith's father, in fact,
    was active in one of the left-wing rebellions that used periodically
    to sweep North American farm country. The son commenced the career
    that would eventually make him famous for his urbanity by studying
    animal husbandry at a little-known ag college in his home province.
    From there it was on to Berkeley, where he acquired a Ph.D. in
    agricultural economics -- an exciting and important subject at the
    time, given the agrarian reforms on which the New Deal had embarked --
    and Harvard, where he landed an instructorship in 1934. He knew
    presidents from Roosevelt to Clinton. With John F. Kennedy he was
    particularly close, advising him again and again to avoid entanglement
    in Vietnam. Through it all he served as the urbane face of liberalism,
    commenting constantly on television and producing a long, admirable
    list of books and articles.

    What astonishes the contemporary reader is, first of all, that a
    genuine, independent intellectual like Galbraith was permitted to
    serve in government, let alone become the confidant of presidents.
    Facile anti-intellectualism is the order of the day now, as even
    Democrats race to embrace the free-market logic of the Chicagoans. The
    ''New Industrial State'' that the great liberal economist described in
    1967 is now Public Enemy No. 1 of financiers and rebel C.E.O.'s
    determined to, as Tom Peters put it in 1992, blast ''the violent winds
    of the marketplace into every nook and cranny in the firm.''

    Yet reading Parker's comprehensive account of the 20th century's
    economic battles, I can't help thinking that this ought to be
    Galbraith's moment. An old-school scoffer like Galbraith would remind
    us that all our elected officials have done with their heady
    incantations of the virtues of privatizing Social Security and the
    glories of deregulation is resurrect the superstitions of our orthodox
    ancestors, and trade in our affluent society for a faith-based
    19th-century model in which the affluence accrues only to the top.

    Thomas Frank is the author, most recently, of ''What's the Matter With
    Kansas? How Conservatives Won the Heart of America.''

    Correction: February 27, 2005, Sunday:

    A picture caption on Page 18 of the Book Review today, with a review
    of "John Kenneth Galbraith" by Richard Parker, gives an erroneous
    title from the book for the post held by Robert F. Kennedy in 1962. He
    was attorney general, not a senator.

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