Academic journal article American Economist

Memorializing John K. Galbraith: A Review of His Major Works, 1908-2006

Academic journal article American Economist

Memorializing John K. Galbraith: A Review of His Major Works, 1908-2006

Article excerpt

Introduction

John Kenneth Galbraith was born on October 15, 1908 at Iona Station in Ontario, Canada, the son of William and Catherine Galbraith. His father was a schoolteacher, a politician of Canada's Liberal party, holding various offices in the county. Galbraith attended local schools, graduating from Ontario Agricultural College in 1931, and then moved to the United States. He did his graduate studies at UC at Berkeley in agricultural economics, gaining a Ph.D. in 1934 for his dissertation written on California County Expenditures. In 1934 he became an Instructor at Harvard, where some of his colleagues included Joseph Schnmpeter, Alvin Hansen, and Seymour Harris. At Harvard, Galbraith broadened his economic perspectives to include macroeconomics and industrial organization.

In the 1930s, when the world was suffering from the Great Depression, when unemployment was rampant and governments were struggling with policy measures to steer the economy back to growth, Galbraith published an influential paper titled Monopoly Power and Price Rigidity (1936) to address the problem. It was a landmark year because John Maynard Keynes, who brought macroeconomics into being, had published his General Theory the same year, dealing with similar topics of price rigidities. After receiving a Social Science Research Fellowship in 1937, Galbraith went to Trinity College, Cambridge where he met distinguished economists such as Michal Kalecki, Joan Robinson, Richard Kahn and Piero Sraffa. At that time, Keynes had suffered a heart attack, so Galbraith did not meet him, but got the gist of his macroeconomics from Keynes' colleagues. He did study with Keynes, however, in 1937-38 (Dimand, 1988, 146), and impressed Keynes, who viewed Galbraith "as an engaged and politically purposive intellectual" (Parker, 2005, 96).

From that time onwards, Galbraith stayed in the public arena. He served on the National Defense Advisory Committee from 1940 to 1941. In 1942 he was appointed as deputy administrator of the Office of Price Administration where he served until May 1943. Galbraith was co-director of the United States Strategic Bombing Survey after WWII, and served as ambassador to India from 1961 to 1963 under the Kennedy administration.

As we intend to review Galbraith's main contributions, we provide a preamble of what others think about his works. In the area of price theory, he was praised by his adversary, Milton Friedman, who wrote "... of price and wage control, Kenneth Galbraith has the company of many other people-but so far as I know, he is the only person who has made a serious attempt to present a theoretical analysis to justify his position" (Friedman, 1977, 12).

In industrial organization Galbraith propounded the virtues of Schumpeter's theory that large firms are "almost perfect instruments for inducing technical change" (Galbraith, 1956, 91), and formulated his own theory of "Countervailing Power" which states that if sellers develop market power through concentration, then buyers will also develop market power through concentration giving rise to big business and big unions. This "Countervailing Power Ideology" is comparable to the Classical Capitalist, Managerial, People's Capitalism, and Enterprise Democracy ideologies of capitalism (Samuelson, 1972, V. 3,613). The place of this idea in the economic literature stands opposite to Marx's prediction of demise of capitalism. The rivalry of "giants against giants", in Galbraith's Countervailing Power view, is not "decadence but rather ... ruthless efficiency and dynamic expansion" (Samuelson, 1973, V. 3,707).

Galbraith criticized growth for its own sake as wasteful. What is still carried in modern textbooks is his argument that firms use advertising to create demand. In growth theory proper, Galbraith stands against Marx's self-destruction prognosis for capitalism. He sees growth in capitalism through a neoclassical lens, looking "forward to continued real progress, rather widely shared among the various income classes, the rich and the poor" (Samuelson, 1972, V. …

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