The late economist was one of the great public intellectuals of the twentieth century. His lifelong embrace and support of Keynesian economics made him unique in that sometimes rarified world. His rigorous and logical demystification of the dominant neoclassical economics enabled millions to participate in national dialogues about the end and purpose of a somewhat arcane discipline. In many ways he shared many of the presuppositions of Catholic Social Teaching (CST).
Galbraith will be remembered and read when most of us Nobel laureates will be buried in footnotes down in dusty library stacks.
Paul Samuelson
Only active intervention by the state would keep the economy at or near full unemployment and ensure its steady growth.
John Kenneth Galbraith 1973
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth Galbraith
The economy is doing well but not the people.
Emilio Medici, Head of State in Brazil 1971
Capitalism stripped of its religious and ethical meaning tends to become associated with purely mundane passions "specialists without spirit, sensualists without heart."
Max Weber
John Kenneth Galbraith one of America's great public intellectuals died on April 29. The bane of neo-conservatives and a lifelong thorn in the side of market fundamentalists, who could never accept the market intrusion of John Maynard Keynes, was 97. One would be hard pressed to name another person of the last century who had the public impact of Galbraith. As confidant and advisor of presidents from Roosevelt to Clinton, as ambassador to India, antiwar activist and prolific pundit, Galbraith's influence was felt in the groves of academe, the corridors of power and most importantly in the lives of ordinary citizens for whom he demystified the often arcane subject of economics. Perhaps his greatest gift was the latter. By the force of his logic he invited millions into national debates about economic priorities. University economists sputtered as the witty professor shattered their airtight mathematical models, broke into their closed graduate seminars and gave citizens the tools to raise obvious questions. Many jealous of his impact never forgave him, but they could never ignore him.
Born in the small southwestern Ontario town of Iona Station in 1908, Galbraith inherited the progressive politics of his farmer father Archie who dragged his son Ken from the age of ten to Liberal Party events. When the party became too accomodationist to the capitalist system, Archie helped form the United Farmers Party whose electoral success in the Ontario of 1919 sent shock waves through the Canadian establishment. Before it imploded, the Farmer's Party (which had opposed conscription in World War I) enacted extraordinarily progressive social legislation which was not lost on Ken Galbraith nor his father's friend, Mackenzie King.
Galbraith graduated from the Ontario Agriculture College in Guelph in 1930 and like many, was stymied by the failure of neoclassical economics in understanding the Great Depression. He headed off to the University of California on a scholarship in 1931 to study agriculture economics. Mixing with graduate students who ranged "from liberal to radical," Galbraith imbibed the progressive thinking of Berkley professors and the much-discussed work of Stanford Professor Thorstein Veblen, convinced that the new capitalist world "was shrinking the possibilities of the universe." Receiving his doctorate in 1934, Galbraith moved to Harvard where he remained on and off for the rest of his life. The young economist learned much while at America's most prestigious university, but he learned more from the powerful expanded governmental interventions of Franklin Delano Roosevelt. This remained with him all his life as did the impact of the book which revolutionized economics, John Maynard Keynes' General Theory published at the height of the Depression in 1936.
Keynes refused to accept the inevitability of the market's adjustment capacities. He maintained that people suffering through years of the "short run" in the business cycle had every reason to distrust neoclassical economics. (His quip "in the long run we're dead" aptly answered those who suffered little financial pain while counselling patience.) Canada's depression Prime Minister, the wealthy R.B. Bennett, was a classic model of this wisdom. Investment was needed to boost aggregate income and expand purchasing power. But who would invest in a downturn? Keynes' response: The state as FDR had shown. "Only active intervention by the state would keep the economy at or near full unemployment and ensure its steady growth," Galbraith commented in 1973. Deficit spending while unemployment was high and the reverse when the economy was hot. Here was economics which was more than a bloodless intellectual theory. It was economics as if people mattered.
A lifelong liberal
For the rest of his life Galbraith kept the liberal creed. In book after book, in the thousands of articles he wrote he never wavered. He kept his eye on the fundamental question: What is an economy for? Surely for the physical and moral good of citizens, to help sustain and build decent lives, healthy families and a sustainable environment, to create productive non-alienating work. If it failed here, it must be rethought. If it continued to produce consumer goods promoted by mass advertising ("psychic rather than physical need") to create pseudo needs and fulfill them while slums festered and obsolescent junk degraded the environment, then economics must be challenged. Galbraith never stopped insisting that the so-called value free market was never neutral. It was always radically influenced by ideology, power relations, corporate dominance, and political power. These were the necessary lenses through which economy must be viewed. To think that individual needs make the consumer "sovereign" and that his "choice" will result in a self-regulating market he considered ludicrous.
Writing in Economics, Peace and Laughter (1971) one of his over 40 popular books, the author stated: "For important classes of products and services --weapons systems, space probes and travel, a supersonic transport-- decisions are not taken by the individual citizen and voter and transmitted to the state. They are taken by the producers of public services, by the armed services and the weapons firms. It is their goals that are primarily served. The Congress and the public are then persuaded and commanded to acceptance of these decisions...there can be viewed men of accessible mind who have recently looked at the way weapons are produced without wondering if the notion of ultimate citizen sovereignty is above reproach. This is not a detail. It is half the Federal Budget."
Galbraith's genius (and the reason he was despised by the Milton Friedmans and the monetarists who gave us Reaganomics, massive deficits created by runaway military budgets, and the growing global gap between the rich and the poor), was that he was able to pinpoint the deep cultural malaise that the majority of citizens felt when they intuited that the public good was being eviscerated even as the smiling leaders were crowing about "the economy" and the "Bull market." By the sheer power of his formidable intellect, the grace of his felicitous prose peppered with memorable aphorisms, Galbraith convinced millions of citizens that indeed their instincts were right. The individual citizen was not sovereign. Nor was he in command even as the Friedmanites and "choice" gurus of corporate think tanks tried to convince everybody that the consumer cannot be at war with an economy he controls "for he cannot be at war with himself." This was the iron law of neoclassical economics, the theological straightjacket the average citizen untutored in economics had to wear. Galbraith gave them every confidence to resist this "conventional wisdom."
"Sovereignty is exercised" he wrote, "by large and complex organizations. Their exercise of power is to serve their own goals --goals that include the security of the organization and its growth, convenience and prestige, commitment to technological virtuosity as well as its profits. There is every probability that these goals will differ from the aggregate expression of individual goals. Individuals are then accommodated to these goals not the reverse...this normally will involve persuasion. But it may involve resort to the state...it may involve power that is inherent in institutional position." (Economics, Politics and Laughter). As the citizen felt conflicted and found himself at odds with the accepted economics, Galbraith's work convinced him that he or she was not at odds with reality, but really was "in the grip of large impersonal forces whose purposes he senses to be hostile."
Whose "choice?"
"The Pentagon pursues wars and builds weapons systems in accordance with its own dynamic. Similarly NASA…General Motors as a producer of automobiles which threaten to smother cities ...so other industry as it subsumes countryside, water and air. This and the resulting discontent could not occur in a society in which the consumer or citizen is sovereign."
Galbraith's wide reading compelled him to reject the pure laissez faire belief that "choice" produces "maximum levels of freedom, equality and welfare." It clearly wasn't so. As he watched the formidable power of the modern corporation grow in the 1960s and 1970s he continued to see the state as the "countervailing power". Regulatory agencies were created to balance competing interests. As the Cold War heated up Galbraith railed against "military Keynesianism" the astronomical military budgets seen as public spending, but which produced high inflation and comparatively few jobs. As well it fueled McCarthyism and the military industrial complex which Eisenhower had warned against.
Galbraith watched in horror as the Reagan Revolution decimated America with its massive deficits and profligate military spending. As well he shook his head in disgust as deregulation undid public safeguards against reckless speculation. The Savings and Loans scandal epitomized the unleashing of greed in America. Financial speculation on a global scale wrecked several economies, skewed income distribution and created a new Gilded Age. Real income gains stagnated and people found themselves working longer hours just to remain even. In the world's richest economy of $12 trillion dollars 45 million Americans went without health insurance and 33 million (the working poor) remained in poverty.
Perhaps Galbraith's greatest vindication came in the 1990s within the economics community itself. Surveys began to show radical disillusionment with mathematical models. In one major survey by the American Economic Association showed that two-thirds admitted to an overemphasis on "mathematical tools at the expense of substance." The conclusion found "an absence of an empirical and applied base in the entire economics curriculum." The influential brokerage house Morgan Stanley was more scathing: "The commission's fear is that graduate students may be turning out a generation with too many idiot savants skilled in technique but innocent of real world economic issues."
Autisme economie
As the millennium turned, the criticism of neoclassical economics accelerated. Sorbonne economist Bernard Guérmien addressed a conference on the same theme: The disconnect between the teaching of neoclassical economics and reality. Shortly after several students approached their professor and confessed the same disenchantment. The autisme economie (PAE) was born with the rallying cry, "we wish to escape imaginary worlds! We no longer want this autistic science pushed on us." The revolt stunned the media as well as the often-elitist French academy. Hundreds of students signed on as well as many prominent economists. The wave moved throughout Europe, supported by France's leading economist Jean-Paul Fitoussi who proposed new courses ignored by mainstream economists, namely unemployment and the environment. The movement found a similar response in Cambridge and Oxford. And with the same threatening consequences of professional marginalization that Galbraith himself had experienced battling for tenure at Harvard. The young turks this time were supported by Galbraith's son James, now a distinguished economist in Texas. PAE textbooks began to be printed and translated into Chinese.
However it was at Galbraith's Harvard where the battle for an alternative economics really heated up. As students continued to exit bloodless economic courses, resistance accelerated. A challenge was launched against the doctrinaire offerings of the Economics 10 course taught by Martin Feldstein, a former Reagan advisor and "the scholarly mentor to Bush's team" as the New York Times called him. Rejecting Feldstein's decidedly Republican bias, and after sit-ins and petitions, students finally got an alternative course in 2003. It was taught by Stephen Marglin (Harvard '59) and appropriately called "Social Analysis 72." The Students for Humane and Responsible Economics (SHARE) could no longer stomach Feldstein's narrow brand of neoclassical medicine.
The proliferation of newer models of analyzing economy, the burgeoning institutional and structural questions which had consumed Galbraith were beginning to proliferate in the wake of the disenchantment of the young and the obvious failures of neoclassical economics. While no consensus has of yet arrived, exciting new challenges are once again appearing as antidotes to a failed consensus. This is Galbraith's legacy.
Challenging the conventional wisdom of his day and stimulated by the massive failures of capitalism and the attendant suffering caused by the Depression, spurred on as well by John Maynard Keynes and the brave interventionist moves of Franklin Delano Roosevelt, Galbraith avidly desired an economy which would work for the broad majority of citizens. To do this he had to break with the blind trust in markets and the tenets of the neoclassical consensus. Keynesian economics indeed had worked in stabilizing economies until it was sabotaged by a series of U.S. presidents unwilling to challenge military spending which was masked as "Keynesian." In comparison to other spending it created few jobs but much inflation.
Catholic Social Teaching
Galbraith insisted that economics was never pure science, that it could never be captured and explained in mathematical formulae. In book after book and article after article, he showed how economics was always embedded in power relations, inevitably skewed in corporate directions. Countervailing powers were necessary. This is where the state came in. In this sense Galbraith was absolutely in synch with Catholic Social Teaching (CST), which embraces a socially regulated capitalism. The massive failures of cowboy capitalism in Galbraith's adopted country has produced the most stratified society on earth with the greatest maldistribution of income in the developed world. Galbraith --like Catholic Social Teaching-- valued markets as producers of wealth, but was leery of it as a distributor of same.
His witty remark that "In communism man exploits man; in capitalism it is just the opposite" spoke to the massive inequities in his own country. For him, pure self-interest could never produce a communal society. Market economies must never be allowed to become market societies.
At home and in the world where two billion live on less than two dollars a day and where the environment is ravaged, the common good cannot be served without massive intervention. Pope John Paul ll spoke directly to this in Centisimus annus (1991). "There are collective and qualitative needs which cannot be satisfied by market mechanisms." These needs like the natural and human environments "escape the logic of the market ...and must not be bought or sold." Galbraith, while never using religious language or invoking a transcendent dimension, shared much of the core of CST, most especially the absolute rejection of economics as an abstract, pure science disconnected from culture, ecology, and the state. Both were radically concerned with the common good and safeguarding the dignity of the most vulnerable. Both Galbraith and CST balked at modern economic reductionism which insisted that humans were strictly "interest maximizing" animals. Both understood that human choice often contains profound ethical dimensions based on human solidarity, and in the case of CST, altruistic options were summoned from a transcendent horizon. Both understood and responded to human suffering which unemployment, recession and the Great Depression caused. Both Galbraith and CST insisted on the social nature of the human rather than the aloneness of the individual consumer. Both championed the obvious: We are all embedded in several social networks. For Catholics created in the image of the Trinitarian God, we exist, thrive and are called forth within a society of persons.
The news is not bleak. Galbraith's long and consistent attack on neoclassical economics has reaped a rich harvest of new "countervailing" responses --many from within the United States. Galbraith's holistic thinking that economics is always socially embedded represents similar thinking in almost all of the social sciences as well as the life sciences. Atomistic thinking is dying everywhere. As the eminent quantum theorist David Bohm has stated: "Fragmentation (false divisions) is the hidden source of the social, political and environmental crises facing the world." In almost any scientific discipline the further you advance the narrower it gets. Tunnel vision is not germane to economics alone.
Perhaps Galbraith's greatest endorsement was that of Nobel Laureate Amartya Sen, commonly regarded as the world's greatest development economist. Like Galbraith, Sen insists that economics be framed within moral and cultural concerns. Both of their genius lay in pointing out the obvious. As Galbraith relentlessly observed it was producers rather than consumers who dominated markets and foreclosed on "choice." As well, Sen commented that famine has seldom resulted from market failure. Politics and ideology always intruded. The Cambridge professor Sen commented that his whole thinking had changed 50 years ago when as a young student he had read a book called American Capitalism. Its author was John Kenneth Galbraith.
Ted Schmidt is the former editor of Catholic New Times. He can be reached at jtschmi@pathcom.com
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