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Title: John Kenneth Galbraith, RIP Author: Anarcho Date: August 28, 2008 Language: en Topics: John Kenneth Galbraith, economics, obituary, liberalism Source: Retrieved on 28th January 2021 from https://anarchism.pageabode.com/?p=138 Notes: In memory of a flawed economist whose work is worth reading as he understood the role of power in the market.
April 29^(th) saw the death of economist John Kenneth Galbraith at the
grand old age of 97. While his books were popular in the 1950s and
1960s, his influence and ideas grew out of fashion in the 1980s with the
rise of neo-liberalism. This is understandable, as his analysis was far
too realistic to be useable by the ruling elite to justify their power,
profits or policies.
Galbraith firmly saw the role that economics played in justifying
capitalism and elite rule. In Galbraith’s vision, economic power was a
fact which could not and should not be ignored and any form of economics
which did was just apologetics for injustice and inequality. As he put
it, “the most damaging feature” of mainstream economics “is the
arrangement by which power ... is removed from the subject.” He noted
that while it may hard to ignore such an obvious fact, economists do
manage it.
His analysis of the economy was based on the obvious fact of
corporatepower. One section of the economy reflected, to a degree, the
vision of many competing firms but the other, dominant, section did not.
Here was corporate power, with substantial economic and political power
and economics, consequently, had to analyse it in a different way.
Sadly, most economists did not follow his lead.
In response to rising economic power, Galbraith pointed to the
development of what he termed “countervailing power.” For example, the
rise of corporate power saw the rise of union power to protect their
workers. While anarchists may suggest getting rid of economic power to
start with, Galbraith’s starting point was correct – an awareness of
reality and the current structure of the economy. Such a perspective
goes not make you popular in elite circles, unlike those economists who
justified the weakening or elimination of such countervailing
institutions as trade unions in terms of an economic model which ignored
capitalist power.
Nor were his ideas were popular with mainstream economists firmly wedded
to the mathematical illusions of neo-classical economics. This did not
surprise Galbraith, for as he put it economics is dominated by a
perspective in which “it is a far, far better thing to have a firm
anchor in nonsense than to put out on the troubled sea of thought.” He
rightly recognised mainstream economics for the nonsense it is, arguing
that its vision of society “is not real.” Rather than analyse reality,
economics evaded it and asserted that the economy worked “as if” it
matched the unreal assumptions of neoclassical economics. No other
science would take such an approach seriously. In biology, for example,
the notion that the world can be analysed “as if” God created it is
called Creationism and rightly dismissed. In economics, such people are
generally awarded professorships.
While anarchists may reject his reformist strategy and statist
perspective, his critique of capitalism and economics is thought
provoking, realistic and witty. Little wonder he never got the so-called
Nobel prize in economics (that it was awarded to that charlatan Milton
Friedman says it all). If economics ever does become a science,
Galbraith will be fondly remembered as one of its key trail-blazers. For
anyone interested in his ideas, I would recommend “The Essential
Galbraith” (Mariner Books, ISBN: 0618119639) as an excellent starting
point.
His most famous quote is, I think, his concise summing up of supply-side
economics (or neo-liberalism as it is called today), namely “that the
rich were not working because they had too little money, the poor
because they had much.” Ironically enough, a few weeks after his death
corporate capitalism proved his words are still as applicable today as
telecommunications corporation Cable & Wireless has triggered a row with
the Communication Workers Union (CWU) by unveiling a ÂŁ220m bonus scheme
for senior managers just weeks after announcing 3,000 job losses.
The bonus scheme (rightly condemned as “outrageous” by the CWU) comes
just before the company is expected to announce full-year profits of
about ÂŁ220m, a drop of ÂŁ148m down from last year. The plan is to see the
two divisional bosses have their salaries raised to ÂŁ600,000 and give
them the chance to earn ÂŁ22m each if certain targets are reached at the
company. Meanwhile the groups managing director is to receive a similar
amount and an additional 1m shares (with no performance criteria).
That must be a new definition of performance related pay – see
profitsdrop and get a pay increase! Meanwhile, workers received an email
earlier this year warning them of job losses and telling them they all
needed to work harder. In other words, work harder or be fired. As such,
it is hardly surprising that the company thoughtit could follow up the
job losses with huge new pay packages for directors. Job losses are a
great way to increase profits by making the remaining staff work harder
for longer. There is nothing like fear to keep wages down and profits
up.
Of course, it may be considered strange that such high amounts are
required to get the executives to do what, surely, must be considered
part of their normal job but Galbraith would not be surprised. That is
why he is still worth reading today, in spite of his flaws.