Tuesday, September 17, 2013

DeLong on Galbraith vs. Robbins, Meade and Salerno on Galbraith

By Joseph Salerno
Brad DeLong has chided Walter Block like an angry schoolmarm for allegedly calling John Kenneth Galbraith "a totalitarian."   While I would not agree with that assessment of Galbraith, it is interesting to seek for the reason why DeLong chose to ignore the main point of Block's post and to focus solely on Block's  slight of Galbraith.   And we do not have far to seek:  DeLong takes is completely uncritical--one might say hagiographic--view of Galbraith's merits as an economist. Below are a few paragraphs excerpted from a critical article I wrote in 2012 about the new lovefest for Galbraith that has recently been going on some among mainstream economists.
J. Bradford DeLong is a Berkeley economist and former Treasury Department functionary during the Clinton administration. He also writes the clumsily titled and soporific blog, Grasping Reality with Both Invisible Hands: Fair, Balanced, and Reality-Based: A Semi-Daily Journal. DeLong is even less restrained and discriminating than [Amartya] Sen in extolling Galbraith's brilliance, declaring that history professors can do no better "than to assign his books The Affluent Society and The New Industrial State to teach students how the midcentury U.S. economy came to dominate the world." Anyone who wants to learn about the Great Depression, according to DeLong, "should start with The Great Crash; there is no other history of the stock-market crash of 1929 that is as short and even half as worthwhile."
DeLong even praises Galbraith's turbulent and ill-fated stint as deputy director in the Office of Price Administration during World War II, where he apparently performed the miracle of "squar[ing] the growth-inflation circle by pushing production far above economists' measures of potential output without sparking runaway price increases that would threaten the economic mobilization."[2]Although the title of the aforementioned blog doubly touts DeLong's intellectual engagement with "reality," his paean to Galbraith's administration of draconian wartime price controls betrays minimal contact with economic reality.
For a more accurate view of Galbraith the man and his work, we turn to economists who were masters of verbal-logical economic theory that had reached its high point in the 1930s. Two eminent British economists of widely different political persuasions, Lionel Robbins and James Meade, were steeped in this kind of economic analysis, which used mathematics for illustrative purposes only and sought to explain economic phenomena by tracing them back to their essential causes using logical deduction based on realistic premises. Robbins and Meade each assessed Galbraith in their private wartime diaries based on personal interactions with him.[5] Neither was particularly impressed, although their respective assessments of Galbraith could not take into account the works for which he would later become famous.
For much of the 1930s Robbins was a follower of the Austrian School of economics, having been influenced by the writings of Ludwig von Mises and by Friedrich A. Hayek, with whom he developed a close personal relationship. In the late 1930s and especially during the war, Robbins fell more and more under the personal influence of Keynes whom he had gotten to know personally, although he still remained for the most part a generally market-oriented economist. Robbins did not think much of Galbraith's mental acuity and dismissed him as a shill for New Deal policies, writing,
I knew Galbraith in the old days; he sat for some little time in my seminar. I must say I am not altogether surprised at what has happened; for I have always thought him a dull fellow, well intentioned enough, but a sort of pedant of New Deal economics — just the kind of man to upset the business community without himself bringing any startling administrative ability to offset the loss of that which he had antagonized.[6]
Meade was a co-recipient, with Bertil Ohlin, of the 1977 Nobel Prize in economics. Throughout his career Meade was deeply concerned with the inequality of income and wealth and wrote voluminously on the subject. Meade also was a vigorous supporter of "incomes policy," i.e., permanent wage and price controls, as a remedy for "stagflation," which he believed had become an endemic feature of industrialized market economies.[7] Meade was, therefore, in no sense a conservative or free-market economist and in fact could be classified as a Fabian socialist or social democrat in his policy leanings. Yet he viewed Galbraith in much the same light as Robbins. He wrote in a diary entry,
Later I dined with Galbraith and his wife at the Cosmos Club and then went on to their home in Georgetown to talk. He is the "relentless" type of radical, believes that Russia should be permitted to absorb Poland, the Balkans and the whole of Eastern Europe in order to spread the benefits of Communism, that the outlook for American politics is very black because even if the Roosevelt administration wins the next election the liberal New Dealers are now all a crowd of tired, cautious, conservative liberals etc. I think he may be a little embittered at the punishing experience at the OPA where there was a witch hunt against liberal College professors of which he was the main victim.
In a footnote to this entry inserted right after the word "Communism," the diary editors state, "Meade now suspects that he may have unfairly misinterpreted Galbraith's views, and Galbraith denies that he ever held such views."[8] But whether Meade's suspicions 47 years later about what Galbraith did or did not mean is more accurate than his recollection of what Galbraith said on the day he made the diary entry is beside the point. It is clear that Meade the economist was not favorably impressed by Galbraith.
Dr. Joseph T. Salerno is Professor of Economics, Lubin School of Business, Pace University and academic vice president of the Mises Institute.

1 comment:

  1. "Anyone who wants to learn about the Great Depression, according to DeLong, "should start with The Great Crash; there is no other history of the stock-market crash of 1929 that is as short and even half as worthwhile."

    I'm not really surprised by such a statement. "America's Great Depression" would naturally be ignored by a statist cheerleader/central planner.(because actually attacking it in an attempt to discredit it would be very difficult)

    Does anyone really doubt that DeLong is such an animal?

    From that perspective, doesn't the deification of Galbraith make sense?

    If your goal is to make a case for central economic planning you desperately need a champion of such outside of Keynes and on the surface that's Galbraith.

    DeLong might claim the mantle of "free market neo-liberal", but we all know other wise.

    Guys like DeLong dump free markets as it suits them, using "emergency" as cover with Galbraith being a prime example of such as "success".

    My personal biggest gripe is that they obscure their true beliefs instead of being honest. They claim to "support" the free market, but they simply don't. A more honest declaration might be "I support the free market sometimes."

    I think that's why DeLong is so upset with Block and spent so much time on defending Galbraith. Whether you agree or not with Block, he took a swipe at a statist pillar so to speak.(one that I happen to agree with even if Salerno doesn't)

    Maybe DeLong can explain why his opinion differs so greatly from Krugman, who said he "believes that Galbraith's work The New Industrial State is not considered to be "real economic theory", and that Economics in Perspective is "remarkably ill-informed" or why Friedman(who he supposedly admires and has been influence by) said "Many reformers – Galbraith is not alone in this – have as their basic objection to a free market that it frustrates them in achieving their reforms, because it enables people to have what they want, not what the reformers want. Hence every reformer has a strong tendency to be averse to a free market."

    If that doesn't scream "totalitarian" I don't know what does. Maybe DeLong can't come to grips with where his own personal preference lies.