Economists at High Noon

Economics in Perspective: A Critical History

by John Kenneth Galbraith
Houghton Mifflin, 324 pp., $19.95

There are many things wrong with John Kenneth Galbraith’s twenty-fifth book, but there is one important thing right with it. What is wrong will disturb economists—an often slapdash exposition of economic ideas, occasional mistakes of some consequence, a few cavalier historical expositions. But what is right is a perspective on economics that will enlighten its noneconomist readers. Galbraith sees his discipline not as a majestic creation of disembodied intelligence but as the unfinished, still inadequate product of a struggle to understand and master the perplexities and problems of capitalist society. His view is that economic ideas can only be understood as products of their time, and that times change, whereas “at best, change in economics has been reluctant and reluctantly accepted.” Like generals, economists fight the wars behind them.

I shall have more to say about Galbraith’s useful approach to economics, but I am obliged to say at first some critical things. Economics in Perspective is a tour of the thinkers and circumstances from which economics emerged, as well as an account of the gradual and reluctant evolution of its central ideas. This is surely the right way to go about the task, and it is in fact the strategy taken by virtually all books in the field, although one might gain the impression that Galbraith had invented it. In fact, his approach differs mainly insofar as his gallery of thinkers includes a number of interesting lesser historical figures (for instance, Friedrich List, who provided an early rationale for tariff protection), as well as illuminating but usually over-looked questions such as the American squabbles over central banking or the “trusts.” These elements are dealt with in Galbraith’s characteristically sardonic, often witty, anecdotal style. I quote a footnote:

A Harvard legend tells of Veblen’s being invited to the university by President A. Lawrence Lowell to be considered for an appointment as a member of the department of economics. After being entertained by fellow economists, he had a lastnight dinner with Lowell, who used the occasion to bring up, in a suitably careful way, Veblen’s most noted academic drawback, which was then being much discussed.

You know, Dr. Veblen, if you come here, some of our professors will be a little nervous about their wives.”

To which Veblen is said to have replied “They need not worry; I have seen their wives.”

There is, I believe, no truth to the story.

In addition, unlike virtually all other conventional historians of economic thought, Galbraith devotes much attention to the New Deal era, so that the reader will meet the characters (Alvin Hansen, Leon Keyserling, Simon Kuznets, Wassily Leontief) who created the approach to the understanding and control of the economy that is the basis for contemporary working as contrasted with theoretical economics. All this is to the good, although I should warn that Galbraith’s exposition of contemporary figures tends to become little more than a blur of names and dates of birth and death, and that …

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