Sunday, April 30, 2006

John Kenneth Galbraith, RIP

John Kenneth Galbraith, an influential economist, died yesterday at age 97. He was born in Canada, and became a U.S. citizen in 1937, although he always showed fondness for his home country.

During the Second World War, he was in charge of controlling prices to avoid inflation, and the result of his policies was strict rationing. Later he was critical of the strategic bombing of German cities (intended to reduce the warmaking ability of that country), which from a cost/benefit viewpoint did little to shorten the war. He also was critical of the botched partition of India and Pakistan.

He was one of the most prominent economists of his generation, and served under all Democratic Presidents from Roosevelt to Johnson. He was an opponent of neoclassical economics, which is concerned with prices and money within a framework of Utilitarianism, and instead was more interested in political power and institutions, and also notably avoided mathematical models in his analysis. Canadian Prime Minister Pierre Trudeau based his massive reforms on the policy recommendations of Galbraith.

He also was a university professor, ambassador to India, and editor of Fortune magazine. He was one of the earliest opponents of the war in Viet Nam.

He was the main follower of John Maynard Keynes, an economist who advocated massive government spending contrary to the business cycle: deficit spending during recession, and budget surpluses to avoid inflation during economic booms; this theory was proposed between the World Wars as an alternative to Communism and Fascism. This remains an influential theory, and indeed, has incorporated elements of the competing 'conservative' neoclassical monetarist theory of economy: arguably, the economic policies of both the Clinton and George W. Bush administrations are consistent with this neo-Keynsianism.

Galbraith's most influential book is The Affluent Society, published in 1958, where he criticized the lack of spending on public infrastructure. In this book he coined the term "conventional wisdom". He was an advocate of a mixed economy, where big business, big labor, and big government would cooperate economically. He was an opponent of excessive speculation that leads to price bubbles in markets, followed by market crashes; indeed, conservatives and liberals alike are fond of The Great Crash of 1929, which remains Galbraith's best selling book. Galbraith also became a critic of the idea that material production in an economy should always increase.

Galbraith was of Scots descent, and grew up in a town that was proud of its Scottish ancestry. He takes a view of the world quite consistent with that country, in particular the "work ethic" of Calvinism. But his view was a lofty view; even though he said that democracy was his religion, he still believed that an elite should rule the nation top-down.

As a Catholic, I am alternately frustrated and amused by theories that only look at one aspect or another of the moral law. The Calvinist work ethic only sees a single aspect of the virtue of prudence; socialism only sees a slice of the virtue of justice; some seek goodness while avoiding truth and beauty, and these theories do not even attempt to see the whole man and society.

These theories of course deny the theological virtues, including most crucially charity. Under this system, power is centralized at as high of a level as possible, but these powers deny any moral authority. This is a complete inversion of the classical view of society, where economic power is concentrated at the local level and where moral authority is recognized by all.

Towards the end of his life, Galbraith started viewing the world from more of a natural law viewpoint: "The basic fact is clear: the good society must accept men and women as they are."

May he rest in peace.

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