John Kenneth Galbraith: Economics

“If the state is the executive committee of the great corporation and the planning system, it is partly because neoclassical economics is its instrument for neutralizing the suspicion that this is so.”

John Kenneth Galbraith

Power and the Useful Economist (1973)
Context: This is what economics now does. It tells the young and susceptible (and also the old and vulnerable) that economic life has no content of power and politics because the firm is safely subordinate to the market and the state and for this reason it is safely at the command of the consumer and citizen. Such an economics is not neutral. It is the influential and invaluable ally of those whose exercise of power depends on an acquiescent public. If the state is the executive committee of the great corporation and the planning system, it is partly because neoclassical economics is its instrument for neutralizing the suspicion that this is so.

“In the usual (though certainly not in every) public decision on economic policy, the choice is between courses that are almost equally good or equally bad. It is the narrowest decisions that are most ardently debated.”

John Kenneth Galbraith

"The American Economy: Its Substance and Myth," quoted in Years of the Modern (1949), edited by J.W. Chase
Context: In the usual (though certainly not in every) public decision on economic policy, the choice is between courses that are almost equally good or equally bad. It is the narrowest decisions that are most ardently debated. If the world is lucky enough to enjoy peace, it may even one day make the discovery, to the horror of doctrinaire free-enterprisers and doctrinaire planners alike, that what is called capitalism and what is called socialism are both capable of working quite well.

Decision

“The only function of economic forecasting is to make astrology look respectable.”

John Kenneth Galbraith

Though often attributed to Galbraith, as early as 1988 in U.S. News & World Report, the earliest publications of this statement, in The Bulletin (1984) and Reader's Digest (1985) attributes it to Ezra Solomon.
Misattributed

“If you feed enough oats to the horse, some will pass through to feed the sparrows (referring to "trickle down" economics).”

John Kenneth Galbraith

"Recession Economics," New York Review of Books, Volume 29, Number 1 (4 February 1982)
Context: Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy— what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows.

Horse

“Economics is not an exact science.”

John Kenneth Galbraith

Source: The Age of Uncertainty (1977), Chapter 1, p. 36

Science

“The pioneering instrument of reform was the Bank of England. Of all institutions concerned with economics none has for so long enjoyed such prestige. It is, in all respects, to money as St. Peter's is to Faith.”

John Kenneth Galbraith

Source: Money: Whence It Came, Where It Went (1975), Chapter IV, The Bank, p. 30

Money , Faith

“In economics, hope and faith coexist with great scientific pretension and also a deep desire for respectability.”

John Kenneth Galbraith

The New York Times Magazine (7 June 1970)

Faith , Hope

“Economic life, as always, is a matrix in which result becomes cause and cause becomes result.”

John Kenneth Galbraith

Source: Money: Whence It Came, Where It Went (1975), Chapter XIV, When The Money Stopped, p. 192

Life

“In the first place I identify this ["the equilibrium of poverty"] with primitive agriculture, and two factors have been at work there. One is, of course, population growth. If you were a poor farmer in India, Pakistan, or in much of Africa, you would want as many sons as possible as your social security. They would keep you out of the hot sun and give you some form of subsistence in your old age. So, you have pressure for population growth that is, itself, the result of the extreme economic insecurity. This is something which hasn't been sufficiently emphasized.”

John Kenneth Galbraith

Interview with John Newark (1990) from Interviews with John Kenneth Galbraith (2004) http://aurora.icaap.org/talks/galbraith.htm, ed. James Ronald Stanfield and Jacqueline Bloom Stanfield

Age , Sun

“Foresight is an imperfect thing — all prevision in economics is imperfect.”

John Kenneth Galbraith

Source: Money: Whence It Came, Where It Went (1975), Chapter XIX, The New Economics At High Noon, p. 269

“This view that the action of the Federal Reserve authorities in 1927 was responsible for the speculation and collapse which followed has never been seriously shaken. There are reasons why it is attractive. It is simple, and it exonerates both the American people and the economic system from substantial blame… Yet the explanation obviously assumes that people will always speculate if only they can get the money to finance it. Nothing could be farther from the case. There were times before and there has been long periods since when credit was plentiful and cheap -- far cheaper than in 1927-29 -- and when speculation was negligible. Nor was speculation out of control after 1927, except that it was beyond the reach of men who did not want in the least to control it. The explanation is a tribute only to a recurrent preference, in economic matters, for formidable nonsense.”

John Kenneth Galbraith book The Great Crash, 1929

Source: The Great Crash, 1929 (1954 and 1997 https://openlibrary.org/books/OL25728842M/The_Great_Crash_1929), Chapter I, "Vision and Boundless Hope and Optimism" p. 10

Men , Money , People , Time

“The decisive weakness in neoclassical and neo-Keynesian economics is not the error in the assumptions by which it elides the problem of power. The capacity for erroneous belief is very great, especially where it coincides with convenience. Rather, in eliding power — in making economics a nonpolitical subject — neoclassical theory destroys its relation to the real world. In that world, power is decisive in what happens. And the problems of that world are increasing both in number and in the depth of their social affliction. In consequence, neoclassical and neo-Keynesian economics is relegating its players to the social sidelines where they either call no plays or use the wrong ones. To change the metaphor, they manipulate levers to which no machinery is attached.”

John Kenneth Galbraith

Power and the Useful Economist (1973)

World , Error , Problem , Decision

“In economics, unlike fiction and the theater, there is no harm in a premature disclosure of the plot: it is to see the changes just mentioned and others as an interlocked whole.”

John Kenneth Galbraith book The New Industrial State

Source: The New Industrial State (1967), Chapter I, Section 3, p. 6

Change

“Hitler also anticipated modern economic policy... by recognizing that a rapid approach to full employment was only possible if it was combined with wage and price controls. That a nation oppressed by economic fear would respond to Hitler as Americans did to F. D. R. is not surprising.”

John Kenneth Galbraith

As quoted in Adolf Hitler: The Definitive Biography (1991), by John Toland, also quoted in "Repatriation — The Dark Side of World War II (1995) by Jacob G. Hornberger http://www.fff.org/freedom/0795a.asp

Fear

“I was studying agriculture, how to produce better chickens, better cattle, better horses — horses in those days — better fruit, better vegetables. This was in the early years of the Great Depression, and the thoughts crossed my mind that there wasn't a hell of a lot of use producing better crops and better livestock if you couldn't sell them, that the real problem of agriculture was not efficiency in production but the problem of whether you could make money after you produced the stuff. So I shifted from the technical side to, first, the study of agricultural economic issues and then on to economics itself.”

John Kenneth Galbraith

Booknotes interview (1994)

Money , Hell , Problem , Study

“Economic theory is the most prestigious subject of instruction and study. Agricultural economics, labor economics and marketing are lower caste fields of study.”

John Kenneth Galbraith book The New Industrial State

Source: The New Industrial State (1967), Chapter X, Section 5, p. 122 (Mr. Galbraith was originally an agricultural economist...)

Study

“Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes — indeed, deletes — the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.”

John Kenneth Galbraith

"Free Market Fraud" http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html, The Progressive (January 1999)