Economist With a Public Purpose

Michael Keaney, Michael Keaney

• Publisher: Routledge
• Year: 2000
• ISBN:
  9781134614561
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Galbraith's arguments are discussed by a group of economists in regards to current controversies and problems. Topics covered range from globalization and the role of the state to redistributive economic policies. The result is a collection that pays tribute to one of the most prominent, and yet still contemporarily relevant, economists of the twen

1 John Kenneth Galbraith: Economist with a public purpose

Michael Keaney

To have combined longevity with work of lasting significance occasions greater opportunity for tribute than might otherwise be the case. There have been scholars who have produced influential, valuable work and who did not live long enough to enjoy merited recognition—C.Wright Mills and David M.Gordon are only two such examples. Then there are others whose long life is still no guarantee of contemporaneous reward—Thorstein Veblen is notable in this regard. By the time he was offered the presidency of the American Economic Association in 1924 on condition that he join it and deliver an address, he had endured so much professional difficulty and opprobrium in a fraught career that he took pleasure in rejecting it (Dorfman, 1972:492).

But there is another, intriguing phenomenon of intellectual history, whereby the long-lived who have enjoyed both recognition and influence during their lives suffer a curious decline in reputation following their deaths. The work of the major philosophers Benedetto Croce and John Dewey, who towered over their peers in life, became strangely passé following their deaths. This is not to say that the verdict of history is infallible. The inconvenience of certain arguments can be more easily elided when these are treated as among the time-bound idiosyncrasies of their late authors. The existence of disciples to build upon a legacy is also crucial. These need not be identified with any individual person, as with, say, Adam Smith or Karl Marx. As the adherents of the Chicago School of Economics have long demonstrated, personal anonymity is no barrier to the furtherance and entrenchment of a particular set of views.

John Kenneth Galbraith’s position among economists is most unique, in that he is one of the most widely-read and recognisable of the profession, and yet within the discipline his work is most often viewed with suspicion. His apparent detachment from his academic peers contrasts with the ease with which he has participated in political life, and the obvious warmth of the friendships he has enjoyed with politicians. But there are those designated as economists who are similarly frowned upon by their professional peers for acting upon their dissatisfaction with what conventionally passes for economic wisdom. Like Galbraith, they have made explicit their rejection of orthodoxy, whether in writing, teaching or discussion, and have endured similar opprobrium. Many such economists have formed their own societies, in an effort to preserve and develop traditions of inquiry that would otherwise fall victim to the hegemony of neoclassical thought Galbraith has never aligned himself with any one such group; rather, individuals within heterodox associations have identified elements of Galbraith’s work as overlapping or complementary to their own efforts.

The Association for Evolutionary Economics (AFEE) was established in 1965. Based in the United States, it has become a leading international association of its kind, similar in many respects to the more recently formed European Association for Evolutionary Political Economy (EAEPE). AFEE’s periodical, the Journal of Economic Issues, has established itself as the primary source of scholarship in the tradition of institutional and evolutionary economics in the varied traditions of Veblen, Wesley C.Mitchell and John R.Commons. The association’s eclectic approach to the furtherance of heterodox alternatives has brought with it certain problems in the past, as those identifying most closely with theVeblenian tradition have clashed with others who do not accept much, if any, of Veblen’s contribution. To its credit it has retained a pluralistic ethos, allowing many different approaches room to nourish under its umbrella. The association confers annually its prestigious Veblen-Commons Award to the economist regarded as significantly advancing the cause of evolutionary economics. Adolph Lowe, himself a recipient, referred to it as the ‘bad boy’ award because of its recognition of those otherwise disregarded by a snooty profession (Carroll, 1998:11). Galbraith received this award in 1976. Those working in the tradition of institutionalism continue to claim Galbraith as one of their own: Ron Stanfield describes him as ‘a leading scholar of the American institutionalist school’ (Stanfield, 1996:1), while Marc Tool sees Galbraith as a leading contributor to an institutionalist theory of discretionary pricing together with Veblen, Walton H.Hamilton and Gardiner C.Means (Tool, 1995:54).

The Union for Radical Political Economics (URPE) was launched in 1968, and has a similarly pluralistic approach to the nurturance of heterodox thought. Its founding conference, held at the Massachusetts Institute of Technology, featured three presentations on a radical theme: (1) a presentation of Marxian economic theory, (2) a radical critique of neoclassical economics, and (3) ‘a friendly critique of Marxism and an unfriendly critique of conventional economics from the vantage point of Thorstein Veblen’ (Dowd, 1982:23). Its journal, the Review of Radical Political Economics, ‘has served students and teachers of economics with radical inclinations and has increased their numbers, whether as a serious publication that can be studied or, also of great importance, as one that can be written for’ (1982:24). Among the various radical traditions of economic inquiry in the United States, two stand out The first of these is the Monopoly Capital school, building upon the work of Paul M.Sweezy and Paul A.Baran. As others have shown, this research programme shares marked similarities to work in the institutionalist tradition (Stanfield and Carroll, 1997). Not the least of these is the integrated micro-macro analysis of the economy of the 1960s United States as comprising dominant monopolistic and subservient competitive sectors by Galbraith in The New Industrial State and Baran and Sweezy in Monopoly Capital. The second school of radical political economics draws much of its inspiration from the pioneering work of David M.Gordon. His interest in long wave theory, married to a rigorously empirical research programme, led him to formulate the concept of a social structure of accumulation (see Kotz et al., 1994). As Gordon’s colleagues, Samuel Bowles and Richard Edwards, put it, the intention and result of this line of inquiry have been to

promote a return to the theoretically informed but concrete study of institutions as they are, motivated by the quest not for the highest level of generality but for historically contingent answers to questions concerning what might be done to design an economy more conducive to fairness, well-being, and freedom.

Though by no means an example of this specific theoretical approach, one particular contribution is thoroughly consonant with its stated ethos:

If economists do take up this more relevant, more useful, and hardly modest task, they will find Galbraith’s work an exemplary guide.

Bowles and Edwards (1989:50)

Given Galbraith’s long life and public prominence, it should not be surprising that there are many who have already paid tribute to his work. There have been two Festschriften published prior to this one. The first, Unconventional Wisdom (Bowles et at., 1989), was published to coincide with his eightieth birthday. The second, Between Friends (Sasson, 1999), appeared exactly ten years later. The latter volume comprises mostly anecdotal and reflective contributions (although mention should be made of Stephen Marglin’s (1999) scholarly appraisal of Galbraith’s political economy), while the former features more scholarly chapters among mostly reflective pieces.

The rationale for this collection of essays is the accomplishment of three related tasks. Firstly, and most important, is to assess the continuing relevance of Galbraith’s work in economic inquiry. Galbraith’s position as a standard bearer for the dissenting (and large) minority of economists has been of crucial importance. His advocacy of increasingly unfashionable causes both within the profession and in the political yonder deserves continuing support, not least for the preservation and nurturance of diversity within economics. As well as stifling internal pluralism, collaborative inquiry crossing the artificial boundaries of the social science disciplines is difficult for ‘economists’ to undertake unless it conforms to certain conditions. Neoclassical practitioners generally recognise interdisciplinarity only when their rational choice modelling techniques are replicated in the other social sciences. As a result of their powerful grip upon the professional discipline, those practising truly interdisciplinary research and teaching are increasingly often to be found in departments of political science, public administration and management studies, among others. Secondly, Galbraith’s global prominence, despite his avowedly American orientation, is indicative of the influence his thought has exercised throughout the world. Most of the contributors to this volume are from the United Kingdom, where Galbraith’s influence was, for a time, regarded as of such significance that key figures in the New Right resurgence of the 1970s targeted him as a dangerous heretic. Leading Conservative and mentor of Margaret Thatcher, Sir Keith Joseph, objected to the British Broadcasting Corporation spending television licence payers’ money—ostensibly on the series The Age of Uncertainty—so that Galbraith could propagate his subversive views. Such was the alarm at the blatant Left propaganda Galbraith was being given free rein to disseminate, that ‘a high convocation of British conservatives imported Professor Milton Friedman all the way from the University of Chicago to lecture adversely on my economic views’ (Galbraith, 1981:533–4). Unfortunately for Friedman, however, awaiting him and his views was the not inconsiderable figure of Nicholas Kaldor (see Targetti, 1992:260–87).

The third goal of this Festschrift is to provide an explicitly Veblenian appraisal of Galbraith’s work. The contributions of James Ronald Stanfield, William M.Dugger, Douglas F.Dowd and Geoffrey M.Hodgson do just that. Stanfield, like another contributor, David A.Reisman, has already published a book on the subject of Galbraith’s political economy. His is an appreciative retrospective appraisal of Galbraith’s work that begins the collection. Like the chapters by Stephen Dunn and David Donald and Alan Hutton, Dugger focuses on the legacy of The New Industrial State, a book Galbraith himself regards as his ‘principal effort in economic argument’ (Galbraith, 1983:xiii). While Donald and Hutton develop their inquiry into the social functions of private corporations in the context of globalisation (see Donald and Hutton, 1998), Dugger charts the decline and fall of Galbraith’s originally bright prospect in the context of the Great Capitalist Restoration of the 1970s and 1980s. Dunn, on the other hand, argues for a reconsideration of Galbraith’s theory of the firm as the departure point for those seeking to develop microeconomic theory in the post-Keynesian tradition. Dowd and Hodgson compare Galbraith’s work to that of Veblen. While Hodgson demonstrates both continuities between each in their method of inquiry as part of a larger concern to delineate the older, original, American brand of institutionalism from its unrelated neo-classical offspring namesake, Dowd suggests that both Veblen and Galbraith would have accomplished more had they emulated the conscientious and committed scholarly activism exemplified by Robert A.Brady.

Kyle Bruce and Roger J.Sandilands present two interpretive studies of events pertaining to Galbraith that took place during the 1930s. Bruce examines Galbraith’s relationship with businessman Henry Dennison and the influence this had on his subsequent intellectual development Sandilands, meanwhile, discusses the role of Franklin Roosevelt’s New Deal in facilitating the formulation and implementation of Keynesian policies. Usefully complementing Bruce’s chapter on Dennison’s pragmatic view of economic theory and policy is David R.F.Simpson’s argument that much of what passes for economics today in universities is, despite its supposed business orientation (and well-documented use as justification for our present economic system) wholly inappropriate as a preparation for business life. The misguided faith in sophisticated quantitative forecasting serves only to delude rather than to clarify and guide. In a manner reminiscent of Galbraith, Simpson takes management scientists to task for not being able to deliver on their promises. Reisman’s paper charts the evolution of Galbraith’s position vis à vis the role of the state, and interprets Galbraith as essentially technocratic in orientation, if of an enlightened, progressive variety. My own chapter by contrast uses Galbraith’s insights regarding the state in conjunction with those of Veblen, James O’Connor and other authors to suggest possible means of democratising the state in the context of globalisation. Finally, Andrew S.Skinner returns to comments made by Galbraith in 1973 with respect to Adam Smith and the eventual independence of the United States. Skinner argues that Smith desired not only a continued union between Britain and its American colonies, but envisaged the eventual transfer of power from the former to the latter, given the sheer growth potential of the colonies. This sounds not unlike the position recently articulated by media mogul Conrad Black (1999) in his advocacy of British withdrawal from the European Union and entrance into the North American Free Trade Agreement.

As with the members of the professional associations described above, the contributors to this volume represent an eclectic range of interests. Nevertheless, all share two characteristics. Firstly, as practising social scientists in academia and/or business, they are wholly dissatisfied with the discipline of economics, as it is taught to students, and as it is employed to ‘explain’ reality. As has been succinctly stated elsewhere, ‘formal theory can be, and is, an escape from truth’ (Galbraith, 1987:415). Secondly, each is bound by a deep appreciation for the singular contribution of Galbraith to economic understanding. This does not render them uncritical. Some would argue that Galbraith has not gone far enough in his criticisms of the status quo and its conventional wisdom. But all recognise the importance of Galbraith’s work as an alternative to the stagnating orthodoxy of the neoclassical model. For it has been in the act of providing ‘historically contingent answers to questions concerning what might be done to design an economy more conducive to fairness, well-being, and freedom’ that his work has in no small measure transcended its time and place.

References

Black, Conrad (1999) ‘Britain’s Atlantic option and America’s stake’, The National Interest 55: 15–24.

Bowles, Samuel, and Richard Edwards (1989) ‘Varieties of dissent Galbraith and radical political economy’, in Samuel Bowles et al., eds, Unconventional Wisdom: Essays on Economics in Honor of John Kenneth Galbraith, pp. 39–52.

Bowles, Samuel, Richard C.Edwards, and William G.Shepherd, eds (1989) Unconventional Wisdom: Essays on Economics in Honor of John Kenneth Galbraith, Boston: Houghton Mifflin.

Carroll, Michael C. (1998) A Future of Capitalism: The Economic Vision of Robert Heilbroner, New York: St. Martin’s Press.

Donald, David, and Alan Hutton (1998) ‘Public purpose and private ownership: some implications of the “Great Capitalist Restoration” for the politicization of private sector firms in Britain’, Journal of Economic Issues 32, 2:457–464.

Dorfman, Joseph (1972) Thorstein Veblen and his America, 7th ed. Clifton, NJ: Augustus M. Kelley.

Dowd, Doug (1982) ‘Marxism for the few, or, let ‘em eat theory’, Monthly Review 33:14–28.

Galbraith, John Kenneth (1981) A Life in Our Times, Boston: Houghton Mifflin.

—(1983) The Anatomy of Power, Boston: Houghton Mifflin.

—(1987) ‘A look back: affirmation and error’, Journal of Economic Issues 23, 2:413–416.

Kotz, David M., Terrence McDonough, and Michael Reich, eds (1994) Social Structures of Accumulation: The Political Economy of Growth and Crisis, Cambridge: Cambridge University Press.

Marglin, Stephen (1999) ‘John Kenneth Galbraith and the myths of economics’, in Helen

Sasson , ed. Between Friends: Perspectives on John Kenneth Galbraith, pp. 114–138.

Sasson, Helen, ed. (1999) Between Friends: Perspectives on John Kenneth Galbraith, Boston: Houghton Mifflin.

Stanfield, James Ronald (1996) John Kenneth Galbraith, Basingstoke: Macmillan.

Stanfield, James Ronald, and Michael Carroll (1997) ‘The Monopoly Capital School and Original Institutionalist Economics’, Journal of Economic Issues 31, 2:481–489.

Targetti, Ferdinando (1992) Nicholas Kaldor: The Economics and Politics of Capitalism as a Dynamic System, Oxford: Oxford University Press.

Tool, Marc R. (1995) Pricing, Valuation and Systems: Essays in Neoinstitutional Economics, Aldershot: Edward Elgar.

2 The useful economist

James Ronald Stanfield

Ken Galbraith, like ThorsteinVeblen, will be remembered and read when most of us Nobel Laureates will be buried in footnotes down in dusty library stacks.

P.A.Samuelson (1991)

The persistence of a way of thinking which somehow fails to take account of what are proving to be the basic realities of modern economic life is itself one of the great economic mysteries of our civilization.

C.E.Ayres (1944)

My title alludes to the title of Galbraith’s (1973a) presidential address to the AEA: ‘Power and the Useful Economist’. I find the label very apropos to an economist whose prose entertains sufficiently that his books are freely purchased by significant numbers of consumers. Usefulness is also apparent in Galbraith’s lifelong partisan service to the Democratic Party as well as his occupation of several government posts including a tour as U.S. Ambassador to India. Even some who disagree with Galbraith’s analysis may admire him as a paradigm of an involved economist who participates in the political advocacy process. Galbraith’s usefulness is not simply a matter of individual idiosyncracy. It reflects the intellectual tradition which he represents—pragmatic American institutional economics, which insists upon an economics that is useful and that is accessible to the literate citizen so that it can be applied in the democratic process (Stanfield, 1999). Galbraith’s success in this regard is apparent from his lucrative sales figures.

One may reasonably aspire to capture the thrust of Galbraith’s work sufficiently to convey the essential Galbraithian Model of advanced capitalism to one’s readers. But it would be folly to attempt to represent the legendary prose style and mordant wit in any but Galbraith’s own words. Hence I shall begin by sharing a bit of the celebrated Galbraithian wit in his own words with only minimal explanation of context Thereafter, I examine the essential features of the Galbraithian Model of advanced capitalism: his insistence upon a central analytic focus on power and his criticism of his more conventional colleagues for its neglect. I shall then examine the ‘test of anxiety’ by which he proposes to assay the usefulness of economic analysis. I conclude with a brief comment on the continuing significance of his work: the Galbraithian Challenge and Prospect for political economy and social reform.

The Galbraithian wit

Galbraith is ever a critic of the conservative, business ideology of American popular culture. ‘The American business psyche is an acutely vulnerable thing; it associates all change with perverse ideological intent’ (1979:24). On the reluctance to expand the range of options available to individuals in balancing their financial need to work with their self-realisation needs for leisure, Galbraith observed that those ‘who speak much of liberty should allow and even encourage it’ (1967:373). Nor has Galbraith ever suffered agreeably the views of those who would blame the victims of the industrial disease of unemployment: ‘When jobs are unavailable, no useful distinction can be made between those who are voluntarily and those who are involuntarily unemployed. Neither can find work’ (1958:299).

Galbraith...