Thread by @docrussjackson

Quick #THREAD on Canadian-American economist, diplomat, public official, & public intellectual, John Kenneth Galbraith, who died in 2006.

His books on economic topics were bestsellers from the 1950s through the 2000s. As an economist, he leaned toward post-Keynesian economics.

Galbraith was a Harvard University professor of economics for half a century, writing four dozen books, including several novels, and published more than a thousand articles and essays on various subjects.

Among his works was a trilogy on economics, American Capitalism (1952), The Affluent Society (1958), & The New Industrial State (1967).

Neoliberal/libertarian economists Milton Friedman & Thomas Sowell couldn't stand him.

Galbraith was active in Democratic Party politics, serving in the administrations of Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy, and Lyndon B. Johnson. He served as United States Ambassador to India under the Kennedy administration.

His political activism, literary output and outspokenness brought him wide fame during his lifetime.

Galbraith was one of the few to receive both the WWII Medal of Freedom (1946) & the Presidential Medal of Freedom (2000) for his public service & contributions to science.

In The Affluent Society (1958), which became a bestseller, Galbraith outlined his view that to become successful, post–World War II America should make large investments in items such as highways and education, using funds from general taxation.

Galbraith critiqued the assumption that continually increasing material production is a sign of economic & societal health. Because of this Galbraith is sometimes considered one of the first post-materialists. In this book, he popularized the old phrase "conventional wisdom".

Galbraith had originally titled it Why The Poor Are Poor, but changed it to The Affluent Society at his wife's suggestion. The Affluent Society contributed significantly to the "war on poverty", the Govt spending policy introduced by the administrations of Kennedy & Johnson.

The war on poverty is the unofficial name for legislation first introduced by Lyndon B. Johnson in 1964. This legislation was proposed by Johnson in response to a national poverty rate of around 19%.

Maybe @UKLabour should announce one?

This led to the Economic Opportunity Act, which led to the Office of Economic Opportunity administering forty programs aimed at eliminating poverty by improving living conditions for residents of low-income neighborhoods & by helping the poor access economic opportunities.

In 1966, Galbraith was invited by the @BBC to present the Reith Lectures, which he titled The New Industrial State.

Across six broadcasts, he explored the economics of production & the effect large corporations could have over the state.

bbc.co.uk/programmes/p00…

In the print edition of The New Industrial State (1967), Galbraith expanded his analysis of the role of power in economic life, arguing that very few industries in the United States fit the model of perfect competition. A central concept of the book is the 'revised sequence'.

Conventional economic wisdom portrays a set of competitive markets governed, ultimately, by the decisions of sovereign consumers. In this original sequence, the control of the production process flows from consumers of commodities to the organizations that produce them. But...

In the 'revised sequence', this flow is reversed & he suggests - in a similar vein to Edward Bernays - that what actually happens is that businesses exercise control over consumers by advertising, marketing & related salesmanship activities.

The 'revised sequence' concept applies only to the industrial system - that is, the manufacturing core of the economy in which each industry contains only a handful of very powerful corporations. It does not apply to the market system in the Galbraithian dual economy.

In the market system, composed of the vast majority of businesses, price competition remains the main form of social control. In the industrial system of a few large corporations, competitive price theory obscures the relation to the price system of these powerful corporations.

In Galbraith's view, the principal function of market relations in this industrial system is not to constrain the power of the corporate behemoths, but to serve as an instrument for the implementation of their power.

Moreover, the power of these corporations extends into commercial culture & politics, allowing them to exercise considerable influence upon popular social attitudes & value judgments.

That this power is exercised in the shortsighted interest of expanding commodity production & the status of the few is both inconsistent with democracy & a barrier to achieving the quality of life that the new industrial state with its affluence could provide.

The New Industrial State not only provided Galbraith with another best-selling book, it also extended once again, the currency of institutionalist economic thought. The book also filled a very pressing need in the late 1960s.

The conventional theory of monopoly power in economic life maintains that the monopolist attempts to restrict supply in order to maintain price above its competitive level. The social cost of this is a decrease in both allocative efficiency & the equity of income distribution.

But this conventional economic analysis of the role of monopoly power did not adequately address popular concern about the large corporation in the late 1960s, which imho mirrors the concern with the power of corporations both after the 2008 crash & in contemporary society.

The growing concern then, as now, focused on the role of the corporation in politics, the damage done to the natural environment by an unmitigated commitment to economic growth, & the perversion of advertising and other pecuniary aspects of culture.

The New Industrial State gave a plausible explanation of the power structure involved in generating these problems & found a very receptive audience among the rising American counterculture & political activists.

In Economics & the Public Purpose (1973), he expanded on these themes, discussing the subservient role of women in the unrewarded management of ever-greater consumption, & the role of the technostructure in the large firm in influencing perceptions of sound economic policy aims.

In A Short History of Financial Euphoria (1990), he traces speculative bubbles through several centuries, & argues that they are inherent in the free market system because of "mass psychology" & the "vested interest in error that accompanies speculative euphoria."

Also, financial memory is "notoriously short": what currently seems to be a "new financial instrument" is inevitably nothing of the sort. Galbraith cautions: "The world of finance hails the invention of the wheel over & over again, often in a slightly more unstable version."

Crucial to his analysis is the assertion that the common factor in boom-and-bust is the creation of debt to finance speculation, which "becomes dangerously out of scale in relation to the underlying means of payment."

Galbraith's main argument is that as society becomes relatively more affluent, private business must create consumer demand through advertising, & while this generates artificial affluence through the production of commercial goods & services, the public sector becomes neglected.

He points out that while many Americans were able to purchase luxury items, their parks were polluted & their children attended poorly maintained schools.

It becomes increasingly obvious markets alone will *always* under-provide (or fail to provide at all) for many public goods.

Private goods are typically "over-provided" due to the process of advertising creating an artificial demand above the individual's basic needs.

This emphasis on the power of advertising & consequent over-consumption may have anticipated the drop in savings rates in the US.

Galbraith proposed curbing the consumption of certain products through greater use of pigovian taxes & land value taxes.

Galbraith's major proposal was a program he called "investment in men"—a large-scale, publicly funded education program aimed at empowering ordinary citizens.