Economists From The United States

"Mises was born in 1881 in my hometown of Lvov, in what is now Ukraine. He emigrated from Eastern Europe to New York in 1940 and became perhaps the most thoroughgoing American defender of laissez-faire capitalism. Years later Milton Friedman would recount a story about the first meeting of the Mont Pelerin Society, held in 1947. The group was meant to bring together what Europeans would call liberal intellectuals and what Americans would describe as libertarians. As Friedman recalled, “We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.” Furiously and famously, Mises declared, “You’re all a bunch of socialists!” and stormed out. Much like Rand with rent control, Mises felt that once income distribution is on the table, the jig is basically up. It simply becomes a matter of haggling over how much socialism there is."

"No hungry man who is also sober can be persuaded to use his last dollar for anything but food."

"Only men of considerable vanity write books; consistently therewith, I worried lest the world were exchanging an irreplaceable author for a more easily purchased diplomat."

"Private enterprise did not get us atomic energy."

""Poverty" Pitt exclaimed "is no disgrace but it is damned annoying." In the contemporary United States it is not annoying but it is a disgrace."

"Simple minds, presumably, are the easiest to manage."

"In a community wherepublic services have failed to keep abreast of private consumption things are very different. Here, in an atmosphere of private opulence and public squalor, the private goods have full sway."

"The greater the wealth the thicker will be the dirt."

"The family which takes its mauve and cerise, air conditioned, power-steered, and power braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards, and posts for wires that should long since have been put underground."

"Very important functions can be performed very wastefully and often are."

"It is in the long run that the corporation lives."

"A businessman who reads Business Week is lost to fame. One who reads Proust is marked for greatness."

"In recent times no problem has been more puzzling to thoughtful people than why, in a troubled world, we make such poor use of our affluence."

"It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought."

"One man's consumption becomes his neighbor's wish."

"We do not manufacture wants for goods we do not produce."

"More die in the United States of too much food than of too little."

"The massive reduction in risk that is inherent in the development of the modern corporation has been far from fully appreciated."

"Marx profoundly affected those who did not accept his system. His influence extended to those who least supposed they were subject to it."

"Ideas do not respect national frontiers, and this is especially so where language and other traditions are in common."

"Even the word depression itself was the terminological product of an effort to soften the connotation of deep trouble. In the last century, the term crisis was normally employed. With time, however, this acquired the connotation of the misfortune it described."

"Ideas are inherently conservative. They yield not to the attack of other ideas but to the massive onslaught of circumstance with which they cannot contend."

"The enemy of the conventional wisdom is not ideas but the march of events."

"Wealth is not without its advantages, and the case to the contrary, although it has often been made, has never proved widely persuasive."

"Galbraith's penetrating insights into the nature of capitalism – as it is lived, not as it is theorized in simplistic models – has enhanced our understanding of the market economy. He has left an intellectual legacy for generations to come."

"What Galbraith understood, and what later researchers (including this author) have proved, is that Adam Smith's "invisible hand" – the notion that the individual pursuit of maximum profit guides capitalist markets to efficiency – is so invisible because, quite often, it's just not there. Unfettered markets often produce too much of some things, such as pollution, and too little of other things, such as basic research. As Bruce Greenwald and I have shown, whenever information is imperfect – that is, always – markets are inefficient; hence the need for government action."

"Galbraith has often been compared to Keynes, and they had much in common. But the way they did their economics was very different. Keynes produced theories, Galbraith, theoretically-inspired sociology. Keynes thought that ideas ruled the roost; Galbraith thought it was structures of power. His was a non-Marxist version of class struggle, with the intelligentsia as the engine of social innovation and carrier of the "public purpose"."

"He doesn't get enough praise. The Affluent Society is a great insight, and has become so much a part of our understanding of contemporary capitalism that we forget where it began. It's like reading Hamlet and deciding it's full of quotations."

"His is an artistic, speculative mind. He sets up hypotheses which go beyond the data, and some of the greatest scholars in history have been of that type, … Part of Galbraith's strength is that he writes well. Some economists believe writing well is a defect that creates too much spurious impact on thought. If it's a crime, it's not one that many of my profession are guilty of."

"Political economy is an art as well as a science. John Kenneth Galbraith has always been a creative artist in formulating theories of the social world. His fabrications constitute the stuff of economic science."

"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."

"An economist such as John Galbraith is as much a political scientist as Robert Dahl or David Truman."

"Ken also identified the corporation, not “the market,” as the defining institution of modern economic activity, developing these and related themes both in his teaching and in such widely celebrated books as American Capitalism (1952) and The New Industrial State (1967). But his interest in these ideas persisted throughout his life. The central importance of the corporation, and the fear that government was no longer able to provide an adequate countervailing force against corporate influence exerted both legally and otherwise, was the subject of his last book, The Economics of Innocent Fraud (2004)."

"If Walter Bagehot was right that “one of the greatest pains to human nature is the pain of a new idea,” Ken caused an extraordinary amount of pain. Both in his economic thinking and in his political activities, he was dedicated to resisting, and where possible overturning, what he famously called “conventional wisdom” (one of his many turns of phrase that have since become commonplace locutions). Rejecting the standard economic theory based on small, anonymous households and firms that autonomously engage in perfectly functioning markets, Ken instead saw an economic stage dominated by large, nameable actors: big business, big labor, big government. Sorting out their roles and respective power was central to his analysis, and the continually shifting tensions in the interplay among them—“countervailing power” in another of his deft phrases—was the real story of how an economy behaved."

"So Galbraith is oblivious to the most serious problem facing modern liberalism: reconciling social justice with full employment. In the real world this is a terrible dilemma; even Sweden, with its powerful sense of community and overwhelming consensus for the welfare state, has found itself suffering from an acute case of Eurosclerosis. But in Galbraith's world there is no dilemma at all: Unemployment is merely a problem of inadequate demand, to be cured by New Deal-type public works programs and redistribution of income away from rich people who save too much."

"The example of Galbraith is not an accidental one: in many ways, Galbraith broke important new ground in the relationship between politics and economics. He was the first celebrity economist (where the definition of a celebrity is the usual one: someone who is famous for being famous). His rise as a policy entrepreneur was one marker of the growing dominance of style (which he has in abundance) over substance in American political discourse, even among those who image themselves to be well informed about public affairs."

"The general educated—the public that watches McNeil/Lehrer or read The New Yorker—thinks of Galbraith as an important economic thinker. Although Galbraith is a Harvard economics professor, however, he has never been taken seriously by his academic colleagues, who regard him as more of a “media personality”. The contrast between public and professional perception became particularly acute in 1967, when Galbraith made a grand statement of his ideas about economics in The New Industrial State, a book that he hoped would come to be regarded as being in the same league as John Maynard Keynes’s General Theory or even Adam Smith’s Wealth of Nations. The book was rapturously reviewed in the popular press, but it met with indifference from the academics. Galbraith’s book wasn’t what they considered real economic theory. Not incidentally, the academics were right in believing that The New Industrial State could be safely ignored."

"At the beginning of the twenty-first century, it has become clear who John Kenneth Galbraith really is: Sisyphus, constantly pushing the boulder of social-democratic enlightenment up the hill. But the hill, it turns out, is too steep, and Galbraith not mighty enough."

"Galbraith propounded no such easily summarized doctrine. The closest we can get is: "the world is complicated, and both right-wing ideology and the conventional wisdom that is this age's self-image are terribly wrong." He offered critiques that required you to read and understand old theories, not new theories that allowed you to dismiss everything prior as irrelevant. The result? Nearly all economists today are Paul Samuelson's children. Many are Keynes' children. Friedman, Robert Lucas, Robert Solow, and James Tobin all have plenty of descendants. But there are few Galbraithians on the ground. Would economics as a discipline be stronger if the 50-year-old and 30-year-old economists had a better appreciation of Galbraith? Almost surely. Will the winds of economic fashion shift and cause economists to appreciate Galbraith once again? For that to happen, an astute young economist would have to devote himself to "mathing up" chapters of The Affluent Society and The New Industrial State and publishing them in journals—not a likely prospect in today's risk-adverse academic environment."

"If there were justice in the world, John Kenneth Galbraith would rank as the twentieth century’s most influential American economist. He has published several books that are among the best analyses of modern US history, played a key role in midcentury policymaking, and advised more presidents and senators than would seem possible in three lifetimes. Yet today, Galbraith’s influence on economics is small, and his influence on US politics is receding by the year."

"In recent years economists and historians have increasingly turned their attention to modern economic institutions. Economists such as Edward S. Mason, A. D. H. Kaplan, John Kenneth Galbraith, Oliver E. Williamson, William J. Baumol, Robin L. Marris, Edith T. Penrose, Robert T. Averitt, and R. Joseph Monsen, following the pioneering work of Adolph A. Berle, Jr., and Gardiner C. Means, have studied the operations and actions of modern business enterprise. They have not attempted, however, to examine its historical development, nor has their work yet had a major impact on economic theory. The firm remains essentially a unit of production, and the theory of the firm a theory of production."

"In the mid-1960s, I was a typical left-wing undergraduate student at Caltech. For any social problem that arose, I had no doubt that the appropriate cure involved some form of government intervention. So, naturally, Galbraith was my hero, and I was therefore greatly excited when he came to my school in 1964 to give a speech in support of Lyndon Johnson’s campaign for the presidency. I confess that I cannot remember a lot of the details of the speech, but I know that I was disappointed. In particular, I recall feeling that his arguments for bigger government were not compelling. No doubt, this event started me on the road to doubting the wisdom of governmental activism and appreciating the wonders of free markets. When I discussed this experience with Ken after more than thirty years, his surprising reaction was to apologize for what must have been a bad speech. He said that he especially regretted his endorsement of Lyndon Johnson, who was later to become anathema to liberals because of his pursuit of the Vietnam War. If it had been me, I would have apologized mainly for Johnson’s Great Society programs."

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

"I write with two things in mind. I want to be right with my fellow economists. After all, I've made my life as a professional economist, so I'm careful that my economics is as it should be. But I have long felt that there's no economic proposition that can't be stated in clear, accessible language. So I try to be right with my fellow economists, but I try to have an audience of any interested, intelligent person."

"I react to what is necessary. I would like to eschew any formula. There are some things where the government is absolutely inevitable, which we cannot get along without comprehensive state action. But there are many things — producing consumer goods, producing a wide range of entertainment, producing a wide level of cultural activity — where the market system, which independent activity is also important, so I react pragmatically. Where the market works, I'm for that. Where the government is necessary, I'm for that. I'm deeply suspicious of somebody who says, "I'm in favor of privatization," or, "I'm deeply in favor of public ownership." I'm in favor of whatever works in the particular case."

"Going back to the most ancient times, national well-being, the national prestige depended on territory. The more territory a country had, the more income revenue there was, the more people there were to be mobilized for arms strength. So we had an enormous sense of territorial conflict and territorial integrity, and that was unquestionably a part of the cause of war, coupled with the fact that there was a disposition in that direction by the landed class, a disposition to think of territorial acquisition and territorial defense and to think of the peasantry as a superior form of livestock which could be used for arms purposes."

"Broadly speaking, [Keynesianism means] that the government has a specific responsibility for the behavior of the economy, that it doesn't work on its own autonomous course, but the government, when there's a recession, compensates by employment, by expansion of purchasing power, and in boom times corrects by being a restraining force. But it controls the great flow of demand into the economy, what since Keynesian times has been the flow of aggregate demand. That was the basic idea of Keynes so far as one can put it in a couple of sentences."

"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."

"One of the things I argue in my book [A Journey Through Economic Time] is the extent to which people go to avoid rational decisions – the very large role of mental deficiency in economic history. Generally, people have been very resistant to attributing a causal role in history to stupidity."

"The present age of contentment will come to an end only when and if the adverse developments that it fosters challenge the sense of comfortable well-being,"