The report on ABC Radio's AM program of the death of
John Kenneth Galbraith is perhaps as good as any to lead into my own "obituary."
This is not an obituary in any meaningful sense. I can claim no special understanding of the life of Galbraith, and have only skimmed his readings. But as a major critic of what he labelled in 1958 "Conventional Wisdom" - which four years later Thomas Kuhn would have labelled a "paradigm", I share some of his criticisms of what some would call the "orthodox" view.
That said, I also diverge from his views, especially the way those views have been fed through what in the 1970s we called "political economy" to what is now called "heterodox" economics.
The History of Economic Thought website says Galbraith was considered by many as the last American Institutionalist. This description fits with the ABC segment assertion that where traditional economisrs saw individuals and markets, Galbraith saw politics and power. The latter version, however, overemphasises the political dimension. The critique Galbraith made was more that it is wrong to merely focus on the individual and markets and that the structure of markets and production were significant. More specifically that applying tools of analysis designed for studying the question of allocation of scarcity were not appropriate in a world of productive abundance.
From this came the view that rather than the consumer being "king", in reality business is creating demand, and that the consumer rather than being king, or even an equal participant, is merely the end of a production process. In this view Galbraith is largely reiterating the views of Thorstein Veblen, the person usually referred to as the first Institutionalist.
I find myself caught, because I absolutely agree with Galbraith's questioning of the institutional assumptions underpinning "conventional wisdom". However, I reject the conclusions reached and the effective jettisoning of the role of the market, the discipline of competition and the view of the disempowered and helpless consumer.
The History of Economic Thought website describes the difference between the American Institutionalists and the New Institutionalists as that the former took institutions as given and critiqued the market view, whereas the latter used the market to explain the latter. I think the reality is that it is a conjoint relationship - markets and institutions evolve together, but that the more concentrated industry becomes and the less like the "competitive ideal" of many small competing firms the real world becomes, the weaker the effective discipline of the market.
In the final analysis it is hard to disagree with the view expressed in the NY Times review (reprinted in the AFR) that "his sweeping ideas, which might have gained even greater traction had he developed disciples willing and able to prove them with mathematical models." It is not too late for this task.
New York Times (free registration required, reprinted in AFR)