How Ken Galbraith Became President of the AEA

Tucked away in the first chapter of Knowledge and the Wealth of Nations is a very short account of  the circumstances in which John Kenneth Galbraith was nominated to the presidency of the American Economic Association, in December 1970.  An early passage in the book states, “Indeed, go back far enough and you’ll find John Kenneth Galbraith, a literary economist who criticized the profession in a succession of widely-read books – and who is said to have won his presidency only after the immediate past president, Milton Friedman, angered the nominating committee (of which he was a member) by asserting that Galbraith ‘wasn’t an economist at all.’”

Milton Friedman has confirmed the story, although he recalls having described Galbraith as being more of a sociologist than an economist. Also on the committee was economist Hollis Chenery, who had just begun as chief economist at the World Bank (an institution he would serve for thirteen years).  Incensed by Friedman’s attitude, Chenery led the charge for Galbraith and carried the day. (Other committee members included Irma Adelman, Andrew Brimmer, Albert Fishlow and Harold Somers.)  In due course Galbraith was elected.

And so JKG served a spirited term in the tumultuous year of 1971, anointing panels for the annual meeting in December. Among them were sessions on market power, economic equality for women, black political economy, land-use policies, the economics of the arts.  He invited his old friend Joan Robinson to give the distinguished lecture – “The Second Crisis of Economic Theory.” It was distribution, she said; you could tell there was a crisis because of the preponderance of cranks prescribing remedies for problems that mainstream economists ignored.

“Charles Reich proposes to turn America green with a spade and hoe. J.W. Forrester proves on a computer that humanity is bound to be wiped out either by poison or by famine within a hundred years.  Our distinguished Chairman [JKG] can hardly be classed with the cranks, considering the seat he occupies this year, but next year, perhaps, he will be relegated once more to the position outside the pale of those who commit lese majeste against consumer sovereignty.”

Robinson was right. Soon the man his friends called Ken was again being ignored by most technical economists. In the late 1970s, the indignity was compounded when a significant part of the public shifted its fealty to Friedman, whose television series with his wife, “Free to Choose,” crushed Galbraith’s own “The Age of Uncertainty” in the ratings. Good books continued to flow from his pen – an autobiography, a pair of novels, a history of thought, collections of essays.  But never again did he have the enormous success he had enjoyed first with The Affluent Society in 1958, then in 1967 with The New Industrial State. (Richard Parker has written an extensive biography.) 

Galbraith died on April 29, at the age of 97. The year he served as president of the AEA is a forceful reminder that, while his chief celebrity derived from his role as a public intellectual, an unflagging spokesman for big-government liberalism, he most definitely was an economist as well. It is true he did not influence the profession directly so much as hold a place for economics in many minds with literary arguments. Later, these same ideas would be explored by formal methods and find secure places in other minds.

He taught development economics by example, serving as John F. Kennedy’s ambassador to India instead of writing a text. He illustrated monopolistic competition by writing about the “technostructure.” At a time when economists such as Chenery, Karl Shell, Richard Nelson, Edmund Phelps, Nathan Rosenberg and Burton Klein were unable to catch and hold the attention of the profession, Galbraith succeeded, at least for outsiders, in making economics more like real life, happily trading away precision and professional influence for popularity. If his grasp exceeded their reach, he was only too happy to pocket the difference. 

In time, insiders learned to capture the considerations at which Galbraith had merely hinted. Most of his issues have been overtaken by technical work. Avinash Dixit and Joseph Stiglitz were working on a Galbraithian problem of brand-proliferation – were there too many kinds of breakfast cereal? – when in 1977 they devised the model of monopolistic competition that has proven to be the workhorse of a revolution in the way in which we understand industrial organization. Jean Tirole codified the new learning in The Theory of Industrial Organization in 1988. Robert Lucas’ famous 40-page lecture “On the Mechanics of Economic Development,” first presented in 1986, probably did more to stimulate professional interest in the growth of newly-industrial countries around the world than anything Galbraith ever wrote. Yet before there was Lucas there was Galbraith, preaching the gospel that the lot of the world’s poor surely somehow could be improved by policy. Never mind that it was a very different policy than the one he advocated. He was a prophet of endogenous growth. 

Other economists have proved willing to take up the burden of going beyond their tools to engage in moral instruction:  Milton Friedman, for example. The most prominent representative of this type today probably is Jeffrey Sachs, the Harvard exile now presiding at Columbia University’s Earth Institute.

What is it that these people do for us?  They create the future. As William James wrote, in “The Moral Philosopher and the Moral Life,”  “We all help to determine the content of ethical philosophy so far as we contribute to the race’s moral life….    [T]here can be no final truth in ethics, and more than in physics, until the last man had had his experience and said his say.”  Yet some men and women, more than others, influence the course of events, most often by their demonstration of James called “the strenuous mood” — the capacity for “living hard, and getting out of the game of existence its keenest possibilities of zest.”  William James was one of these, Milton Friedman and John Kenneth Galbraith two others: not so much psychologist and economists, respectively, as moral philosophers. Almost all the copies of James’ The Will to Believe were borrowed from the two main Harvard libraries when I checked. Capitalism and Freedom and The Affluent Society will be similarly read by undergraduates throughout the 21st century.

 

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