Some of the Economic Ideas of John Kenneth Galbraith Part One

John Kenneth Galbraith was one of the most important American thinkers of the twentieth century. He was an economist by profession, a Keynsian. He was a proud Liberal, back when that meant something, in the tradition of Franklin Roosevelt, Harry Truman, John Kennedy, and Lyndon Johnson, in whose administrations he served. He was a prolific author, and according to Wikipedia, he produced four dozen books and over one thousand articles.

Having only recently become acquainted with some of his work, I can tell you that he was a very engaging writer, a true prose stylist, whose reflections are a pleasure to read on a literary basis, if you know what I mean. Now, this hub is not going to be a biography of Galbraith, you can get that from anywhere. As I indicated in the title, I want to go through some of his economic ideas. Recently I picked up a little paperback from the library called The Essential Galbraith.

This book is a selection of excerpts from some of his best known books. So, right there I hope you understand that I cannot give a thorough treatment of his views. But I will try to do them justice to the extent that I can, with my limitations -- both intellectual and access to material -- in mind. There are twenty-one passages in the book, and so we are going to have a series of twenty-one hubs covering SOME (and partially) of the economic ideas of John Kenneth Galbraith.

Okay?

Okay, good.

Let's begin.

By the way, what is a Keynsian anyway?

There is a debate that gets played out in American politics, and really, in any capitalist society. The debate I'm referring to broadly concerns the proper role of government in making the economy function. Partisans on the Right generally call for a very constrained, limited-to-no role of government in the economy. For them, an intrusive government always means a troubling reduction of economic liberty. Even when the economy hits a severe downturn, conservative think that the government should stay out of it and let the market correct itself.

On the liberal end of the spectrum dwell those of a Keynsian attitude. They believe that the state hand needs to be heavily involved in the economy at all times. They believe that the government must firmly control what the market does, how the market can do it, where the market does, and who the market does it to. Regulations are important to Keynsians, in a way that is of negligible value to conservatives and libertarians -- to keep the market from hurting the most vulnerable in our society (i.e., blue collar, so-called "semi-skilled" and "unskilled" labor, ethnic minorities, women, the poor, etc).

In keeping with the spirit of wanting to help the less fortunate in our society, true Keynsians are in favor of a concept that is generally anathema to conservatives and libertarians. And that concept is redistribution of income and wealth downward. As opposed to the upward redistribution that is par for course in the United States.

I'm talking about the social safety net, which is much more generous, by far, in almost every other capitalist, advanced industrialized country on the planet, than it is in the United States. We work more hours per week than even Japanese workers (and that's saying something) and we get the least vacation time as compared to the capitalist societies of Western Europe and Canada.

The interesting thing, though, is that in the United States, the business community -- which, for historical reasons, has always been far more powerful here than in other capitalist societies -- did come to believe, between about 1935 and 1965 that a CONSERVATIVE KEYNSIANISM would be useful to them. The result of this was to endow us with what the economist Dean Baker calls "The Conservative Nanny State"....

http://deanbaker.net/images/stories/documents/cns.html

..... as opposed to the very liberal Keynsianism that one finds in Sweden. You may remember hearing in the news a few months back, that in Sweden each adult worker gets four hundred eighty (thats 480) paid leave days for each new child born to their family. In other words, when Swedish workers start having children, each adult gets four hundred eighty days of paid leave for each new child born. One child, 480 days. Two children, 960 days. And so on.

We couldn't even dream of that in the United States, getting a year and a third paid leave for each new child born!

Anyway, Keynsians also naturally believe that the state needs to step in very powerfully when there is an economic downturn. Keynsians are motivated by the desire to ameliorate the harm done to the most vulnerable in the face of recession or depression. In the mid-1930s Franklin Roosevelt taxed rich people and corporations and said: 'We are going to tax you and give this money to people when they turn sixty-five and retire.'

That's Social Security, and along with Medicare, elderly poverty was virtually ended. The G.I Bill of Rights prevented returing soldiers from being thrown away like rusted tools, as had been the case before WW II. Unemployment was epidemic duing the Great Depression, far worse than anything we're experiencing at present. Roosevelt created huge public works programs, which put eleven million people who had no jobs to work. If we were to do the equivalent today this would mean creating twenty-five million jobs.

But you see my point? Roosevelt recognized that the market had a tendency to leave some people behind, as it were. So, to his eventual way of thinking, the government had to institute social policy to re-balance things.

One last word

Whether the government is in a state interventionist mode of in a relatively laissez faire, "hands off' mode, the role of the government in capitalist economy is always significant, powerful, and central. Make no mistake about this!

The government prints the money. Nothing happens without the money.

The government controls interest rates, the terms on which money is borrowed, for businesses and individuals.

The government (all levels, city, county, state, federal) is by far the largest employer, and as such, has something of an influence on wages and salaries.

The government makes, interprets, and enforces the laws governing commerce.

The government is the SOLE buyer for whole industries. You cannot buy an aircraft carrier, for instance. Only the government can. By definition this has to give the government enormous power over industry.

While its true that corporations do the bulk of the business in the United States, for example, corporate status is a state-granted status. The state grants the charter allowing enterprises to incorporate!

And so on and so forth.

Keeping this in mind, we need to understand that the debate between liberals and conservatives/libertarians is about how much more or less should the role of government be in relation to the economy. Okay, in part two we will begin with Galbraith's first selection "Countervailing Power," about how retailers exercise something of a resisting force against manufacturers.

Thank you so much for reading. See you in part two.

Let's go out with this... It's Silk Tymes Leather. Remember that group?

And now part two.

http://wingedcentaur.hubpages.com/hub/Some-of-the-Economic-Ideas-of-John-Kenneth-Galbraith-Part-Two