The Essential Galbraith

John Kenneth Galbraith

• Publisher: Mariner Books
• Year: 2017
• eBook ISBN: 9780547348681
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

"Graceful and often witty" insights from the legendary economist, drawn from his most influential works ( Library Journal).
 
The Essential Galbraith includes key selections from the most important works of John Kenneth Galbraith, one of the most distinguished writers of our time—from The Affluent Society, the groundbreaking book in which he coined the term "conventional wisdom," to The Great Crash, an unsurpassed account of the events that triggered America's worst economic crisis. Galbraith's new introductions place the works in their historical moment and make clear their enduring relevance for the new century. The Essential Galbraith will delight old admirers and introduce one of our most beloved writers to a new generation of readers. It is also an indispensable resource for scholars and students of economics, history, and politics, offering unparalleled access to the seminal writings of an extraordinary thinker.

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The Massive Dissent of Karl Marx

[from The Age of Uncertainty]

Marx was not a central figure in my economic life, but no scholar can ignore him.

…

ADAM SMITH, David Ricardo and their followers affirmed as the natural order an economic society in which men owned the things—factories, machinery, raw materials as well as land—by which goods were produced. Men owned the capital or means of production. Spencer and Sumner gave this the highest social and moral sanction. Thorstein Veblen mused over and was amused by the result. But even Veblen did not dissent. Though a merciless critic of the high capitalist order, Veblen was not a socialist or even a reformer.

The massive dissent originated with Karl Marx. In considerable measure he used the ideas of Ricardo to assail the economic system that Ricardo interpreted and described. I’ve used the word massive to describe his onslaught. If we agree that the Bible is a work of collective authorship, only Mohammed rivals Marx in the number of professed and devoted followers recruited by a single author. And the competition is not really very close. The followers of Marx once far outnumbered the sons of the Prophet.

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II

The world celebrates Karl Marx as a revolutionary, and for a century most of the world’s revolutions, serious or otherwise, invoked his name. He was also a social scientist, many would say the most original and imaginative economist, one of the most erudite political philosophers of his age. The late Joseph Schumpeter, the famous Austrian (and Harvard) economist, iconoclast and devout conservative, introduced his account of Marx’s ideas with the statement that he was a genius, a prophet and, as an economic theorist, “first of all a very learned man.”¹

Marx was also a brilliant journalist, and all American Republicans, including Mr. Gerald Ford and Mr. Ronald Reagan, both highly prominent as I write, may note with suitable pride that, during an exceptionally meager time in his life, he was sustained by the New York Tribune and was described by its editor as its most esteemed as well as best-paid correspondent. The Tribune, with the Herald, the other parent of the Herald Tribune, was, for generations, the organ of the highest Republican establishment. Marx had another involvement with Republicans. After the election in 1864, he joined in congratulating Lincoln warmly on the Republican victory—and on the progress of the war: “The working men of Europe,” he said, “felt instinctively that the star-spangled banner carried the destiny of their class.”²

Marx was also an historian, a man for whom history was less a subject to be studied than a reality to be lived and shared. Paul M. Sweezy, the most distinguished of present-day American Marxists, has said that it is this sense of history that gives Marxist economic thought its special claim to intellectual distinction. Other economists have heard of history; Marxists make themselves and their ideas a part of history.

Finally, Marx himself was a major historical event. Often it can be imagined that if someone hadn’t lived, someone else would have done his work. The innovating force, to recur to a familiar point, was not the individual but the circumstance. No one will ever suggest that the world would be the same had Marx not lived. Marx, as an historian, would expect one to begin with his history.

III

It begins in Trier, or Tréves, at the head of the Moselle Valley. When Marx was born there in 1818, the surrounding countryside must have been the loveliest in Europe. Many would say that it still is. The valley is filled with towns out of the Brothers Grimm. Above are the vineyards. And beyond the rim of the valley are gently rolling farmlands, much of which is still farmed in the thin, inefficient but vividly contrasting strips that remain a common feature of Rhineland agriculture. Delegations come to Trier as they do to Highgate Cemetery in London where Marx is buried. From the West, travelers come to drink the wine. The local tourist office reports that only the most occasional visitor asks about Marx. A largish store in the town features a variety of merchandise and the family name. The pleasant and spacious house in which Marx was born still survives.

There was much in this small town—it then had a population variously estimated at from 10,000 to 15,000—to stimulate a feeling for history. Once, as Augusta Trevorum, it was called the Rome of the North. The German tribes regularly erupted southward on the Latins, a habit they did not break until the middle of the twentieth century. Augusta Trevorum was the principal bastion against this aggression. The Porta Negra, the great black gate from the Roman wall, stands to this day as the most impressive Roman relic in what was northern Gaul.

Trier is now, of course, part of Germany; in 1818, it was only recently so. When Marx was born, French occupation had just given way to Prussian rule. The change was a matter of prime importance for the family of Heinrich Marx. The Marx family was Jewish; numerous of Karl Marx’s ancestors had been rabbis. The French had been comparatively liberal to the ancient Jewish community of the town. Prussia was not. As an officer of the High Court and the leading lawyer of the town, Heinrich Marx could not be a Jew. So he and later his family were baptized as Protestants. It was, most scholars now agree, a purely practical step, one that did not involve any rejection of the social and intellectual traditions of Jewish life. As to religion, by the time Karl Marx was born, it was no longer thought very important by his family. Their mood was by then strongly secular.

His Jewish antecedents were, nevertheless, to be wonderfully useful to Marx’s enemies in later times. Anti-communism could be combined with anti-Semitism. This was a fine start for anyone with an instinct for rabble-rousing, and Hitler and the Nazis found it especially valuable. But many others made use of it.

However, there would also be a lurking suspicion that Marx was himself anti-Semitic. After all, he had been baptized. More important, some of his writing was very hard on Jews. This was partly a literary convention; the word Jew in the last century was used extensively as a synonym or metaphor for the avaricious businessman. But it takes effort not to read some racial animus into what he wrote.

Marx was also an atheist. This was an age when most people took religion very seriously, when its active practice was a badge of respectability. And Marx was not a passive but an active atheist. One of his most famous phrases described religion as the opiate of the people, which taught them to acquiesce patiently in hardship and exploitation when they should rise up in angry revolt.

Karl Marx never cultivated popularity but where religion was concerned, he obviously excelled. To be Jewish, open to the charge of anti-Semitism and openly hostile to Christianity as well as all other faiths, was to ensure adequately against religious applause.

IV

Marx was a deeply romantic youth. He wrote poetry, much of it unreadable—or so his family thought—and idealistic essays (some of which have survived) on nature, life and the choice of a career. A career should be where one “can contribute most to humanity . . . and glowing tears of noble men will [then] fall on our ashes.”³ While still in his middle teens, he affirmed his love for Jenny von Westphalen.

Jenny was the daughter of the leading citizen of the town, Baron Ludwig von Westphalen. Baron von Westphalen, obviously a rather remarkable man, was an intellectual and a liberal, and he had taken a great liking to the young Marx. They walked together on the banks of the Moselle, and the Baron introduced his young friend to romantic poetry and also to the notion that the ideal state would be socialist, not capitalist; be based on common property, not private property.⁴ This was heady conversation for a German aristocrat to be offering a young lad of the town. It is not suggested that Marx’s socialism began with these talks but they do explain how it was possible for him, though not without social strain, to marry into this family.

At seventeen, Marx was sent down the Rhine to Bonn to the University. This was then a small academy of a few hundred students, very aristocratic in tone. Marx was still a romantic; his interests now extended to drinking and duelling. Even by the relaxed academic standards of the time, he was rather idle. His father complained both of his high living costs and his almost complete failure to maintain communications with his family. But after a year he moved on from Bonn to Berlin. This was in 1836, and it was much more than a change in universities. It was a move into the very mainstream of German, even European, even Western intellectual life.

V

The romantic years were now at an end; the years of Hegel began. Not only was Berlin a far more serious place than Bonn but Marx was now surrounded by the disciples of Georg Wilhelm Friedrich Hegel. These young men, the young Hegelians, took themselves and their scholarly mission very seriously indeed. Recurrently in history intellectuals have been so impressed with their unique vision of truth that they have seen themselves fated to change how all men think. This was one of those moments.

What is not so easy to describe is the change the young intellectuals sought. Hegel is not a very accessible figure for the Anglo-Saxon or American mind; certainly I have never found him so. Once, years ago, I was greatly comforted by a story told me by Arthur Goodhart, the Oxford law professor and onetime Master of University College. It concerned a night in 1940 when, as a member of the Home Guard, he was deployed with a fellow professor, a distinguished philosopher at the university, to guard a small private airstrip near Oxford. They may well have been the two most improbable soldiers in the annals of British military history. But they marched back and forth in a light mist, one with a rifle of more or less Crimean vintage, the other with a fowling piece. Occasionally, being professors, they stopped to converse. Toward dawn, during one of these pauses, Goodhart’s fellow soldier lit his pipe and said, “I say, Arthur, do you suppose those wretched fellows aren’t coming? I did so want a shot at them. I’ve always detested Hegel.”

Marx’s lifetime associate and ally was Friedrich Engels. The best short summary of what Hegel meant to both of them comes from him: “The great merit of Hegel’s philosophy was that for the first time the totality of the natural, historical and spiritual aspects of the world were conceived and represented as a process of constant transformation and development and an effort was made to show the organic character of this process.”⁵

An organic process of transformation and development would become the central feature of Marx’s thought. The moving force in this transformation would be the conflict between the social classes. This would keep society in a condition of constant change. Once it had developed a structure that was seemingly secure, the structure would nurture the antagonistic forces that would challenge and then destroy it. A new structure would then emerge, and the process of conflict and destruction would begin anew.

Thus, in the real world at the time, the capitalists—the bourgeoisie—were challenging and destroying the old and seemingly immutable structure of feudalism, the traditional ruling classes of the old aristocratic system. In gaining power, the bourgeoisie would nurture the development of a class-conscious proletariat from the exploited, property-less and denationalized workers. In time, the proletariat would move against the capitalists. The capitalists, including the bourgeois state, would be overthrown. The workers’ state would be the next new structure.

By all Hegelian law, the process should continue. Perhaps the workers’ state, by the nature of its productive tasks, would be highly organized, bureaucratic, disciplined. It would need scientists, other intellectuals. And it would nurture artists, poets, novelists for whose work the literate masses would now have a large demand. These artists would then begin to assert themselves. Their opposition to the bureaucracy would become acute. Thus the next conflict, one that was far from invisible in the countries of Eastern Europe and the Soviet Union. However, Marx did not allow Hegel to take him so far. Nor do modern Marxists as they look at their dissident scientists, novelists, poets. Rigorously applied to modern Communist society, Hegel could be quite a problem.

Hegel’s ideas did not come easily to Marx. Their acceptance, or more likely the experience of serious study itself, involved him in emotional crises, weakened his health and, it appears, brought him to the edge of a physical breakdown. For a time he left the city and went to the small village of Stralau outside Berlin to recover. Each day he walked several miles to attend his lectures—and wrote in surprise at how good it was for his health. It was a lesson he would soon forget. For much of his life he would be in poor health, the result of singularly unwholesome living. Much of the world’s work, it has been said, is done by men who do not feel quite well. Marx is a case in point.

In 1841, Marx left Berlin. Henceforth he would be part of the Hegelian process—one of the prime instruments of its transformation. A new factor would also now begin to influence his movements. Hitherto they were relaxed and voluntary. Henceforth, for years, they would be sudden and compelled. Germany, France and Belgium would all unite in the belief that Marx was an excellent resident for some other country. For a man pursued by the police, an insufficiently recognized point, there are two sources of solace and protection: one is to be innocent of the crime. The other is to be righteous in committing it. Marx was always to have this second and greater support.

VI

Marx went to Cologne. Like Trier, Cologne is also in the Rhineland, and, like Trier, it was also then recently redeemed from France and somewhat more liberal for the experience. In France it was said that what wasn’t prohibited was permitted. Prussia followed a sterner rule: what wasn’t permitted was prohibited. In Cologne Marx became a journalist. The paper was the brand-new Rheinische Zeitung; it was well-financed and by, of all people, the burgeoning industrialists and merchants of the Rhineland and the Ruhr. Marx was an immediate success; he was first a highly valued correspondent and very soon the editor. None of this was surprising. He was intelligent, resourceful and extremely diligent and in some ways a force for moderation. He was also the champion of high standards. Revolution was much discussed. The word “communism,” though still indistinct as to meaning, was now coming into use. Marx said that numerous of the resulting contributions were:

. . . scrawls pregnant with world revolutions and empty of thought, written in a slovenly style and flavoured with some atheism and communism (which these gentlemen have never studied) . . . I declared that I considered the smuggling of communist and socialist ideas into casual theatre reviews was unsuitable, indeed immoral . . .⁶

Marx would still be a force for editorial good in dealing with highly motivated writers of the left today.

Under Marx’s editorship the Rheinische Zeitung grew rapidly in circulation, and its influence extended to the other German states. It became also of increasing interest to the censors who reviewed the proofs each night before it went to press. They reacted adversely to Marx on many things; the most important collision was over dead wood. I must acknowledge my debt on numerous matters to David McLellan’s very lucid biography of Marx, and they include the story of this conflict.⁷

From ancient times, residents of the Rhineland had been accustomed to go into the forests to collect fallen wood for fuel. Like air or most water, it was a free good. Now, with increasing population and prosperity, the wood had become valuable and the collectors a nuisance. So the privilege was withdrawn; wood now became serious private property. The cases seeking to protect it clogged the Prussian courts. Some eighty to ninety percent of all prosecutions were, it is said, for theft of dead wood or what was so described. The law was now to be yet further tightened—the keepers of forests would be given summary power to assess damages for theft. In commenting on this power, Marx asked:

. . . if every violation of property, without distinction or more precise determination, is theft, would not all private property be theft? Through my private property, do not I deprive another person of this property? Do I not thus violate his right to property?⁸

In these same months of 1842, Marx also came to the support of old neighbors, the winegrowers of the Moselle Valley. They were suffering severely from competition under the Zollverein, the common market that the German states had recently adopted. His solution was not radical—more free discussion of their problems—and he came t...

Table of contents

• Title Page
• Contents
• Copyright
• Preface
• Introduction
• Countervailing Power
• The Concept of the Conventional Wisdom
• The Myth of Consumer Sovereignty
• The Case for Social Balance
• The Imperatives of Technology
• The Technostructure
• The General Theory of Motivation
• Economics and the Quality of Life1
• The Proper Purpose of Economic Development
• The Valid Image of the Modern Economy
• Power and the Useful Economist1
• The Founding Faith: Adam Smith’s Wealth of Nations1
• The Massive Dissent of Karl Marx
• Who Was Thorstein Vehlen?
• The Mandarin Revolution
• How Keynes Came to America
• The Speculative Episode
• In Goldman, Sachs We Trust
• The Crash
• Things Become More Serious
• The Unfinished Business of the Century
• Sources
• About the Author