J.K. Galbraith(Oct.15,1908–Apr.29,2006) – a man for our time?

Stephen Dunn, whose The Economics of John Kenneth Galbraith will be published by Cambridge University Press next year, has an essay in The Guardian today  in which he reminds the reader that the 100 anniversary on Galbraith’s birth is not a bad time to remind ourselves that the great man would not have been surprised about what gas been happening to the capitalist economy recently, or by the radical  measures various governments have had to restore some semblance of stability. Galbraith saw it all coming and a close reading of his work, had anybody who mattered cared to do such, might have prevented it’s coming at all.

One hundred years ago today, one of the intellectual titans of the 20th century was born. Had the warnings issued by JK Galbraith up until his death two years ago been better heeded by the policymakers of today, it seems unlikely we would find ourselves so deep in the economic mire.

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 Galbraith argued that an unfettered, competitive capitalist system, operating on pure free-market principles, was inherently cyclical and unstable, requiring robust regulation and active government.

 

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The flurry of action by governments and central banks around the world in recent days suggests that Galbraith’s works have finally been pored over by politicians. The experience of the 1930s must be avoided. This financial crisis must be met with programmes designed to maintain demand and avoid another Great Depression. On the 100th anniversary of Galbraith’s birth, his words matter more than ever.

Interestingly, The Guardian, in an editorial which praises Galbraith in very much the way it praised John Maynard Keynes a week ago, sounds a note of caution when it comes to predicting whether the Galbraithian lessons are being learned.

 

The Great Crash 1929 ends by noting the powerful case for taking action to prevent a return to boom and bust, but warns that “inaction will be advocated in the present even though it means deep trouble in the future”. For the hope of an easy life “causes men who know things are going quite wrong to say that things are fundamentally sound”. This time round, the world must come together and disprove that telling conclusion.

That “must” sounds like an expression of hope, rather than one of certainty.  In  A Journey through Economic Time, Galbraith wrote that, as guiding confession” he believed “the greatest error in economics is in seeing the economy as a stable, immutable structure.” Nothing that’s happening at the moment convinces me that this error will not be repeated.

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