The Essential Galbraith , livre ebook

Contents
Title Page
Contents
Copyright
Preface
Introduction
Countervailing Power
The Concept of the Conventional Wisdom
The Myth of Consumer Sovereignty
The Case for Social Balance
The Imperatives of Technology
The Technostructure
The General Theory of Motivation
Economics and the Quality of Life1
The Proper Purpose of Economic Development
The Valid Image of the Modern Economy
Power and the Useful Economist1
The Founding Faith: Adam Smith’s Wealth of Nations1
The Massive Dissent of Karl Marx
Who Was Thorstein Vehlen?
The Mandarin Revolution
How Keynes Came to America
The Speculative Episode
In Goldman, Sachs We Trust
The Crash
Things Become More Serious
The Unfinished Business of the Century
Sources
About the Author
Copyright © 2001 by John Kenneth Galbraith
Preface copyright © 2001 by John Kenneth Galbraith
Introduction copyright © 2001 by Andrea D. Williams
ALL RIGHTS RESERVED

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The Library of Congress has cataloged the print edition as follows:
Galbraith, John Kenneth, date. The essential Galbraith / John Kenneth Galbraith. p. cm. Includes bibliographical references and index.
ISBN 0-618-11963-9
1. Galbraith, John Kenneth, 1908– 2. Economics—United States. I. Title. HB 119. G 33 A 25 2001 330—dc21 2001024986

eISBN 978-0-547-34868-1 v2.1017

American Capitalism; The Affluent Society; The New Industrial State; Economics, Peace and Laughter; Annals of an Abiding Liberal; The Age of Uncertainty; and The Great Crash, 1929: Reprinted by permission of Houghton Mifflin Company. All rights reserved. A Short History of Financial Euphoria and “The Unfinished Business of the Century”: Reprinted by permission of John Kenneth Galbraith. All rights reserved.
Preface
I send this book to press and on to my readers with one slight sense of concern. It is that someone will ask who decided that this was The Essential Galbraith. The author will be a plausible suspect. In fact, it was associates, my publisher and the wider professional and reading public who were responsible. The selection here is of writing that is thought to have had some durable impact on economic and other scholarly thought or on the world at large.
Thus, as later noted, the piece on Countervailing Power, an excerpt from American Capitalism, is still in print after nearly fifty years. The balance of power between buyer and seller therein described was considered a major modification of the traditional competitive supply-and-demand construct to which all who have studied economics were exposed. It is perhaps a measure of the enduring nature of the term “the Conventional Wisdom,” as defined in the second essay, that one rarely gets through a newspaper today without encountering it. Though I try, however unsuccessfully, to convey an aspect of modesty, I am always pleased to have added this phrase to the language.
The Affluent Society, from which several chapters are here included, was the most widely published economic volume of its time. After his nomination for President in 1960, one of the first questions asked of John F. Kennedy was whether, if elected, he would be guided by the ideas expressed by his known supporter in that book. He responded favorably but also with a certain note of ambiguity.
Later in this collection come three pieces from The Great Crash, 1929, which was published in 1955, just after the twenty-fifth anniversary of that catastrophic event. It was a bestseller at the time; so it has remained to this day. Even now, as we are launched in a new century, there is inevitable unease about the future of the economy and therewith the stock market, so a knowledge of what happened in 1929 is, indeed, still essential.
There are other essays here which were similarly selected and thus selected themselves. The reader will, I think, have no trouble accepting their relevance either to history or to the present day, and I have added some headnotes to suggest my view of their particular significance then and now. I end with a paper given at the London School of Economics in 1999 on the unfinished business of the millennium; this had the largest circulation both here in the United States and around the world of any lecture I have ever given.

J OHN K ENNETH G ALBRAITH
March 2001
Introduction
If, as Professor Galbraith says in the preface, others are responsible for the contents of this book, it is of primary interest to inquire why he himself eschews the credit. It has been widely believed that he is not a man for whom modesty is a familiar virtue, so why does he find it necessary now to step back into the shadows? The answer seems to lie in the fact that what has been considered vanity could be better viewed as a deep sense of security. He is secure in his basic beliefs and secure that his readers, for whom he has the deepest respect, will be able to discern them. He is not given to self-analysis, and so, while he clearly understands what is the Essential Galbraith, he prefers that others define it.
It should first be noted that in the pages that follow, readers will find John Kenneth Galbraith the economist and the writer, with little trace of the diplomat, the art historian, the novelist, the book reviewer, the theater critic or even, except in the last essay, the lecturer. This is highly appropriate, because economics has, in fact, been his chosen field and writing his obviously innate talent. He has always believed that economics should be studied not in the abstract or as a mathematical construct but as it affects the lives of men and women every day. He is not afraid to overturn or at least reexamine strongly held beliefs of earlier generations, realizing that as technology, communications and business change, so too must the economist’s interpretation of them. He has brought to the subject a new way of looking at the role of the great corporations as they faced the countervailing power of trade unions and consumer coalitions. He has identified those who are the guiding intelligence of the corporate world, naming them the technostructure, and has undermined belief in what he calls the myth of consumer sovereignty. A better balance between public and private expenditures has been a recurring theme in his writing, with its reminder that the affluence of our contemporary society should be made to extend to the poorest and most defenseless of our citizens. The uses of power and the persistence of financial euphoria in our public marketplace have consistently attracted his interest, as have the problems of the developing countries, notably India. Above all, the constant thread through his work is his concern with how economics affects the quality of our daily lives and how it will change that of succeeding generations.
These are some of the essentials of the Essential Galbraith, but there are more. There is his continuing fondness for certain of his economic predecessors—for the gift for language and the basic structure that Adam Smith gave to political economy, for the irreverence and unique perception of Thorstein Veblen, for the profound effect John Maynard Keynes and his General Theory of Employment Interest and Money had and continue to have on the economic world.
Finally, there is a writing style that illuminates and enhances all that is said: sardonic humor, felicitous phrasing, reasoned argument in reasonable words or, as he would say, clarity of thought reflected in clarity of prose.
So how can the Essential Galbraith be defined? He is a committed liberal, a compassionate optimist, a cautious but firm iconoclast and a writer whose words can change the way the world looks at its problems.
And none of that would he ever write about himself.

A NDREA D. W ILLIAMS
March 2001
Countervailing Power
[ from American Capitalism]


This is a chapter from one of my first books, the generously titled American Capitalism, which came out in 1952, barely into the second half of the last century. Then, and for well over a hundred years before, a near-sacred doctrine in the economic textbooks had been the beneficent regulatory role of competition. It was the competition of many sellers that protected the consumer and also the individually powerless wage earner from the full economic effects of monopoly. The preservation of competition through the antitrust laws—the fabled Sherman Act in particular—was a vital element of public policy going back to the latter part of the nineteenth century. Now, as I argued in American Capitalism, a new process was at work: trade unions, a countering organizational force, were the obvious response to the greater power of the big corporations. Similarly, but less evidently, when there was one expression of economic power—such as the large producer of consumer staples—another one developed in the form of the seller of those staples—the A&P or the latter-day Wal-Mart. The numerous and technically competitive farmers found their best economic recourse in purchasing cooperatives when dealing with those who bought and bargained for their product. Thus the answer to monopoly was less and less the rule of law and more and more the coercion of countering bargaining power. Not exceptionally, perhaps, I carried this idea somewhat to the extreme, but it