The Indian Economy Blog

April 30, 2006

Goodbye, John Kenneth Galbraith

Filed under: Economic History — Atanu Dey @ 7:27 pm

Ignorance, stupidity, in great affairs of state is not something that is commonly cited. A certain political and historical correctlness requires us to assign some measure of purpose, of rationality, even where, all to obviously, it does not exist. Nonetheless one cannot look with detachment on the Great War (and also its aftermath) without thought as to the mental insularity and defectiveness of those involved and responsible.

Thus wrote John Kenneth Galbraith in his 1994 book A Journey Through Economic Time.

He passed away yesterday at the age of 97. Born in Ontario, Canada, in 1908, he has been one of the keenest observers of the 20th century. A profile the Guardian did in April 2002 called him the last of the old-style liberals. I will leave the Guardian profile to fill in the details. Also see the reviews of the book John Kenneth Galbraith: His Life, His Politics, His Economics for a fairly comprehensive picture of who the man was. For my bit, I will mention two things I share with Galbraith. First, his love for India. He was US President Kennedy’s ambassador to India in the early 1960s, a job he took because of his love of India and for which he turned down the position of being JFK’s chief economic advisor. Second, he received his PhD in economics from the same college as I did at the University of California at Berkeley. I walked the same halls and my doctoral thesis at the Giannini Foundation Library sits a few feet away from Galbraith’s doctoral thesis.

Among the great contemporary economists, I admire Galbraith the most. Something about what he stood for, resonates very powerfully within me. Some years ago I was paid the greatest complement I have ever received. I was discussing various prominent economists with Prof Irma Adelman at UC Berkeley. She, by the way, is one of the world’s great development economists. And I don’t say this just because she was one of my thesis advisors. Anyway, the conversation was long enough that I came around to asking her what how she would size me up. Without a pause she answered, “I think you are an old-style liberal, just like JK Galbraith.” A kindred spirit really and that is why I admire his writings so much.

With Galbraith’s passing, one era very fecund era of American economics has come to a close. He loved the subject of economics and was one of the clearest thinkers in the field. He criticized the study and practice of economics also.

“But, at best, change in economics has been reluctant and reluctantly accepted. Those who benefit from the status quo resist change, as do economists who have a vested interest in what has always been taught and believed. These are matters to which I will return.

“Further, it must be said, much past writing on the history of economic ideas has been aggressively dull. There are a significant number of learned men and women who hold that any successful effort to make ideas lively, intelligible and interesting is a manifestation of deficient scholarship. This is the fortress behind which the minimally coherent regularly find refuge.

“The foregoing paragraphs will suggest my purpose in this history. I seek to see economics as a reflection of the world in which specific economic ideas have developed .. . . ” [Source: "Economics in Perspective: A Critical History" (1987)]

John Kenneth, goodbye, farewell, and thanks for all the wisdom that you found and conveyed.

14 Comments »

  1. Atanu,

    I barely started reading up on John Galbraith after reading the review of his biography in mid-2005 in the Foreign Affairs magazine. I think, as you say, he is a giant in the field of liberal economics and social policy. Unfortunately I am more ambivalent about the giant’s influence on economic discourse especially on Indian economy. I think as an ambassador he was extremely helpful to India when China attacked India in 1962 in the midst of Cuban crisis. But his real impact was on Indian economy and it was real and largely negative. His closeness with Nehru and Indira during the 60s and his advice and writings on economic contribution of public sector institutions – namely nationalization of private sectors, from banks to airlines to industries, there by creating the commanding heights that India is only now trying to dismantle with great difficulty – has proven devastating on nascent post-independent Indian economy. While it’s hard to point finger at one person for creation of India’s commanding heights, other the person who signed them into law, I think, John Galbraith had a major role in it.

    While a strong and rich economy, with diverse interest groups and excellent institutions, like US could sustain a Great Society program that he helped create under president Johnson administration, the full blown effect of his advice to Indian leaders on economic matters were largely negative and persistent and wasted at least two generations of Indian entrepreneurial spirit, not to mention the persistence of large scale unemployment and poverty.

    I subscribe partly, may be in hind-sight, to his thesis in The Affluent Society. And I don’t question his love for India, but he too, like a lot of people who love India and have the best of intentions at heart, put too much confidence on benign hand of the government and not much on the suffocating hand of bureaucracy in economic matters.

    Comment by Chandra — April 30, 2006 @ 11:56 pm

  2. Chandra,

    Thanks for the thoughtful comment. Yes, JKG was a Keynesian and believed that the government has an active role to play in bringing the economy out of a depression through public spending. I am strongly opposed to large governments and firmly believe that the private sector and private entrepreneurial energy leads to the most good with the usual caveats about market failures and the needed regulatory oversight.

    The commanding height shite must be laid at Nehru’s doorstep and JKG has nothing to do with it despite his supposed closeness to Nehru or Indira. JKG had a very very high gain BS detector. See the opening quote of my piece.

    India lost a half a century of potential progress because of Nehruvian socialism induced bureaucratic and public sector malefeascence. Neither Johns–John Kenneth Galbraith or John Maynard Keynes–had a hand in the disaster perpetrated on the Indian economy by Nehru and his progeny.

    Atanu

    Comment by Atanu Dey — May 1, 2006 @ 9:38 am

  3. JKG was a committed democrat, a staunch liberal if the reviews I have read are correct. He fell out earlier with Lyndon Johnson on the Vietnam war that he opposed later. Wonder what he thought of the Bush administration and its policies- I am not sure there is any record of his comments on this out there- or is there?

    Comment by little Ram — May 1, 2006 @ 9:52 pm

  4. Atanu, I have to disagree with you that economists like John Galbraith had no role in the economic policies pursued by Nehru and Indira. In fact John Galbraith had significant influence on policy making in the 60s in India. Beyound his writings and speeches, his tenure in India in early 60s and advisory role in mid-to-late 60s match the period and influence on Nehru’s creation of commanding heights and influence on Indira’s usurpation of private property in the name of development. Politicians listen to economists when formulating policy; but when the economists change their mind about policy – John Galbraith backtracked, somewhat, on his early thesis on government role in economy – the politicians would have moved on. Unfortunately for new India, the policies of the 60s and early 70s framed economic matters so significantly, helped by John Galbraith among others, it’s still a starting point for economic debate among our un-original lawmakers.

    Comment by Chandra — May 2, 2006 @ 10:50 pm

  5. [...] t the Giannini Foundation Library sits a few feet away from Galbraith’s doctoral thesis. ??????…
     

    [...]

    Pingback by ?????? - Gilli » Goodbye, John Kenneth Galbraith - Atanu Dey — May 3, 2006 @ 1:33 pm

  6. Chandra, I am sure the subject of how much blame to assign to JK Galbraith for India’s disasterous Nehruvian socialism is worthy of debate. Not entirely facetiously I note that India’s economic growth rate is not called the “Galbraithian” growth rate; nor are most major institutions named after JKG but rather after Nehru or Indira and her children and grandchildren (and soon will be named after her daughter-in-law.)

    For the moment, I would like to quote from a Salon article called The Galbraith I Knew by Richard Parker in which he writes:

    Galbraith began warning President Kennedy of the dangers Vietnam posed in the summer of 1961, before the first U.S. troops were dispatched there. Kennedy heard him, and amazingly agreed with him, but was in a sense boxed in by the near unanimity of his top advisors that Vietnam was a place where America must “take a stand.” Through recently declassified State and Defense Department documents, I was able to learn just how in tune JFK was with Galbraith’s warning. The two men understood that this was no mere “foreign misadventure,” but could become a quagmire that would not only blow back to the United States but destabilize its economy, delegitimize the Democratic Party and ultimately destroy the confidence of the American people in government itself.

    Comment by Atanu Dey — May 3, 2006 @ 1:47 pm

  7. JKG was an economic fool. He got more things wrong than right. Indeed, there were few problems he thought could not be solved by increasing government expenditure and funding.

    He was skewered rather terribly in BBC. When asked by the BBC presenter if Galbraith would still be read in ten years’ time, Desai gave this money quote, “Nobody reads him now. No economist reads Galbraith now.”
    http://www.samizdata.net/mt/mt-tb.cgi?__mode=view&entry_id=8890

    And one of JKG’s most idiotic statements:
    “Partly, the Russian system succeeds because, in contrast to the Western industrial economies, it makes full use of its manpower.”

    Good riddance to an idiot.

    TWG

    Comment by The Wobbly Guy — May 3, 2006 @ 8:29 pm

  8. Wobbly Guy

    Galbraith was right about the Russian system’s success ‘partly’ due to optimal usage of manpower. Contrary to the fashionable belief, the Soviet system isn’t a failed one. It did have its negatives like the American system, but it surely wasn’t an out and out failure.

    The Indian system is succeeding due to manpower (quality is a different issue).

    The bottomline is Man, Material, Capital, and Organization and an Affluent Society does use all the four in good measure and combination.

    Comment by Shrini — May 4, 2006 @ 1:45 am

  9. The Wobbly Guy–

    “No economist reads him now”. All I can say is- 1)Untrue and 2)Those economists who dont read him ignore him to their detriment. He has much more critical things to say than the latest fad in econometrica and so on.

    Atanu–It would be good to try and consider the counterfactuals when you speak of ‘disastrous Nehruvian socialism’. What would have been a reasonable and promising prescription in 1950 for economic growth, say? You were trained in Berkeley– what might David Card say for example to put some quantitative heft to that statement?

    Comment by Arjun — May 4, 2006 @ 6:22 am

  10. I’m no expert on JKG, whether it be his economics or his views on/ relationship with India.

    However, two economists I hold in high regard, Milton Friedman and Paul Krugman (in his original avatar as an economist, not the political pundit) don’t think much of JKG. Interestingly enough, Friedman and Krugman have different sensibilities but both diss JKG.

    http://www.pkarchive.org/cranks/GalbraithGoodSociety.html

    http://web.mit.edu/krugman/www/ricardo.htm

    http://books.google.com/books?id=GcmvijkDrEcC&dq=paul+krugman+john+kenneth+galbraith&oi=print&pg=PA13&ots=S5Zwhae9Ka&sig=mtAjIAfpV2BAZAsfBkYIB0ikmUk&prev=http://www.google.com/search%3Fhl%3Den%26q%3Dpaul%2Bkrugman%2Bjohn%2Bkenneth%2Bgalbraith&sa=X&oi=print&ct=result&cd=2

    Here’s Hit & Run’s post on JKG…

    http://www.reason.com/hitandrun/2006/04/john_kenneth_ga.shtml

    Comment by Prashant Kothari — May 4, 2006 @ 11:34 am

  11. Although barely schooled in economics and therefore unable to evaluate Galbraith’s legacy to India, I do believe that even the most independent thinkers are not quite independent of their times and current trends.

    Remember the Sixties and Seventies? Almost every conscionable person was a socialist back then. The halls of learning, as well as the chai stalls of India, were rife with discussions about the need for a responsible government to manage the run-amok economic engine of India for the betterment of all. A truly free economy was considered an American anomaly – fine for those Yanks but a potential disaster for most of the world.

    As we criticize Galbraith for his influence on India’s past economic policies, let’s also remember that he was ultimately a product of his times. It would be similar to criticizing your parents for not being as enlightened a parent as you probably are. They didn’t know a lot of the new age parenting techniques that we now know.

    Chalk it up to “that’s the way things were back then.”

    Comment by Sarat — May 4, 2006 @ 3:39 pm

  12. Atanu, I don’t want to “blame” Galbraith for Indian economic ills. But when every thing I read (except may be George Will of WP) is so effusive (including this post) about him, I want to put things into perspective (Vietnam war issue is unrelated). May be I am being un-bharatiya speaking ill of the newly dead. In any case, I think he had disproportionate influence of Indian economic matters at the time. I read somewhere that US offered Milton Friedman or John Galbraith as economic advisor to India during the time and John Galbraith won out – may be it was because Friedman was 5 feet tall and was technical economist and Galbraith was almost 7 feet tall with a talent for good writing. I think, again, may be in hindsight, Indian economy could have been on a different trajectory if Friedman was the advisor.

    Here is an interest memo Friedman wrote to GOI in 1955 which I saw a few years ago. I dug it up recently:

    http://web.archive.org/web/20010213221054/http://indiapolicy.org/debate/Notes/friedman.htm

    Sarat, I couldn’t disagree more with you. I don’t think there was anything inevitable about economic choice. I doubt the economic elite in the country considered what the people in chai stalls were thinking at the time (or, for that matter, now).

    Comment by Chandra — May 5, 2006 @ 9:40 pm

  13. The only real economist I have ever met in my life is somebody called Hicks from England. Was he any good, guys?

    Anyhow, sometime during the Sixties, Hicks came to my little town in India where I grew up, and delivered a lecture that went pretty much over my head. I was only 14 or 15 at the time. Interestingly for you free market thinkers – of which I, too, am a living, walking creation (founder/CEO of two companies in the USA of all places) – Hicks made the following opening remark.

    “On my way from the airport to my hotel, I saw a lot of billboards urging people to save. I did not see many billboards telling people to spend.” The other billboards he probably saw but never brought up must have been, “Do ya teen bachey, bus.”

    I didn’t understand Hicks’s emphasis on spending. My father, an uber-intellectual, violently disagreed with consumer spending as a fuel for economic growth, and my uncle, a London School of Economics product, kind of understood Mr. Hicks’s point but still disagreed. It was the Sixties. I was groovin’ to the Beatles. My dad was listening to K. L. Saigal. And we all lived in an India that was headed towards disaster.

    P.S. Chandra, I did not mean that the economic thinkers were literally listening to the common masses. Obviously, the masses do not develop policy or even theories. The opinion leaders do. BUT, the opinion leaders do reflect their times, and most “new” ideas in any society are not developed in a vacuum, with no influence of current trends, populist opinions, even global trends. During that era, there was a widespread global acceptance of planned economies. There was even an acceptance of more than planned economies – the entire Communist block. Ahhh, forget it…I am just repeating myself. I do respect your point of view, Chandra.

    Comment by Sarat — May 6, 2006 @ 12:48 am

  14. I am intrigued by the praise Galbraith is receiving as an economist. As a social thinker, as an economic historian, as a critic of the affluent society, yes, Galbraith has made his mark. But as an economist? His critique of advertising, that it made people buy things they did not need, sounds suspiciously like an early forerunner of the kind of thinking now associated with Naomi Klein (of No Logo fame). Likewise, his description of countervailing power (in the form of unions): has it not been overtaken by events? Is it not the case that unions themselves are monopolies, or like craft guilds, erecting a barrier to entry to those who’d like to be part of the profession, but aren’t allowed to? That, I think, takes us to the central aspect of Galbraith’s life and work. As someone who grew up in the depression era, and one struck by Keynes, Galbraith instinctively, and intuitively, believed that the state could be the great equalizer, and redistribute wealth. Some of his interventions were right, and price controls during WW II made sense. But did they make sense after the war? Similarly, Galbraith was right on the Great Society, and in calling for better wages for Vietnam era soldiers. But those, again, burnish his reputation as a concerned social thinker, an economic interpreter. He’d have been unhappy by India’s economic reforms and liberalization; a diminishing role of the state was not something he’d have been comfortable with. But I agree he was a highly skilful, engaging and entertaining writer.

    Comment by Salil — May 6, 2006 @ 3:55 am

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