John Kenneth Galbraith

Canadian-born American economist

• Born: October 15, 1908
• Birthplace: Iona Station, Ontario, Canada
• Died: April 29, 2006
• Place of death: Cambridge, Massachusetts

A leading liberal economist and prolific author, Galbraith became one of the most prominent advocates of the economic theories of John Maynard Keynes. Galbraith was also a liberal political activist and a friend of President John F. Kennedy, who named him U.S. ambassador to India.

Early Life

Born the son of a midlevel Canadian farmer, John Kenneth Galbraith (GAHL-brayth) initially seemed destined for the family farming business. At his father’s urging, he attended Ontario Agricultural College in Guelph, Ontario, receiving a degree in animal husbandry in 1931. This gangling descendant of the Highland clearances in Scotland he was six feet eight inches tall hardly seemed, then, on the path to his later prominence.

Despite these modest beginnings, however, Galbraith possessed a remarkable capacity for hard work, together with two other qualities: He was a master of words and a collector of friends. As a result he managed to combine three careers: professional, academic economist at Harvard University; politician associated with the leading democratic politicians of the mid-twentieth century; and prolific author of articles and of books, more than forty during his long lifetime.

Luck favored Galbraith in 1931 when he won a fellowship to the graduate school of the University of California, Berkeley. By 1934 he had completed a doctoral degree in agricultural economics that brought him to the attention of Professor John Black of Harvard, then one of the country’s leading agricultural economists. After teaching at Harvard for three years, Galbraith won another fellowship, to Cambridge University in England, just in time to absorb the new economic doctrines being advanced by John Maynard Keynes in his The General Theory of Employment, Interest, and Money (1936).

Life’s Work

Although over time Galbraith came to question some of what came to be known as the Keynesian doctrine, he nevertheless held fast to Keynes’s belief that the economy as defined by contemporary economists was volatile and incapable of producing maximum efficiency while ensuring a high level of employment. Intervention by the government was the only viable way of easing the volatility and ensuring that employment would remain full or nearly full. These views were in accord with those politicians who sought to mitigate the effects of the Great Depression of the 1930’s with government programs. Galbraith began promoting such programs (such as a brief term at the Agricultural Adjustment Administration in 1934) and in his teaching.

The outbreak of World War II jump-started Galbraith’s political career. His connections with Democratic politicians led to his appointment as the deputy head of the Office of Price Administration in 1942. In this role he became the designer of the wartime system of price controls; the need to make this justifiable in individual cases led him into an intense investigation of the market conditions of all aspects of the American economy, a factual base on which he was later to build in his books. He added to this knowledge of the economy when, in 1943, he signed on as an editor of Fortune magazine, a post made possible by his earlier friendly relationship with Henry Luce, the innovative publisher of Fortune as well as Time and Life magazines.

However, Galbraith’s government service was not yet finished. In 1944 he was recruited for a project that only bore fruit after the end of fighting in Europe in 1945. He was one of a group of experts called upon to evaluate the effectiveness of the U.S. strategic bombing campaign. Here he inserted himself between the experts and the politicians. His Strategic Bombing Survey showed, when it was published in 1947 (Galbraith had been asked to evaluate the effect of the bombing on the German wartime economy), that strategic bombing had had very little effect on German war production.

In the fall of 1948, Galbraith returned to teaching at Harvard, but his involvement with politics continued, though in a different form. Instead of being a government bureaucrat, or a specialist assigned to work on government projects, Galbraith henceforth expressed his liberal outlook by advising politicians. He was among the advisers to Adlai E. Stevenson, who ran as the Democratic candidate for president in 1952 and again in 1956. Most important, though, he became a close friend of President John F. Kennedy. This led to his appointment as U.S. ambassador to India from 1961 through 1963. He later advised President Lyndon B. Johnson, but the two parted company over the Vietnam War, which Galbraith opposed.

Beginning in the 1950’s, however, Galbraith, now secure at Harvard (although his appointment was highly controversial) began the third arm of his career. His first major work as a writer was American Capitalism , which first appeared in 1952 and rapidly became a best seller. In the book Galbraith challenged economic orthodoxy that had, hitherto, extolled the market as the major determinant of economic success. Galbraith argued, instead, that in the United States capitalism had discovered the economic advantages of size, and that many markets were dominated by a few giant firms, or oligopolies. He cited in particular the steel, telephone, and automobile industries, and a few competing megafirms. It is true that there were some markets where the small producer competed on price in the market, notably Galbraith’s own specialty of agriculture, but for the most part American capitalism was dominated by large firms that commanded thousands of workers and millions of dollars of capital.

Galbraith followed up his American Capitalism with another, even more successful, best seller, The Affluent Society . Published in 1957, it took Galbraith’s earlier argument even further, proposing that the U.S. economy had gone beyond its old-time focus on supplying basic needs such as food, shelter, and clothing, and instead had become a self-sustaining system of wants that were in fact generated by the industries serving them; these wants were developed through intensive marketing and advertising. These industries, for the most part dominated by large, capital-intensive firms that produced goods in huge quantities, became the core of the American economic system. The market, the magical device proposed by Adam Smith in The Wealth of Nations (1776) as the regulatory system governing the economy, had been relegated to a subsection of the economy, where small firms, including farms, competed with one another to sell what they produced at a price dictated by supply and demand. The real market, that controlled by large, heavily capitalized megafirms, was busy generating its own demand, but not necessarily producing the maximum efficiency extolled by traditional economists.

A decade later Galbraith brought out another best seller, The New Industrial State (1967), in which he integrated the ideas of his earlier books into a comprehensive picture of the American economy. In this new book he argued that, because the dominant element of the American economy was the large, heavily capitalized firm, it was interested chiefly in its own preservation. Its survival was ensured through massive marketing of its products. However, the power of these big corporations needed to be balanced by and the interests of the ordinary consumer need to be protected by an equally potent force, the states or federal government.

Galbraith formally retired from Harvard in 1975, but he continued to write well into his nineties. He starred in a British Broadcasting Service special, The Age of Uncertainty (1976), much of which he wrote as well. He published his memoirs, A Life in Our Times, in 1981, which gave him the opportunity to display his talent for exquisite irony: “Nothing in economics so lends itself to mystification as money,” he wrote. In the 1990’s he published five new books and numerous articles. His death in 2006 at the age of ninety-seven followed a brief two-week illness.

Significance

Galbraith gave intellectual respectability to liberal, antimarket economics, though it was always an uphill battle, especially in the 1980’s and 1990’s, when conservatism revived the old respect for the market as that which determines economic advance. The New Industrial State summarizes a major aspect of his economic philosophy: Controlling competition among giant firms through antitrust action was not enough for the government; instead, the government needed to be an active participant in the competitive race, which it could do by progressive taxation and by employing the proceeds to supply those human needs that could not be addressed by the private market. Galbraith used the following examples to outline his philosophy: Heavily marketed cars needed roads as well as places to park, workers needed basic education, and urban centers needed police and fire protection, parks, and recreational space. Little of these needs, Galbraith argued, could be met by the private market.

Galbraith was considered an institutional economist in the sense that he believed that understanding the workings of social structures, such as the large corporation, is more critical to understanding economics than are purely quantitative data (as espoused by those working in econometrics). He provided intellectual justification for the expansion of governmental activity, a grand social structure, in regulating the economy.

Bibliography

Bowles, Samuel, et al., eds. Unconventional Wisdom: Essays on Economics in Honor of John Kenneth Galbraith. Boston: Houghton Mifflin, 1989. Galbraith’s wide circle of friends in and out of economics pay tribute to him.

Galbraith, John Kenneth. A Life in Our Times: Memoirs. Boston: Houghton Mifflin, 1981. Galbraith’s own account of his life.

Keaney, Michael, ed. Economist with a Public Purpose: Essays in Honor of John Kenneth Galbraith. New York: Routledge, 2001. Reflects the continuing admiration for Galbraith, in particular the wide scope of his interests.

Parker, Richard. John Kenneth Galbraith: His Life, His Politics, His Economics. Chicago: University of Chicago Press, 2005. This monumental life of Galbraith by a fellow economist who had access to Galbraith family papers is the definitive biographical source.