Sunday, April 30, 2006

Economist John Kenneth Galbraith Dies

Canadian-born economist and former ambassador to India John Kenneth Galbraith died Saturday at the age of 97. Among the many accomplishments in his long career was the enormous contribution he made as a lead architect of the Great Society programs that became in their sweeping scope a monumental legacy of ambitious government action in the last half of 20th Century America. In that endeavor, Dr. Galbraith extended the reign of Keynesian economics as a foundation of fiscal policy, assuring that hundreds of millions of Americans would live in a nation whose government chose to engage a long-term, enduring fight against poverty that Classical economists and their political proponents believed was an unnecessary, inappropriate, and counter-productive role for government. The great Keynesian economists ruled the era from Franklin Delano Roosevelt on, however, and Dr. Galbraith was at the forefront of their work with Presidents and Congresses throughout the latter half of the last century. Galbraith's contribution to the Great Society was so significant that he shaped the speech that President Lyndon Johnson would make to the American people explaining this new, vigorous engagement of the U.S. government in building a modern nation where the power of the private sector was unleashed through the standing commitment of the state to its people and its businesses. Ultimately, Galbraith would break ranks with President Johnson because of the latter's prosecution of the war in Vietnam.

Although many outsiders and even a number of economists consider Galbraith the standard bearer of "liberal" economics, his was a far more complex view of the science of human action, as his contemporary Ludwig Von Mises described their shared field of endeavor. From his work in the World War II Office of Price Administration, Dr. Galbraith developed a sweeping prescription for national economic growth that advocated allowing oligopolies to form as a means of encouraging rapid technological innovation in part through economies of scale. Coupled with a benign government stance toward industrial concentration would be what he called "countervailing institutions" to act as buttresses against potential abuses by the oligopolies. Many believe that it is exactly this model that countries like Japan and others in Asia followed in the later 20th Century. In the United States, the great military/industrial complex was in large part an application of this concept of guided market concentration being allowed to play out to generate technological advancement, huge numbers of high-paying jobs, and economic dominance on the world stage.

Galbraith earned no small amount of disdain from peers for his 1958 book, The Affluent Society, in which he tore down what he called the "myth" of consumer sovereignty in the American economy. He continued to upset standard models of economics in his 1967 book, New Industrial State, in which he argued that the paradigm of "perfect competition"—long used as the basis for modeling most market structures—was wholly inadequate for describing the real world of firms. In that book, he argued that many industries are characterized by firms more like oligipolies that engage in fierce competition for market share, expanding both horizontally and vertically in a process that ultimately makes them institutions separate from even their owners. It was this approach that led to modern-day emphasis, even in principles of microeconomics classes, on a market structure now called "monopolistic competition," perhaps the most interesting of all market structures because of its topical aspects such as strategic pricing, marketing, and market contestability.

Dr. Galbraith was vitally active even into his last years, writing and making public appearances. He was, at the time of his death, professor emeritus at Harvard University.

John Kenneth Galbraith has now passed from this good Earth that he made better for his intellectual contributions; and because of those great and good contributions, he will stand forever as the powerhouse luminary of the theory and practice of economics of the last half of the 20th Century, that amazing era after the failed Classical economists of the 19th Century had been chased fully into the shadows and before their spiteful and equally failing Right-wing successors would return from the depths of deserved repudiation to diminish the world of the 21st Century.

The Dark Wraith gives a moment of silence in respect for Dr. Galbraith.

This article is cross-posted from The Dark Wraith Forums.

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