John Kenneth Galbraith

Galbraith's Legacy

John Kenneth Galbraith died on 29 April, aged 97. He has been famous ever since I was aware of economics, and I think he was really the voice of the generation that lived in the 50's and 60's (or at least, the voice of economics during that time). Perhaps he is most famous for coining the term "Conventional Wisdom".

John Kenneth Galbraith (1908-2006)

Reading the various obituaries was interesting. I was expecting a fairly dismissive obit from the Wall Street Journal , and that's pretty much what it is. But it attacks his few attempts at theory, rather than his legacy. And it at least recognizes him as a huge influence on economic thinking.

I was looking forward to coverage in The Economist , since its style is very similar to Galbraith's own writings. And I was not disappointed, although I was surprised at how some of its themes were mirrored in the Wall Street Journal's writeup. I guess there are some aspects of Galbraith's legacy that most people can agree on.

For one thing, he was an excellent and prodigious writer. He wrote over 30 books (the Wall Street Journal claims 33, The Economist says "over 40", and wiki notes "four dozen"), and most of them sold well. Of course, sales aren't an indication of quality, but it is unusual for an economist to write so many best-sellers. His prose is very readable, and his wit shines through.

For instance, even if you don't think you'd ever want to read a book by an economist, at least go to a bookstore and flip through some of John Galbraith's introductions (which he wrote for his own books). I think he wrote some of the best introductions ever. They are at times funny, usually self-deprecating, and at other times scorching. Perhaps the most powerful were written during the McCarthy era. He manages to make plain exactly how he feels about McCarthyism without ever getting himself into trouble.

But a common theme for all of the obituaries was that he didn't leave a lasting economic theory. John Keynes and Milton Friedman both wrote books (albeit not as successfully), but they also created new economic theories that had a lasting impact on economics. Galbraith's few claims to theory (mostly laid out in The Affluent Society and The New Industrial State ) were basically proven wrong. Galbraith really focused on the role of the state and large corporations in economics, with a well-deserved mistrust. That led him to think some advertising-fed demand was dangerous, and at times he advocated more state control in private companies. Most of his dire predictions never came about, and even centrist economists consider many of his state-intervention ideas inefficient.

Galbraith and Me

So what did Galbraith mean to me?

For one thing, I stumbled upon him when I needed him most. Many years ago, I had read a bunch of very right-wing economists, and I was vaguely uncomfortable with some of their assertions. Galbraith was an excellent counterbalance.

Receiving the Medal of Freedom

I mentioned above that many people feel that Galbraith didn't leave an economic legacy. But that's because he didn't focus on the mathematics. He focused on how states and large economies actually worked. Unlike many armchair economists, he had taken a leading part in running the US economy, most notably in marshalling the US's resources for World War II. That required almost Socialistic planning, with careful rationing of resources, and price controls.

To get a bit geeky for a second, I think Galbraith was good at looking at some of the oft-neglected parts of global economic theory, where decisions by a few individuals really do make a big difference. A lot of economic theory focuses on the effects of millions of decision-makers having a cumulative impact. Galbraith was an effective reminder that that was only half the picture. Any mathematician or computer scientist can tell you that focusing exclusively on local optimizations can sometimes lead to poor global solutions. I wouldn't be surprised if there was a resurgence in Galbraith's popularity among economists if people do more modeling of economies as metastable equilibria (where even the slightest changes can have drastic consequences).

And I think Galbraith was at his best when he didn't try to make sweeping economic theories, but instead just focused on interesting historical events, and why they happened. For practically any discipline I find that is the best way to get a feel for How Things Work.

For instance, I was unable to read much of The Affluent Society (after the excellent introduction, of course). And I never started The New Industrial State. They are warnings for an age now past.

What I find timeless are some of his more historical works. For instance, my favorite Galbraith book would be The Great Crash , which covered the stock market crash of 1929. If you have any money in stocks, read this book. And it also covers, not in theory but in practice, how large imbalances in wealth can lead to unstable states where a crash, if not guaranteed to happen, is almost guaranteed to be catastrophic if it does. Written in 1954, it is still completely relevant and readable. One of his notes is frightening (when he wrote it in 1954, more true now): there will come a day when survivors of the crash will be gone, and the country will be vulnerable to the same stupid mistakes again.

Another excellent book in the same vein is A Journey Through Economic Time which is a walk through his own life and involvement with important economic decisions. Again, no economic theories, just a very straightforward (and enjoyable) dissection of what he saw happen, and why he think it happened.

Other favorites of mine would be Money and Name-Dropping . Money was a weird book: it started out as kind of a history of money in general, but quickly turned into just a history of the US Dollar. Fascinating nonetheless. Name-Dropping was a light read, more autobiographical and covering famous people he's run into, rather than economics.

Keep Galbraith In Your Head

I'm not a Galbraith dittohead . Like most of his other reviewers, I don't think he left a coherent economic theory in his wake, and I don't subscribe to most of his Socialistic ideals.

However, his viewpoint and calm advice can't be ignored. Although his theory was vague and lefty, his practice was hard-nosed and practical. His character shines through his writings, enough to create a tangible personality in my head even though I never saw him speak in person. So whenever I read a new economic theory, or see new events unfolding in the national or global economy, I can ask myself "What would Galbraith say?" I can dismiss his answer, but I always have to ask him.

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