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Sisyphus as Social
Democrat
John Kenneth Galbraith
J
. Bradford DeLong
U.C. Berkeley
Department of Economics and Blum Center,
WCEG, and
NBER
http://bradford-delong.com
brad.delong@gmail.com
@delong
2018-05-16 last edited
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1
I. Galbraith’s Vanished Influence
A Review of
J
ohn Kenneth Galbraith: His Life, His Politics,
His Economics
by
Richard Parker. : Farrar, Straus &
Giroux, 2005, 820 pp.
<
http://www.foreignaffairs.org/
20050501fareviewessay84312/j-bradford-delong/sisyphus-
as-social-democrat.html
>
If there were justice in the world, John Kenneth Galbraith
would rank as the twentieth century's most influential
American economist. He has published several books that
are among the best analyses of modern U.S. history, played
a key role in midcentury policymaking, and advised more
presidents and senators than would seem possible in three
lifetimes. Yet today, Galbraith's influence on economics is
small, and his influence on U.S. politics is receding by the
year.
In this lively and thoughtful biography, Richard Parker sets
himself the task of explaining Galbraith's career: why it
was so dazzling, and why its long-term impact has turned
out to be so much less than expected. The result is not only
the story of a smart, witty, and important man, but also a
fascinating meditation on the rise and fall of twentieth-
century American liberalism.
2
II. A Man for All Seasons
That Galbraith's career has been dazzling nobody can
dispute.
Professors of post-World War II American history can still
do no better than to assign his books
The Affluent Society
and
The New Industrial State
to teach students how the
midcentury U.S. economy came to dominate the world (and
what should have been done to make it work better).
Anyone wanting to learn about the beginning of the Great
Depression should start with
The Great Crash
; there is no
other history of the stock-market crash of 1929 that is as
short and even half as worthwhile.
During World War II, Galbraith helped run the Offi ce of
Price Administration, working to square the growth-
inflation circle by pushing production far above
economists' measures of potential output without sparking
runaway price increases that would threaten the economic
mobilization. And after the war, his work on the Defense
Department's "United States Strategic Bombing Survey"
made Washington rethink the effi cacy of its standard war-
fi ghting policy
—
staying high in the sky and dropping lots
of explosives on all kinds of people far below
—
although
the rethinking did not go far enough.
3
Lots of ideas in the background of contemporary U.S.
political and economic thought are Galbraith's.
His work as an economist was a scattered but
comprehensive attempt to think through the consequences
of the transition from a nation of small farms and
workshops to one of large factories and superstores. In
doing so, he took on many of the questions most central to
the new U.S. economic landscape:
•
How much can advertising shape demand?
•
In a world of passive shareholders, autonomous managers
and engineers, and fi rm decisions that emerge out of
internal bureaucratic contests, just what are the objectives
that drive big fi rms?
•
How does competition work when its principal
dimensions are quality and marketing rather than price?
•
And critically, how do the limits of polite discourse allow
the system to hold itself together while constraining its
flexibility?
For decades, Galbraith's influence in politics
and the public
sphere
was unmatched by any other economist. The pieces
of his advice best remembered are those that went against
the "conventional wisdom" (a now ubiquitous phrase that
Galbraith coined): strategic bombing did not win World
War II; Vietnam was a strategically unimportant quagmire
where the United States would do more harm than good;
4
macroeconomic "fi ne tuning" is likely to blow up in the
face of policymakers; the businessman's capacity for self-
delusion is nearly infi nite.
Galbraith sees the United States as a would-be social
democracy that has lost its way, assuming that if only the
self-serving declarations of the right could be wiped away,
the benefi ts of a bigger, more activist government would
become obvious to everyone. The right-wing claim that the
most effi cient economy is one in which the gales of perfect
competition scour the land is, in Galbraith's view, nonsense.
Modern industrial and post-industrial production is a large-
scale process, large-scale processes require planning, and
planning requires stability
—
which means that the gales of
the market must be calmed.
III. The Eclipse of Galbraithian
Thought
This political vision, however, has been in retreat since the
early 1980s. Nobody wants to hear about the importance of
Big Government, Big Bureaucracy, or Big Labor (which
hardly even exists).
5
Galbraith's economic views have undergone an even more
distressing eclipse. Among economists (excluding
economic historians), the 70-year-olds have read Galbraith
and think he is very important; the 50-year-olds have read
Galbraith and know that the 70-year-olds think he is
important but are not sure why; and the 30-year-olds have
not even read him.
Parker has an explanation
—
a relatively convincing one
—
for the retreat of Galbraith's politics.
The story behind it is the Democratic establishment's loss
of nerve. Too many party intellectuals and politicians drink
cocktails on Martha's Vineyard, in Parker's view, and too
few spend time on the shop floor learning what issues are
important to those sweeping up or manning an assembly
line or tending the convenience-store cash register from
midnight to six a.m. Thus, the mass base of the Democratic
Party has withered, and without a mass base Democratic
politicians listen too much to their rich contributors and
turn into Eisenhower Republicans
—p
eople who are
interested above all in balancing the budget.
Galbraith, a committed social democrat, has wielded his
pen and his tongue in an effort to halt this decades-long
rightward drift. But he has failed: his allies are too few, and
the loss of nerve among the party elite is too complete.
6
Parker also has an explanation
—
also a relatively
convincing one
—
for the eclipse of Galbraith's economic
thought. The story here is of the blindness of an academic
establishment steeped in Paul Samuelson's
Foundations of
Economic Analysis
. Economists, Parker believes, have sold
their birthright for a tasteless pottage of mathematical
models. As a result, they can say much about theory but
little about reality. And they ignore Galbraith because he is
a guilt-inducing reminder of how much broader and more
relevant economics can be.
IV. What Do Economists Do?
This explanation, however, is far from complete. Late-
twentieth-century American economics centers on the use
of mathematical models to reach one of two conclusions:
that the market is already doing a good job, or that some
imperfection is causing "market failure" and correcting or
counterbalancing the imperfection will make everything
okay.
Thus there are New Classical macroeconomists, who
believe that the market works fi ne and that even
depressions are necessary and inevitable; Monetarists, who
believe that recessions result from failures in the banking
7
system, which can be corrected by ensuring stable growth
of the money supply; and New Keynesians, who are
indistinguishable from Monetarists save for their
identifi cation of market failures in the labor market or in
the investment decisions of fi rms.
In all these cases, it is clear what an economist must do to
belong to a particular school: start underneath the lamppost,
take a few steps in one direction by describing a market
failure, and then start searching for lost keys. New
Classicals master the solutions of "dynamic stochastic
general-equilibrium representative-agent models."
Monetarists analyze the details of the fi nancial system in an
effort to defi ne a "neutral monetary policy." New
Keynesians trace the implications of subtle differences in
labor- and capital-market failures.
V. What Would a Galbraithian
Do?
Just what a "Galbraithian" economist would do, however, is
not clear. For Galbraith, there is no single market failure,
no single serpent in the Eden of perfect competition. He
starts from the ground and works up: What are the major
forces and institutions in a given economy, and how do
8
they interact? A graduate student cannot be taught to follow
in Galbraith's footsteps. The only advice: Be supremely
witty. Write very well. Read very widely. And master a
terrifying amount of institutional detail.
Harry Johnson, in his superb but not entirely fair critique of
Milton Friedman's
m
onetarists, said that in order to carry
out an intellectual revolution in economics, one must
propound a doctrine that has three qualities:
•
it can be summarized in a single sentence,
•
it provides the young with an excuse for ignoring the
work of their elders,
•
and it tells the young what they can do to further the
revolution.
John Maynard Keynes and Friedman both offered such
doctrines. They said, respectively, that "aggregate demand
determines supply" and that "inflation is always and
everywhere a monetary phenomenon"; they dismissed their
predecessors as obsolete; and they set hundreds of young to
the task of estimating consumption, investment, and
money-demand functions.
Galbraith propounded no such easily summarized doctrine.
The closest we can get is: "the world is complicated, and
both right-wing ideology and the conventional wisdom that
is this age's self-image are terribly wrong." He offered
9
critiques that required you to read and understand old
theories, not new theories that allowed you to dismiss
everything prior as irrelevant.
The result? Nearly all economists today are Paul
Samuelson's children. Many are Keynes' children.
Friedman, Robert Lucas, Robert Solow, and James Tobin
all have plenty of descendants.
But there are few Galbraithians on the ground.
Would economics as a discipline be stronger if the 50-year-
old and 30-year-old economists had a better appreciation of
Galbraith? Almost surely. Will the winds of economic
fashion shift and cause economists to appreciate Galbraith
once again? For that to happen, an astute young economist
would have to devote himself to "mathing up" chapters of
The Affluent Society
and
The New Industrial State
and
publishing them in journals
—
not a likely prospect in
today's risk-adverse academic environment.
VI. Does Horatio Alger Yet Live?
Galbraith's life traces an arc through an age in which three
gigantic shocks appeared to transform U.S. politics.
10
