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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.

Anarcho

John Kenneth Galbraith, RIP

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 £220m 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 £220m, a drop of £148m down from last year. The plan is to see the

two divisional bosses have their salaries raised to £600,000 and give

them the chance to earn £22m 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.