Countervailing Powers: On John Kenneth Galbraith
With The Affluent Society, published in 1958, Galbraith directed his mockery at the world of professional economics. He argued that the basic principles of economic thought had been developed in the late eighteenth and early nineteenth centuries, a period when the chief economic problem was producing enough to ensure survival. The old truisms about the destructive force of the state, the paramount importance of production and the surpassing efficiency of the competitive economy were no longer relevant in the mid-twentieth-century United States, where material prosperity had spread far beyond the upper classes. Yet the “conventional wisdom” of economic life, reiterated with what Galbraith described as religious solemnity at Chamber of Commerce meetings and in the pages of prestigious academic journals alike, made it impossible to govern in a reasonable way. The “march of events” had made the old ideas irrelevant, but businessmen and economists clung to them desperately:
The business executive listening to a luncheon address on the immutable virtues of free enterprise is already persuaded, and so are his fellow listeners, and all are secure in their conviction. Indeed, although a display of rapt attention is required, the executive may not feel it necessary to listen. But he does placate the gods by participating in the ritual. Having been present, maintained attention, and having applauded, he can depart feeling that the economic system is a little more secure.
Nor were such rituals only for the unsophisticated. The conventional wisdom existed at least as much in academic life as in the broader world: “Scholars gather in scholarly assemblages to hear in elegant statement what all have heard before. Again, it is not a negligible rite, for its purpose is not to convey knowledge but to beatify learning and the learned.”
Because of the old faith, inherited from the classical economists and refined to a harsh moral code in the Victorian era, that only hard work, private initiative and a relentless emphasis on increasing productivity could lift human society out of poverty, people were irrationally hostile toward the public sector and government—even though in the modern context they might accomplish goals that were far more socially valuable than the exertions of private firms. Private consumption rose to heights of bizarre extravagance—while schools and parks had to beg for money from the state. “Vacuum cleaners to ensure clean houses are praiseworthy and essential in our standard of living,” Galbraith wrote. “Street cleaners to ensure clean streets are an unfortunate expense. Partly as a result, our houses are generally clean and our streets are generally filthy.” He also observed the odd discrepancy in attitudes toward public and private debt—the one, sharply condemned, the other eagerly encouraged.
The idea that a society ought to commit its economy to satisfying consumer wants no longer made sense if the wants themselves were managed by the companies that were selling the goods to satisfy them (Galbraith called this the “dependence effect”). Once, more production had meant less hunger, less misery, less privation. In the modern world, it only meant satisfying the craving for “shiny rumpus rooms, imaginative barbeque pits, expansive television screens and magnificent automobiles.” Smith had believed that material affluence might lead to a world of greater equality and decency and freedom—but in fact people were enslaved by the whims induced by advertisers. In one of the best-known passages in The Affluent Society, Galbraith described an American family going out for a camping trip in a top-of-the-line “mauve and cerise” automobile, cruising along on a badly paved highway, past a countryside whose natural beauty had been blotted out with billboards, dining on a picnic of packaged foods beside a polluted stream. “Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius?”
In The New Industrial State, published in 1967, Galbraith presented a vision of the American economy that systematically turned the axioms of economics upside down. In the mid-twentieth century, Galbraith argued, the internal “planning system” of gigantic corporations largely substituted for the free market. This marked a fundamental change in economic life. In the modern corporation, bureaucrats and managers exercised far more power than stockholders over the companies that the latter nominally owned. Scientific knowledge and technological expertise became more important in economic life than the willingness of entrepreneurs to take economic risks. The ability of corporations to run on their retained earnings meant that management no longer had to worry much about the opinion of investors. As massive corporations controlled the market, they no longer even needed to maximize profits in order to survive. As a result, the American and Soviet economies had more in common with each other than they did with the idealized vision of small, decentralized production still celebrated in economics textbooks. In his earlier work, Galbraith had hoped that labor unions and the state could counter corporate power. In The New Industrial State, he argued that both had been subsumed by the demands of the corporate monolith. The epitome of the modern economy was the bloated military industry, which was able to win government contracts for technologically sophisticated but socially useless bombs manufactured to support a ginned-up arms race with the Soviet Union. Galbraith believed that attempting to shrink these gigantic companies was futile and counterproductive, but he did think that they could be turned to different, more socially accountable ends.
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Of the books collected in this volume, The New Industrial State has aged the least well. For one, the economy’s industrial base has eroded since Galbraith’s day; General Motors, Chrysler and Ford are no longer unassailable giants. These differences go beyond international competition and the problems of the manufacturing sector. Corporations are no longer the stodgy, management-driven enterprises Galbraith depicted. Shareholders are not the sleepy figures they may have been in the mid-twentieth century. The labor peace that Galbraith wrote about has evaporated, and the prospects he saw for a humane capitalism seem dim. Even in his day, there remained, as Galbraith knew, deep pockets of poverty. Today, the gulf between the richest and the poorest has grown wider, with the policies that support such inequalities buttressed, in part, by the intellectual project of modern conservatism, which Galbraith once called “one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” With the headlines dominated by news of recession and austerity, how clear is it that we live in an “affluent society” any longer?
In a way, Galbraith sought to expand on Keynes’s idea that the world of abundance that was unimaginable at the start of the Industrial Revolution demanded the invention of a new economic morality. No longer was it necessary to extol the virtues of hard work in an unthinking way. In the society Galbraith imagined, once the ideology of production for its own sake no longer reigned supreme, a thriving and rich public realm could come into existence, filled with parks, libraries and universities, accompanied by a new vision of the good life. Yet temperamentally and politically Galbraith was a skeptic, not a radical. He always believed that people were led astray by bad ideas, the suggestion being that reason might prevail if only the right leadership were at the helm. His confidence, in many ways, was a reflection of the optimistic, prosperous period in which he wrote. At the same time, Galbraith’s life was punctuated by tragedy: the sudden death of his mother when he was a teenager, his father’s accidental death only months after Galbraith was married and the loss of his second son to leukemia at 7. The books in this volume were all written after these losses, and it may be that some of Galbraith’s doubts about the orderly operation of the economic universe arose from his own acquaintance with the caprice of life.
But while some of the particulars of his vision may seem out of place today, his argument that there is something absurd about a society that can afford tremendous mansions, private jets and elite colleges while cities close firehouses, shut down bus lines and debate whether their crumbling public schools can even stay open five days a week seems as relevant as ever. So does his willingness to poke fun at those who recite platitudes about the market. One of the strengths of this volume is that it includes the introductions written by Galbraith, who died in 2006, for the updated editions of his four classic works. The 1993 edition of American Capitalism reminds the reader of the immense delight Galbraith took in rebelling against economic ideas long held to be sacrosanct: “For me, at least, there has always been a certain pleasure in questioning the sacred tenets.” In the nineteenth century, economists exalted competition as a civilizing force, one that would uplift the weak and glorify the worthy. True believers, therefore, would see Galbraith’s happy farewell to competition as a “treaty” with “the forces of economic evil.” Did this alarm him? Not in the least. “I enjoyed doing this, and I trust that some of this enjoyment is still evident in this book.”