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A definitive look at The liberator of economics

Thursday, March 24th, 2005

Trying to tell the story of John Kenneth Galbraith's life would be a daunting task for any biographer.

Galbraith has written 48 books -- his latest, "The Economics of Innocent Fraud," came out last year -- that have sold more than 7.5 million copies and have been translated into nearly three dozen languages. He also has written more than 1,000 articles and essays for newspapers and magazines around the world over the past 70 years.

At 96, he is old enough to have written his autobiography several times - from "The Scotch," his 1964 nostalgic look back at his Canadian boyhood, to the more definitive "A Life in Our Times" in 1981, to his gossipy 1999 book, "Namedropping."

In the trilogy that stands as his greatest economics writing -- "American Capitalism" (1952), "The Affluent Society" (1958) and "The New Industrial State" (1967) -- Galbraith liberated economics from its impenetrable prose. Like his role model, the English economist John Maynard Keynes, Galbraith recognized that economic and political power always trumped economic theory and that it was more important to write for the general public than one's peers.

Galbraith wanted to be what he called "a useful economist." He spent as much time in politics and in government service as he did in academia. In his work in a variety of roles for every Democratic president from Roosevelt to Clinton, he learned the sharp difference between economic theory and the political and social realities that often altered those theories.

In short, Galbraith has more than earned his reputation as the most widely read economist of all time and as one of the great public intellectuals of the past century.

Richard Parker, who heads the economics and journalism program at Harvard University's John F. Kennedy School of Government, was undaunted by all this. He took on the task of interpreting and putting into context Galbraith's extraordinary life and times in "John Kenneth Galbraith: His Life, His Politics, His Economics."

A longtime friend and associate of Galbraith, Parker was a natural choice to be his official biographer. He spent hundreds of hours interviewing Galbraith, his family and friends and sifted through tens of thousands of Galbraith's personal papers and files. The result is a solid, well-researched book that is as much a political and economic history of the 20th century as it is a biography.

How does one write about a man like Galbraith?

"Very, very patiently," Parker told me in an phone interview last month.

Parker said he got the idea to do the book because of the lack of any serious overview of Galbraith's life and ideas.

"Peggy Lamson's book (the 1991 biography, 'Speaking of Galbraith') is a rich personal history and a fine short book, but it stops 15 years ago and it makes no attempt to contextualize Galbraith and his ideas into American history," said Parker.

Parker said he went to the John F. Kennedy Library and found "a couple hundred feet of shelf space" of Galbraith's papers. "After I signed the contract for the book, I went over to his home for dinner and he asked me, 'Did I tell you about the basement?' As it turned out, that's where two-thirds of his papers were."

Parker spent a summer down in the cellar of Galbraith's home in Cambridge, Mass., going through boxes of his personal papers. Another treasure trove of information came Parker's way when government documents related to Galbraith's time as ambassador to India were declassified.

Galbraith was never well liked by his peers, who thought of him more as a popularizer than an innovator. Economist and Nobel laureate Paul Samuelson dismissed Galbraith as "America's foremost economist for non-economists."

When another Nobel laureate, George J. Stigler of the University of Chicago, lamented that it "was shocking that more Americans have read 'The Affluent Society' than 'The Wealth of Nations,'" Adam Smith's seminal book on economics, Galbraith's response was that "Professor Stigler's sorrow may not be that so many read Galbraith and so few read Smith but that hardly anyone reads Stigler at all."

That exchange was in keeping with the reputation Galbraith had for supreme self-confidence, bordering on arrogance. But Parker feels that part of Galbraith's personality has been overemphasized.

"In going through his vast correspondence, you can see the character of the man outside the limelight," said Parker. "It didn't matter who you were, he would take the time to reply. I think some of the arrogance comes out of what he called 'the aroma of manure' that he thought hung over him. He grew up on a farm and didn't have a silver spoon background."

It was an improbable journey from a small farming town in southern Ontario to teaching economics at Harvard, writing best sellers and having the sort of proximity to power that few people in academia ever get to have.

What made Galbraith unique among his economic peers was how close he was to power -- he was "price czar" for the Office of Price Administration during World War II, ambassador to India during the Kennedy administration and an important advisor to Presidents Kennedy and Johnson on many economic and political matters.

"He has been close to power and came away skeptical of it," said Parker. "He always cautioned to maintain a skeptical view toward the conventional wisdom. He may have been a lifelong Democrat, but he was unafraid to be critical of those in power."

A good example of this was Galbraith's early recognition that American involvement in Vietnam would be a disaster. In October 1961, he wrote the following in a letter to President Kennedy as the president was considering substantially increasing the number of U.S. troops in Vietnam:

"Although at times I have been rather troubled by Berlin [the Berlin Wall had just been built], I have always had the feeling that it would be worked out. I have continued to worry far, far more about South Viet Nam. This is far more complex, far less controllable, far more varied in the factors involved, far more susceptible to misunderstanding. And to make matters worse, I have no real confidence in the sophistication and political judgment of our people there."

We know what happened instead. President Kennedy put more faith in the judgment of others and, that fall, green-lighted the start of an open-ended U.S. military commitment in Southeast Asia.

Although the apex of Galbraith's political and economic influence was in the four decades from 1932 to 1972, Parker argues that the last three decades of his life have been just as important.

"He has been a shrewd judge of where we are headed economically and in retrospect, he been right far more often than he's been wrong," said Parker.

Certainly every time the stock market goes into a tailspin, people dust off their copies of Galbraith's 1958 best-seller "The Great Crash: 1929." He crystallized the irrational exuberance that marked the bull market of the 1920s in that book, and was one of the few people in the 1990s who saw similar stock market collapse coming.

With the rise of conservatism in the past three decades, Galbraith has fallen out of favor, both politically and in the field of economics.

Economics is now based more on mathematical models than upon the study of politics, history, human behavior and power. Galbraith has been replaced in the economic pantheon by the monetarists and supply siders such as the University of Chicago's Milton Friedman.

"Within a certain circle, it's fashionable to say that Galbraith's time has passed and liberalism is over," said Parker. "What you have in modern mathematically-oriented economics is a theory that assumes humans are rational and markets are good. However, you have to ask if that strategy has yielded a robust understanding of the economy that has made things better."

Parker sides with Galbraith on this question. Galbraith, unlike Friedman and his disciples, never believed in the primacy of the market. He also never believed in rigid formulas or theories to explain economic behavior.

"One has to recognize that Keynes wrote 'The General Theory of Employment, Interest, and Money' with as few mathematical formulas and models as Galbraith did," said Parker. "And Keynes wrote more than 500 articles for newspapers and magazines in his lifetime. In a democratic society, to mask the understanding of essential problems in a language that's impenetrable is damaging to democracy."

Parker's book is not total hero-worship of Galbraith. He gives space to Galbraith's political and economic critics and treats them with fairness. Parker also points out where Galbraith's ideas have not panned out.

In "American Capitalism," Galbraith put forth the idea that big government was needed to act as a "countervailing force" against concentrated corporate power. As we've seen in the past three decades, that premise no longer is operable.

In "The Affluent Society," Galbraith believed that the age of the individual titans of industry -- the Rockefellers, Mellons and the like -- were over and that the all-powerful captain of industry was replaced by a cadre of faceless managers who were behind the bureaucracy that makes corporations run. Again, the 1990s boom and the cult of the CEO as superstar has made that premise quaint.

The last third of Parker's book is tinged with sadness. As the New Deal coalition of the Democratic Party that Galbraith so loyally served broke apart over civil rights and the Vietnam War, and conservatism moved from the fringes to become the dominant political philosophy, we see Galbraith brushed aside as a political player. There was no longer any role for a liberal thinker who was firm in his convictions when it came to the need to civilize American capitalism.

Galbraith didn't anticipate the combination of high inflation and high unemployment known as "stagflation" in the 1970s, the corporate takeover orgy that began in the 1980s or the Internet boom of the 1990s. He certainly didn't expect to see the return to the free market economic theories that were once thought forever discredited after the 1929 crash.

However, on issues of war and peace, economic justice and the ongoing battle between human reason and irrationality and superstition, Galbraith never wavered in his essential optimism that common sense would eventually prevail.

The Friedman ideal of small government, low taxes and minimal outside interference in the economy that currently guides those in power in Washington hasn't come close to delivering a strong economy and prosperity for all. When people start to realize that, we may see a return to the Galbraithian view that markets never operate rationally and that the only protection against the harsh uncertainties of an unregulated market is a robust public sector.

In the March 14 issue of The Nation, William Greider wrote that the time is ripe for a Galbraith revival.

"When the right's rigid ideology falters and breaks down, sooner perhaps than people imagine, Americans will need an explanation for what went wrong," wrote Greider. "They can read Galbraith."

Parker said he hoped his book can play a role in such a revival. "I care less about royalties and sales and more about sparking a public discussion about Galbraith and his generation of liberalism," he said.

The book ends with the words of Nobel laureate Amartya Sen, who has said he got interested in Galbraith's brand of economics reading "American Capitalism" as a young college student in Calcutta nearly five decades ago.

Sen said Galbraith's work will endure, and called "The Affluent Society" an example of Galbraith's "great insight," which "has become so much a part of our understanding of contemporary capitalism that we forget where it began. It's like reading 'Hamlet' and deciding it's full of quotations. You realize where they came from."

While Galbraith is slowing down and nearing the end of an impossibly full and rich life, his ideas will resonate for years to come. Those who have an appreciation for common sense and a preference for reality over wishful thinking will keep turning to Galbraith.

Randy Holhut is a Reformer editor and a 1997 graduate of Harvard's Kennedy School of Government. He edited "The George Seldes Reader" (Barricade Books).

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by Randy Holhut
Brattleboro Reformer