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May 01, 2006

John Kenneth Galbraith

Nil nisi mortuem and all that but this at the ASI really does take the cake:

"That the Soviet economy has made great material progress in recent years is evident both from the statistics... and from the general urban scene... One sees it in the appearance of solid well-being of the people on the streets, the close-to-murderous traffic, the incredible exfoliation of apartment houses, and the general aspect of restaurants, theaters, and shops... Partly, the Russian system succeeds, because, in contrast with the Western industrial economies, it makes full use of its manpower."

That’s John Kenneth Galbraith writing in The New Yorker. You might get away with it in 1924...just coming out of the Civil War and using the New Economic Plan (NEP, or whatever that stood for). 1934, well, you’d have to ignore the odd famine here and there but industrialisation was proceeding apace. 1944? War economy again, yes, these do tend to be planned. 1954? Recovering after the war, of course. Same excuse given in the UK at the time despite Germany beginning to move ahead. 1964? Kruschev and all, still recovering from war of course, Japan now soaring ahead. 1974? Well, less excuse really, but he actually wrote that in 1984. Yes, the high and holy days of the Brezhnev Stagnation.

Highly perceptive man our John Kenneth.

Hedge Fun Guy is also less than taken with his legacy:

He seemed a good man, in that he was honest and well-intentioned, and here I'm sure he has left a fine legacy for his friends and family. But his legacy to economics, is virtually non-existant. Big firms are generally weak, advertizing increases competition, depressions are not caused by excessive speculation, and conventional wisdom has always been for greater government regulation and redistribution.

May 1, 2006 in Economics | Permalink


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There was a time up to about the mid 1990s when BBC radio editors tended to dial up Galbraith whenever they wanted to air the slant of a leading international economist. I never understood why. Perhaps they had all read Galbraith's The Affluent Society (1958) on economics and evidently not much else. Maybe it was the phrase: Private affluence, public squalor, that bewitched them all.

Posted by: Bob B | May 1, 2006 11:33:55 AM

Listening to the World Service last night you'd think that he was the greatest economist ever and his thinking the basis of all economic prosperity.
That and they called him a 'liberal economist' which apparently means being in favour of state intervention rather than freedom of trade and work.

Posted by: Tristan Mills | May 1, 2006 1:50:15 PM

Crap economist, good writer. "The Great Crash" shows what fun one can have in a cuttings library if one also has a waspish pen. Emphasis on the pish.

Posted by: dearieme | May 1, 2006 2:57:30 PM

Tim, you are trying to pretend here that Galbraith was an apologist for Communism and he wasn't.

Tim adds: No, I’m not. I’m pointing out that he was grossly wrong about the material wealth that Soviet communism created. Or didn’t, which is rather more the point.

Posted by: dsquared | May 1, 2006 3:00:34 PM

Well, at the time he wrote that Soviet Russia did actually have a fairly good post-WWII growth record. If higher GDP per capita growth than the US isn't 'great material progress' I don't know what is. If your criticism is that he failed to predict the subsequent stagnation, revolution and collapse, then yes I suppose you're right, but that's not really the same thing, is it?

Tim adds: But Jim, they didn’t have higher per capita growth rates. It was only two years later that Gorby made a speech pointing out that , absent higher resource extraction, value add per capita was the same as it had been in 1913.

Yes, I know the official statistics said differently, but aren’t economists supposed to look behind them?

Posted by: Jim | May 1, 2006 5:13:36 PM

"But Jim, they didn’t have higher per capita growth rates."

Says you. I based what I said on the figures (http://www.usd.edu/~rbrown/world.xls) produced by Angus Maddison, who is pretty much the world's leading authority on historical growth rates. By contrast, you're just some wingnut blogger. You want to argue with those figures, argue it out with Angus.

Tim adds: 1999 figures showing GDP per capita at $4 k in the ex USSR? Great proof Jim. Try this:

Posted by: Jim | May 1, 2006 6:38:03 PM

Anyone who ever says anything nice about communists, muslims, yuuroopeans, libruls IS A NAZI! NAZI! NAZI!

(The real author of this comments says:) War economies do tend to be planned. Yup. Like the US war economy, which probably created more wealth than any other four years in world history, and certainly was a revolution in mass access to education of a kind never seen before or since. Thank God some euroweenazi weakass like J.K. Galbraith wasn't there to wreck it....

whoops. It was him that planned it

Tim adds: And by limiting wages but not benefits led to the employer based health insurance system which cuases so many problems now. Planned economies are fine in the short term....but it’s how economies react in the long term that matters.

Posted by: Shorter Tim | May 1, 2006 7:27:18 PM

btw, Brezhnev in 1984? I know they propped him up for a few years, but not that many.

Tim adds: You’re right. Andropov by then? Although they didn’t prop him up....more kept him lying down wasn’t it?

Posted by: dsquared | May 1, 2006 10:46:29 PM

"1999 figures showing GDP per capita at $4 k in the ex USSR? Great proof Jim."

Wow Tim, are you really telling me you don't know the difference between growth rates and the level of GDP? Or that you weren't aware of the collapse in Russian GDP in the 1990s?

How about you actually address yourself to the point I made? Now that you've seen the figures, why not do the calculation yourself and tell me whether or not the USSR grew faster than the US between WWII and 1984?

Tim adds: Jim, in that .xls you link to the figures start in 1999. Unless I’m missing something, of course.

Ah, I see my mistake with the .xls now. Apologies, not used to using it.
$6,703 in 1984 for the USSR? Nope, not a chance of me believing that. 1/3 of US that year? Give over. Gorby himself said, in 1986, that absent increased resource extraction, GDP per capita that year was the same as 1913. i.e $1,488 or so.

Posted by: Jim | May 2, 2006 1:35:32 PM

"$6,703 in 1984 for the USSR? Nope, not a chance of me believing that. 1/3 of US that year? Give over. Gorby himself said, in 1986, that absent increased resource extraction, GDP per capita that year was the same as 1913. i.e $1,488 or so."

Well, now you're just being silly. GDP per capita in 1986 of "$1,488 or so" would make the USSR much poorer than every other Eastern Bloc country (including Albania), poorer than every Latin American country except Haiti, poorer than Palestine, and poorer than the Ivory Coast and numerous other countries in Africa.

And if GDP per capita really was $1,500 in 1984, that means it would have to have approximately tripled since then to get to current levels. This would be really something, considering you've already said that the 1980s were a time of stagnation and the 1990s was distinguished by one of the most spectactular economic collapses in memory. So how exactly could Russia have got from $1,500 in 1984 to multiples of that today (and remember we're talking about constant dollars here)?

Speaking of that 1990s economic collapse, I seem to remember you don't believe it happened or something. I said in a comment on a previous post of yours that the collapse in incomes is shown not just by national accounts but by household income and expenditure surveys, and I linked to a World Bank study that showed exactly that. Naturally, you ignored it, because that's what you do with evidence you don't agree with.

So no, I really think you're talking bollocks here. Unless you've got anything better than a (probably mis-remembered) alleged quote from Gorby to go on, I think I'll stick with the guy who is after all the world expert on this kind of thing.

Posted by: Jim | May 2, 2006 5:55:14 PM

Any more to say on this, or shall we just accept that the USSR really did grow faster than the USA (albeit from a much lower level)?

Timn adds: As I said, I don’t believe the figure.

Posted by: Jim | May 3, 2006 11:30:41 AM

But you didn't give any good reason. Not *wanting* to believe it isn't good enough. And the idea that the USSR's GDPPC was $1,500 in 1984 is nuts, as I explained above.

Tim adds: I didn’t say it was. I said that Gorby made a speech that stated "absent increased resource extraction" it was. Still don’t believe the 1/3 of US number though.

Posted by: Jim | May 3, 2006 12:01:09 PM

Good stuff Tim, pick the one comment and slay the whole man's philosophy. Proper economics that, generalising from the specific to the general. A sort of methodological individualism for the population of Galbraith's entire writings.

His ideas were so much more penetrating than just being 'against the system'. You really should do better.

Tim adds: Not that I was quoting someone else. My main reservation about Galbraith would actually be that he didn’t actually propose many solutions for the problems he claimed to identify. "Private affluence, public squalor" for example. In recent years there’s been much wondering about exactly why this is. Is it shortage of public resources? Or inefficient management of such public resources. You know which side of that debate I’m on but Galbraith never went into the nitty gritty of it. Just made the observation and moved on.
Similarly, advertising. Having noted that some of it creates previously unknown desires that was enough to condemn all of it. But yes, what do we do about it? Ban all advertising? Great, means we’ll almost never have new entrants into markets.

Posted by: Fluffy Economist | May 3, 2006 1:03:46 PM

Perhaps he was a bit short on solutions, but his general approach, as I have elsewhere said, of taking a holistic view of the economy is one that economics should learn. Doesn't it strike you as odd that mainstream economic theory has no explanation of innovation and learning processes , yet these are the meant to be the foundations of the 'new economy'?

Galbraith recognised the importance of power relationships and human foibles in deciding how an economy is run, something that is only now coming back to prominence.

Posted by: Fluffy Economist | May 3, 2006 1:19:17 PM

Fluffy Economist:

When I read Hayek or Friedman, that is the impression I get. They look at the economy as a whole, they look at the effects on people, they are centrally concerned with power.

The fundamental insight is that nobody can plan for long term economics. Human foibles have a great effect, an even bigger one when power is concentrated in a planned economy, but it is the foibles of the powerful, the rulers.

And Hayek explains innovation and learning processes, elegantly.

Posted by: Tristan Mills | May 7, 2006 11:16:28 PM