The Canadian-born, Berkeley-trained John Kenneth Galbraith has been considered by many as the "Last American Institutionalist". As a result, Galbraith has remained something of a renegade in modern economics - and his work has been nothing if not provocative. In the 1950s, he presented economics with two tracts that needled the mainstream: one developing a theory of price control (which arose out of his wartime experience in the Office of Price Administration) which he argued for as an anti-inflation policy (1952); the second, American Capitalism (1952), which argued that American post-war success arose not out of "getting the prices right" in an orthodox sense, but rather of "getting the prices wrong" and allowing industrial concentration to develop. It is a formula for growth because it enables technical innovation which might otherwise not been done. However, it can only be regarded as successful provided there is a "countervailing power" against potential abuse in the form of trade unions, supplier and consumer organizations and government regulation. Many have since argued the formula for East Asian success later in the century was based precisely on this combination of oligopolistic power and "countervailing" institutions.
It was his smallish 1958 book, The Affluent Society, that earned Galbraith his popular reknown and professional emnity. Although the thesis was not astoundingly new - having long been argued by Veblen, Mitchell and Knight - his attack on the myth of "consumer sovereignty" went against the cornerstone of mainstream economics and, in many ways, the culturally hegemonic "American way of life".
His New Industrial State (1967) expanded on Galbraith's theory of the firm, arguing that the orthodox theories of the perfectly competitive firm fell far short in analytical power. Firms, Galbraith claimed, were oligopolistic, autonomous institutions vying for market share (and not profit maximization) which wrested power away from owners (entrepreneurs/shareholders), regulators and consumers via conventional means (e.g. vertical integration, advertising, product differentiation) and unconventional ones (e.g. bureaucratization, capture of political favor), etc. Naturally, these were themes already well-espoused in the old American Institutionalist literature, but in the 1960s, they had been apparently forgotten in economics.
The issue of "political capture" by firms was expanded upon in his 1973 Economics and the Public Purpose. But new themes were added - notably, that of public education, the political process and stressing the provision of public goods.
Although often not acknowledging it explicitly, many economists have since pursued themes raised by Galbraith. The issue of political capture has been followed up by Buchanan and "Public Choice" economics, the objectives and conduct of the firm by Simon and the "New Institutionalist" schools, the failure of consumer sovereignty by Scitovsky and others. Even the game- theoretic developments in industrial organization have replayed Galbraithian themes.
Although Galbraith is outside the mainstream, that did not prevent them from electing him president of the American Economic Association in 1972. Galbraith certainly remains one of the better-known economists in post-war America and has worked in a variety of capacities. Besides his tenure at Harvard and the Office of Price Administration, Galbraith was editor of Fortune magazine for several years, director of the US Strategic Bombing Survey, chairman of the Americans for Democratic Action in the late 1960s, television and newspaper commentator, advisor and speechwriter for John Fitzgerald Kennedy, Eugene McCarthy and George McGovern. He also served as the American ambassador to India in the early 1960s and tried his hand at two novels (1968, 1990).
Major works of John Kenneth Galbraith
Modern Competition and Business Policy, 1938.
A Theory of Price Control, 1952.
American Capitalism: The concept of countervailing power, 1952.
The Great Crash, 1929, 1954.
The Affluent Society, 1958.
The Liberal Hour, 1960
The New Industrial State, 1967.
The Triumph, 1968.
Ambassador's Journal, 1969.
Economics, Peace and Laughter, 1972.
"Power and the Useful Economist", 1973, AER
Economics and the Public Purpose, 1973
Money, 1975.
The Age of Uncertainty, 1977.
Annals of an Abiding LIberal, 1979.
A Life in Our Times, 1981.
The Tenured Professor, 1990.
A Journey Through Economic Time, 1994.
The Good Society: the humane agenda, 1996.
biography
John Kenneth Galbraith (born October 15, 1908) is something of an iconoclast among North American economists: he is an "old-fashioned" Keynesian with progressive values and a gift for writing accessible, popular books on economic topics in which he takes delight in describing ways in which economic theory does not always mesh with real life.
Galbraith was born in Iona Station, Ontario, Canada. He graduated from the Ontario Agricultural College, now University of Guelph and then got an M.S. and Ph.D. from the University of California, Berkeley.
During World War II, Galbraith served a tenure as deputy head of the Office of Price Administration. At the end of the war, he was asked to carry out a survey of US and allied strategic bombing, and concluded that it served no use and did not shorten the war (Source: The Guardian newspaper, Aug. 14, 2004). After the war, he became an advisor to post-war administrations in Germany and Japan.
In 1949, Galbraith was appointed professor of economics at Harvard University. He also served as editor of Fortune
He was a friend of President John F. Kennedy and was appointed by Kennedy as U.S. ambassador to India from 1961 to 1963. There he attempted to aid the Indian government with developing its economy. While in India, he helped establish one of the first computer sciences department at the Indian Institute of Technology in Kanpur, Uttar Pradesh.
Works
In American Capitalism: The concept of countervailing power, a seminal work published in 1952, Galbraith outlines how the American economy in the future would be managed by a triumvirate of big business, big labour, and an activist government. He contrasted this with the previous pre-depression era where big business had free rein over the economy.
In another work, The Affluent Society, which became a bestseller, Galbraith outlines how to be successful the United States would need to make large public investments in items such as highways and education. In The New Industrial State (1967), he argues that very few industries in the United States fit the model of perfect competition. In A Short History of Financial Euphoria (1990), he traces financial bubbles through several centuries, and cautions that what currently seems to be "the next great thing" may not be that great and may have quite irrational factors promoting it.
Galbraith's son, James K. Galbraith, is also a prominent economist.
Quotes
"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everybody gets busy on the proof."
——John Kenneth Galbraith
"If you feed enough oats to the horse, some will pass through to feed the sparrows." - in relation to trickle-down economics
——John Kenneth Galbraith
Economics is extremely useful as a form of employment for economists.
——John Kenneth Galbraith
If all else fails, immortality can always be assured by spectacular error.
——John Kenneth Galbraith
It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled sea of thought.
——John Kenneth Galbraith
Meetings are indispensable when you don't want to do anything.
——John Kenneth Galbraith
Nothing is so admirable in politics as a short memory.
——John Kenneth Galbraith
Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable.
——John Kenneth Galbraith
Under capitalism, man exploits man. Under communism, it's just the opposite.
——John Kenneth Galbraith
Where humor is concerned there are no standards - no one can say what is good or bad, although you can be sure that everyone will.
——John Kenneth Galbraith
You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too.
——John Kenneth Galbraith
Partial bibliography
Modern Competition and Business Policy, 1938.
A Theory of Price Control, 1952.
American Capitalism: The concept of countervailing power, 1952.
The Great Crash, 1929, 1954.
The Affluent Society, 1958.
The Liberal Hour, 1960
The New Industrial State, 1967.
The Triumph (a novel), 1968.
Ambassador's Journal, 1969.
Economics, Peace and Laughter, 1972.
Power and the Useful Economist, 1973, AER
Economics and the Public Purpose, 1973
Money, 1975.
The Age of Uncertainty (also a BBC 13 part television series), 1977.
Annals of an Abiding Liberal, 1979.
A Life in Our Times, 1981.
A Tenured Professor, 1990.
A Journey Through Economic Time, 1994.
The Good Society: the humane agenda, 1996.
The Economics of Innocent Fraud, 2004.
The Nature of Mass Poverty
Money: Whence It Came, Where It Went
