John Kenneth Galbraith Biography

John Kenneth Galbraith BiographyArchibald Galbraith, a Canadian schoolteacher, formerly climbed onto a platform atop asteaming pile of mire to address a group of Liberal party voters before the approach Ontarioelections.Before I begin, he said, I must apologize for communicate from the Tory platform.Later on, his teenage son, John Kenneth, would congratulate him on the dig, to which heArchibald would respond, It was good. save it didnt adjustment any votes. (Arthur Scheslinger,1984, p. 7) So, from an early age, John Kenneth Galbraith was between the earth of politics andpragmatism.John Kenneth Galbraith was born in 1908. His fathers aff form in politics had a rudimentary impact on the one-year- nonagenarian John Kenneth, politicizing him at an early age. He origin everyystudied agrarian Economics at the Ontario Agricultural College, but would eventu solelyy saythat he took his prime(prenominal) real economics course at UC Berkeley, and that the economics culturein Canada was very poor (Dunn, 2002, p. 350). As a graduate bookman at UC Berkeley, hecontinued his study of cl proclaimish economics and worked as a research assistant for a very zanyold man by the name of Edwin Voorhies (Kreisler, 1986). He groundd that it was his study ofagricultural economics that left him with a strong feeling that social scholarship should be tested byits usefulness, an idea inspired by Veblens dichotomy between exoteric intimacy (knowledgethat is valuable and applicable) and esoteric knowledge (knowledge that has no practicalapplication, but because of that, is considered more prestigious). Galbraith believed that socialsciences should be exoteric, not esoteric. In his book Economics and The Public Purpose,Galbraith develops this idea further, saying, The supreme test of a set of economic ideas iswhether it illuminates the anxietes of the magazine (Galbraith, 1973, p.198).In the 1930s, turn Galbraith was studying to receive his Ph. D, it was clear thateconomic t heory was not addressing the anxietes of the era. Economists were essay toexplain how free foodstuffs had led the United States to economic ruin. One in four the Statesnswere jobless. Production had all but ground to a halt. Obviously, thither were egregious errors inthe accepted dogma, which stated that free markets left to their own devices would bring ab come to the fore faculty and employment. Galbraith said that his method of coming to an instinct was tofor yearsstart with Alfred Marshall, see the world as it is, and make the requiredmodifications (Dunn, 2002, p. 351). Upon graduating, Galbraith traveled to Washington D.C.and took a position assisting with the implementation of the Agricultural valuation account Act, beforetaking a position as a enlighten at Harvard. At Harvard, he made speeches supporting the reelection of Roosevelt, cementing his initial ties with the antiauthoritarian party. Not long after, he was offereda fellowship at Cambridge, where the discussi ons touch around Keynes, who had just published his General Theory of Employment, Money, and Interest (Dunn, 2002, pp. 350-355).Galbraith returned from England to his tutor position at Harvard a con loyaled Keynesian.He spent a few more years tutoring at Harvard (where he met John F. Kennedy) and and then took ajob as resident economist for the the Statesn farm Bureau Federation in Washington. Galbraithsobservation of the farm fabrication solidified his belief in the power of g all overnment to moveindustries forward. In 1930, farm households accounted for a quarter of the population, whereastoday they account for only 1% of the population and yet on the whole, they now produce morethan they did in 1930. This is imputable to strong government support of the farming industry. Thatnational proviso could transform a weak, disorganized, and poverty prone sector of the frugality into the Statess approximately spectacular fatty successpreserved his governmental concerns(Arthur Sc hlesinger, 1984, p. 8). Galbraith became head of the Office of Price Administration in1941 during founding state of war II, and at the same time began his long c beer as a ghostwriter, penningspeeches for Samuel Rosenman and Robert Sherwood (Arthur Schlesinger, 1984, p. 8).Galbraith then became editor of Fortune magazine, where he worked directly for irritateLuce, founder of Time Inc., whom he called one of the most ruthless editors I live with ever known,or anyone has ever known (Kreisler, 1986). Galbraith has credited Luce with dramaticallyimproving his writing via ruthless editing. Galbraith credited Fortune with giving him amarvelous introduction to the corporate mind, because the focus of the magazine at the timewas the anatomy of the big corporations (Dunn, 2002, p. 353). The decisiveness making processesof study corporations would be a recurring phenomenon that he would write just about in many ofhis publications.Galbraith returned to academia in 1948, having spent fiv e years as editor of Fortune. Hewas nominated to a position teaching economics at Harvard. However, members of Harvardsboard of overseers regarded him as a dangerous Keynesian, and as a result, took the step, good-nigh unprecedented in modern times, of blocking the appointment (Dunn, 2002, p. 353).However, Galbraith had many semipolitical allies, and among them was Harvards president, JamesB. Conant. Conant was much(prenominal) a fan of Galbraith that he pull through to resign unless the board ofoverseers backed down. Eventually they did, and Galbraith became a tenured professor atHarvard. It was then that he began work on his first major bestseller, Ameri keister Capitalism TheConcept of Countervailing Power.Galbraith begins his discussion of capitalism in America by pointing out the followingconundrum Mainstream economic theory asserts that in the chance of monopoly, prices will rise,business will screw consumers, fail to innovate, and as a result, the economy will be in bad shape. He then notes the work of Joan Robinson in developing the idea of monopolistic andoligopolistic competition, noting that oligopolistic industries sway in the same way asmonopolies would, and through informal agreements can involve the exact same effect. Then, usingthe actual data stash away by the American government, he shows that the majority of industriesare in detail oligopolistic. exclusively he goes even further than that, saying that almost all industries willeventually be grapple oligopolistic for the following reasons At the birth of an industry,competetion is un neutraliseable and possible, as no fasts have clear and significant advantages yet. Butover time, it will become increasingly difficult to enter the industry because of the barriers to admittance created by high capital requirements and increasing returns to scale. At the same time thatincreasing returns to scale start to set in (as they inevitably do), quick firms will too gain theadvantage of expe rience and prior organization. The convergency of these factors leads, in mostcases, to an industry with a few power players and a hulkyr but exempt relatively small number ofhangers-on, who exist by change niches that arent worth the time of the large firms.Galbraith poses a question in American Capitalism, and before fixateting to that question, itis important to get a sense of the context in which he asks it. After World War II, America wasexperiencing incredible prosperity. But underlying this prosperity was the upkeep of low. TheGreat Depression was still fresh in the collective consciousness, and the number mans faith thatcapitalism would bring about efficiency and full employment was shaken. And yet, as the yearsafter the war progressed, things were stable and employment was plentiful. It is also important tonote that the era of non-depression Keynesianism was beginning, and much to the crucify of thebusiness community, government was becoming a much more participat ory force in markets.The business community was reacting violently against this expansion of government, claimingthat it was a complete disaster, wasteful to the very extreme and bound to cripple growth. Thestate of the American economy in the 1950s then was that of big government, near-ubiquitousmonopoly or oligopoly, and an underlying fear of depression. Yet, by almost any measure, theeconomy was a success.The problem, according to Galbraith, was that, in principle, the economy pleased noone in practice it satisfied most. Social inefficiency government spending, unrationalizedpower monopoly and oligopoly, intrusive government regulation, and depression were allmatters for deep concern. But neither liberal nor conservatives, neither the generous nor all but thevery poor, found the consequences intolerable (Galbraith, 1954, p. 85). What fascinatedGalbraith was how an economy which was so flawed in theory could work so thoroughly in practice.The question he asked was Why are things sowellgood? Thus, he states that his aim inAmerican Capitalism is to testify in turn the circumstances that have kept social inefficiency, esoteric power, government intervention, and unemployment from ruining us in the recentpresent (Galbraith, 1954, p. 85).The first answer that he gives is that oligopoly is much more conducive to techonologicalinnovation than absolute competetion. There is no more pleasant fiction than that technicalchange is the product of the matchless ingenuity of the small man forced by competition toemploy his wits to better his neighbor. Unhappily, it is a fiction, he says. technologicaldevelopment has long since become the preserve of the scientist and engineer (Galbraith, 1954,p.86). His argument is that due to the costliness of development, it can only be under shoot downn by afirm with considerable resources. In highly agonistic industries, no one firm has considerableresources. Moreover, because innovations can easily be imitated, it is not economi cal for a smallcompetitive firm to bear the research and development be for an entire industry.Galbraith then turns his keen eye to the idea of inefficiency. He deals with this complete byasserting that Americas relative opulence shields us and is moreover a cause of suchinefficiency. At the time that the classic economists were writing, an opulent economy had yetto be observed. For Mal therefrom and Ricardo, inefficiency was, indeed, an evil thing. It deniedbread to the athirst(p) and clothing to the naked (Galbraith, 1954, p.102). The true power ofGalbraiths insight is his expertness to point out the obvious. He criticizes his fellow economists forbringing the mentality of the 19th century, with all its poverty and degradation, to theopulent twentieth century. Galbraith finds this error both diverting and absurd, saying, He the primary(prenominal)stream economist worries far too much about partially monopolized pricesfor tobacco, liquor, automobiles, and soap, in a land whi ch is already suffering from nicotine poisoning andalcoholism, which is nutritionally gorged with sugar, which is filling its hospitals and cemeterieswith those who have been maimed or murdered on its highways, and which is dangerouslymental case about physical structure odors (Galbraith, 1954, p.102). His point is that these inefficiencies are infact a sign of the wealth of America. They are the symptom of a wealthy economy, and thus weought not to worry so much about them. He also discredits the idea of intrusive government,noting that, alarm over pending action by government on economic matters, which frequentlyreaches almost pathological proportions when the decision is pending, almost invariablyevaporates completely once the action is taken. One of the profound sources of Americanstrength has been the margin of error provided by our well-being (Galbraith, 1954, p.106).But the most significant reason that monopoly has failed to capsize the Americaneconomy, according to Galbrait h is the exercising of what he calls countervailing power. Theassumption always made by economists, when they would consider the case of markets, was thatthe check on an individual firms power wold come from the leave side of the industry.Galbraith disagrees. He admits that the existence of monopoly power in a competitive marketdoes in fact encourage the entry of more producers to appropriate some of that power forthemselves. In other words, he says. disputation was regarded and is a self-generatingregulatory force (Galbraith, 1954, p. 112).But in a market that is not competitive, the incentive for some economic agent toapproptiate that power still exists. But it need not come from the supply side. That power is, inpractice, usually appropriated by strong buyers or coalitions of buyers, who can sometimes takeeven more than their share. Because of the tendency of power to be organized in response toexisting power, countervailing power is also a self-generating force (Galbraith, 19 54, p. 113). match to Galbraith, it is the large retailers who, by way of their absolute power overmanufacturers, muckle for the consumer and protect the consumer from the high monopolyprices that would otherwise result. Likewise, the considerable market power of large firms ischecked by trade unions for a simple reason, there is something to be bargained for Galbraithnotes that trade unions are most sizeable in the least competitive industries. This is because thesurplus that a company derives from monopoly power acts as an incentive to unions. In the verycompetitive industries, producers and workers are operating at bare token(prenominal) profit and theincentives to organization insignificant.These are the basic ideas lay out in American Capitalism. The book in many ways laysthe framework and notation for the books he would publish in the sixties and seventies. But whileAmerican Capitalism was Galbraiths first major bestseller, it was The laden Society thatskyrocketed him to fame. The large Society builds on many of the concepts introduced in hisfirst book, but with some(prenominal) key differences. Though Galbraith could not suppress his urge tosocial commentary, The Affluent Society is a much more prescriptive book, growing out of hischapter on technical development in American Capitalism. To his original abstract he adds asignificantly moral component. The Affluent Society concerns itself with the policies that oughtto be undertaken once the basic needs of the people have been met. Galbraiths main argument isthat our ratio of private good (cars, televisions, automobiles) to public goods (schools, roads) isinequitable and ridiculous. The exposit of his argument is that once our basic desires such asfood, clothing, and shelter have been satisfied, large corporations employ advertising to concoctnew film for products. The tralatitious economic and utilitarian argument for goods quagoods falls on its face if consumer demand is not sovereign. What is really necessary is the useof societys productive resources in the public realm in juxtaposition with growth in the privaterealm. He calls this idea social chemical equilibrium, saying, the problem of social balance is ubiquitous,and frequently it is obtrusive. As noted, an increase in the consumption of automobiles requires afacilitating supply of streets, highways, traffic control, and parking spaces (Galbraith, 1958, p.193). He also confronts the existence of poverty in an affluent society as being the result ofoutdated nineteenth century attitudes. A poor society, he says, had to enforce the rule that psyche who did not work could not eat. An affluent society has no resembling excuse for suchrigor (Galbraith, 1958, p. 251). But he admits that, nothing requires such a society to becompassionate. But it no longer has a high philosophical justification for its callousness(Galbraith, 1958, p. 251).In the 50s, America was in the midst of the cold war and attempts at engineering a bettersociety were very suspect. Galbraith throughout The Affluent Society understands the subjectiveand ideological opposition to big government and social policy, but he is adamant in stating,that cities residents should have a nontoxic supply of air suggests no revolutionary dalliance with fabianism (Galbraith, 1958, p. 191).In fact, Galbraith eventually finds socialism and central planning to be in many ways like to the kind of capitalism that developed in America in the latter(prenominal) half of the 20th century.9In The New Industral State, Galbraith focuses his effort on understanding what he calls thetechnostructure. In an era when the division of intellectual tire out is so overwhelming, themanagement or even management team of a powerful corporation doesnt actually make most ofthe decisions. The decisions are instead made collectively by teams of experts. Galbraith coinsthe term technostructure as, embracing all who bring specialized knowledge, talent orexperience to group decision-making. This, he says, not the management, is the guidingintelligence, the brain, of the enterprise (Galbraith, 1967, p.71).Many of Galbraiths ideas resonate to this day. Unfortunately, most do not. It would betempting to end this essay optimistically, expounding poetically on the way Galbraiths ideascontinue to incline national policy. In reality, although he was a well-respected and powerfulman, many of his ideas continue to be handle by mainstream economists and politicians. Rarelydoes one hear a contemporary economist talk about countervailing power, or reference thetechnostructure. While as a society we owe much to Galbraith and his ideas, the discipline ofeconomics has for all intents and purposes laid his practical ideas by the wayside. But whether ornot his continued influence on economics is felt by the mainstream, his contribution to thediscipline ashes poignant and accessible for those who choose to seek it out on their own.Galbraiths main contribution t o economic thought was his tackling of the problem ofpower. He was positive(p) that the most glaring, most significant, and most ignored problem inthe surface area of economics was the effect of power on economic activity. Understanding whyGalbraith was so affixed by this idea of power is actually kind of simple he was surrounded by it.Through his political work, Galbraith knew not only Kennedy, but several other presidents andall the most powerful officials in the democratic party. Through his work at Fortune he becameacquainted with the heads of the largest and most powerful corporations in the world. He saw,10clearly, the issue to which the decisions of these men (and the technostructures supportingthem) affected the direction and performance of the economy of the whole. apt(p) that he was anastute man, for him to ignore the influence of power on economies, in order to advance a seriesof aesthetically pleasing models and equations, would have been not only unthinkable butdis honest. Galbraith wanted badly to be useful, to change votes, as his father would have said.To him, sitting in a room concocting theories did not qualify as usefulness. He longed to be inthe thick of policy-making. Later in life, he wanted badly to avoid what he called Belmont Syndrome1 Thus, his struggle to be relevant was not only ideological but moral.John Kenneth Galbraith died peacefully at home in 2006. He left behind not only anextensive body of economic work, but two novels. His first novel, The Triumph, written in 1969,was about U.S. foreign policy disasters in Latin America. His second novel, A promoteProfessor, written in 1990, was about an eccentric Harvard professor, and lampooned the eliteinstitution. He lived ninety-seven years, almost all of them (excepting the first few) werepreoccupied with upending the conventional wisdom. He remains one of the most famous andcontroversial economists of the twentieth century, and a fine novelist.