[Sunday, May 7, 2006]
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".
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.
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.
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.
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.
