Wealth of Nations May 2006

John Kenneth Galbraith, Revisited

For all his attributes, John Kenneth Galbraith was not what the American Left believes him to have been: a font of economic truth.

"In all life one should comfort the afflicted, but verily, also, one should afflict the comfortable, and especially when they are comfortably, contentedly, even happily wrong." John Kenneth Galbraith, who died at the age of 97 on April 29, said that to Britain's Guardian newspaper in 1989. Was any American economist of comparable esteem so wrong—so comfortably and contentedly wrong, and for so many years—as Galbraith himself? Verily, I cannot think of a rival.

Galbraith, let me say, was a brilliant public intellectual; an elegant (if tending to the orotund) writer; a remarkably accomplished and productive man; and, by all accounts (setting his legendary immodesty aside: He actually boasted about his immodesty), a good man. He was not, however, what he apparently thought he was, or what the American Left believes him to have been: a font of economic truth; the intellectual heir to John Maynard Keynes, no less; a paradigm-shifting thinker to rival the opposing champion of free markets, Milton Friedman.

Galbraith, despite the Harvard professorship, was never really an economist in the ordinary sense in the first place. In one of countless well-turned pronouncements, he said, "Economics is extremely useful as a form of employment for economists." He disdained the scientific pretensions and formal apparatus of modern economics—all that math and numbers-crunching—believing that it missed the point. This view did not spring from mastery of the techniques: Galbraith disdained them from the outset, which saved time.

Friedman, in contrast, devoted his career to grinding out top-quality scholarly work, while publishing the occasional best-seller as a sideline. He too was no math whiz, but he was painstakingly scientific in his methods (when engaged in scholarly research) and devoted to data. All that was rather beneath Galbraith. Brilliant, yes; productive, certainly. But he was a bureaucrat, a diplomat, a political pundit, and a popular economics writer of commanding presence more than a serious economic thinker, let alone a great one.

Galbraith's special gifts were not intellectual penetration or access to deeper wisdom, but gravitas, worldly sophistication, armor-plated apprehension of his own intellectual superiority—and wit (never underestimate that). Friedman does in fact rival Keynes as the greatest economic thinker of the 20th century. His devotion to meticulous scholarship did not preclude him from thinking big: Capitalism and Freedom is up there with Keynes's General Theory and Hayek's Road to Serfdom. Galbraith's The Affluent Society is up there with The Tipping Point and The World Is Flat—except that Malcolm Gladwell and Thomas Friedman are not usually so wrong in their judgments.

During the Second World War, Galbraith worked at the Office of Price Administration, fixing prices as part of that era's semiplanned economy. Unlike every other former central planner I have ever come across, in person or in print—whether it be from India's old Planning Commission (which Galbraith once advised), the Soviet Union's pre-perestroika Gosplan and its East European equivalents, Africa's agricultural marketing boards, Britain's assorted pre-1979 prices and incomes boards, you name it—Galbraith brought from that experience the view that there was much to be said for having bureaucrats fix prices. The experience seemed to dismay everybody else and to convert them to the view that markets do the job better. Galbraith thought, no, he had done pretty well.

He appeared to believe that the sensible thing would be to find more brilliant men like himself, difficult though this would be, and to put them in charge. This approach to managing the economy would become more desirable over time, not less, because economic growth would otherwise mean the increasing accrual of power to corporate interests. The countervailing power of the state would need to grow in response—just the opposite of what modern economic orthodoxy (based on all that specious math) called for.

The book he sometimes said was his best (of the 30-odd he produced) was The New Industrial State, published in 1967. Its thesis was that big companies were growing so powerful that consumers no longer had any say. The basic mechanism of supply and demand was broken. Consumers just did as they were told. All power resided with mighty corporations—such as General Motors. Long before Galbraith died, and probably even at the time he wrote the book, the falsity of this idea was plain. (What would General Motors have had to say these past 20 years about the impotence of consumers?) Galbraith never saw the need to adjust his worldview.

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