Transcript: John Kenneth Galbraith on Legacy for the 21st Century | Apr 23, 2005

Richard Parker stands in front of a projecting screen and addresses an unseen audience.
He's in his fifties, with short tousled salt and pepper hair, and a full white beard. He's wearing glasses, a beige suit, blue shirt, and yellow tie.

He says THE SUBJECT
OF MY TALK TODAY IS GALBRAITH'S
LEGACY FOR THE 21st CENTURY.
IT'S NOT AN IMMODEST SUBJECT IN
ITS SCOPE, BUT OF COURSE KEN
GALBRAITH IS NOT AN IMMODEST
MAN.
I'M SURE MANY YOU KNOW THAT
GALBRAITH'S FIRST LAW IS THAT
MODESTY IS A VASTLY OVERRATED
VIRTUE, SOMETHING WHICH HE HAS
HAD NEEDLEPOINTED TO A LARGE
CUSHION, AND THE CUSHION SITS ON
A SOFA IN THE LIVING ROOM OF HIS
HOME.
IT'S ALSO, I THINK, AN
APPROPRIATE TOPIC AS A WAY TO
LOOK BACK ON KEN GALBRAITH'S
CAREER AS IT NOW COMES, IN ONE
SENSE TO AN END.
BUT IN ONE SENSE I HOPE IS ALSO
GOING TO BE REVISITED AGAIN AND
AGAIN, HOPEFULLY, IN THE YEARS
AHEAD, BECAUSE I THINK HIS
LEGACY POTENTIALLY FOR THIS NEW
CENTURY IS QUITE LARGE.
HE'S A MAN WHO EVEN NOW REFUSES
TO GIVE UP.

A caption appears on screen. It reads "Richard Parker. Harvard University. John Kenneth Galbraith: His life, his politics, his economics. The Munk Centre, U of T. February 25, 2005."

Richard continues LAST WEEK WE CANCELLED A MAJOR
HARVARD EVENT WHICH 890 PEOPLE
WERE GOING TO SHOW UP TO HONOUR
HIM, BUT HIS DOCTOR WOULDN'T
ALLOW HIM OUT OF THE HOUSE.
HOWEVER A TORONTO "GLOBE and MAIL."
REPORTER HAD BEEN SCHEDULED TO
SEE HIM, AND GALBRAITH, ALWAYS
THE GOOD CANADIAN BOY, NO MATTER
HIS NUMBER OF YEARS IN THE
UNITED STATES, SAID THAT
CANADIANS WOULD ALWAYS BE
WELCOME IN HIS HOME AND HE
DECIDED TO GO AHEAD WITH THE
INTERVIEW.
AND APPARENTLY IT RAN HERE IN
CANADA IN "THE GLOBE and MAIL."
LAST WEEK.
I TOLD RICK AT LUNCH THAT IT WAS
QUITE WONDERFUL IN SOME WAY,
BECAUSE I WAS WORRIED HOW THE
INTERVIEW WOULD GO.
BUT AGAIN GALBRAITH'S COMMANDING
PRESENCE TOOK HOLD AND THE
REPORTER CAME UP TO THE BEDROOM.
GALBRAITH IS BREATHING WITH AN
OXYGEN TUBE.
IT'S DIFFICULT FOR HIM TO
PHYSICALLY MOVE, BUT THE MINE
REMAINS REMARKABLY ALERT.
BUT I'D TOLD THE REPORTER IN
ADVANCE THAT IF HE STARTED TO
FLAG PARTWAY THROUGH THE
INTERVIEW, THAT WE'D JUST HAVE
TO STOP AND DO SOMETHING ELSE OR
FORGO THE REST OF THE INTERVIEW.
WE'RE ABOUT 15 MINUTES INTO THE
INTERVIEW, GALBRAITH IN FACT
STARTED TO SLOW DOWN.
AND THIS IS A 96-YEAR-OLD MAN
WITH VERY LITTLE TIME LEFT.
AND I THOUGHT WELL, THIS IS THE
END OF IT.
WE REALLY NEED TO CALL A HALT.
AND THEN I LOOKED AT THE
REPORTER, AND I LOOKED AT
GALBRAITH.
AND I LOOKED AT THE REPORTER,
AND I LOOKED AT GALBRAITH, AND I
REALISED THAT THE OLD FOX HAD
SLOWED DOWN BECAUSE THE REPORTER
COULDN'T WRITE FAST ENOUGH TO
KEEP UP WITH JOHN KENNETH
GALBRAITH.
NOW, IT ISN'T JUST THE ENDURING
POWER OF THE MAN, BUT I THINK
THE ENDURING POWER OF HIS
STRATEGY FOR APPROACHING NOT
ONLY SUBJECT OF ECONOMICS BUT OF
POLITICS AND ECONOMICS AND POWER
WHICH REALLY ARE THE HEART OF
WHAT I WANT TO TALK ABOUT TODAY.
WHAT GALBRAITH HAS DONE OVER THE
LAST 50 YEARS OF HIS LIFE IS
EMPHASIZE AGAINST THE MAIN
CURRENTS OF HIS OWN CHOSEN
DISCIPLINE THE CENTRALITY OF
POWER AND THE CENTRALITY OF
INSTITUTIONS, AND THEIR ROLE IN
SHAPING NOT JUST ECONOMIC LIFE,
BUT THE WAYS IN WHICH THE
CHOICES THAT WE MAKE ABOUT POWER
AND ABOUT INSTITUTIONS AND THE
WAY THAT POWER AND INSTITUTIONS
ACT UPON US ARE CRITICAL FOR
UNDERSTANDING NOT ONLY ECONOMICS
BUT THE WORLD IN WHICH WE LIVE.
NOW WHAT DO I MEAN BY THAT?
WELL, VERY EARLY ON IN HIS
WRITING GALBRAITH IDENTIFIED THE
PROBLEM OF POWER AS CENTRAL TO
UNDERSTANDING ECONOMICS.
WHY?
I THINK WHAT WE CAN DO IS
UNDERSTAND THIS BY LOOKING BACK
OVER HIS OWN EARLY LIFE IN
CANADA, FIRST OF ALL, BEFORE WE
EVEN PROCEED TO HIS CAREER AS AN
ECONOMIST.
HE WAS BORN HERE IN ELGIN COUNTY
IN IONA STATION IN 1908.
HIS FATHER WAS A PROMINENT LOCAL
FIGURE.
THE FAMILY HAD MIGRATED TO
CANADA IN 1819 OR 1820.
AND THE FATHER WAS ALSO A
COMMITTED MEMBER, A COMMITTED
LEADER, ACTUALLY LOCALLY, OF THE
OLD LIBERAL PARTY OF SIR WILFRED
LAURIER, WHO I'M SURE MANY OF
YOU HAVE STUDIED.
GALBRAITH LEARNED EARLY ON FROM
HIS FATHER THE IMPORTANCE OF
TAKING A POSITION IN LIFE.
HE SAYS THAT WHEN HE WAS 12 HE
REMEMBERS HIS FATHER AS A
SPOKESPERSON FOR THE LIBERAL
PARTY IN A CANADIAN CAMPAIGN
GOING TO A NEIGHBOUR'S BARNYARD
WHERE LOCAL FARMERS HAD BEEN
GATHERED TO HEAR HIS FATHER
SPEAK ABOUT THE VIRTUE OF THE
LOCAL LIBERAL CANDIDATE.
AND DECISIVELY OLD ARCHIE
GALBRAITH WHO, LIKE HIS SON KEN,
WAS 6'8'' TALL, AND WAS WEARING
LONG FARMERS BOOTS AND A PLAID
COAT, WALKED TO THE LARGE MANURE
PILE IN THE CENTRE OF THE
FARMER'S BARNYARD, IMMEDIATELY
STEPPED ON TOP OF IT, AND THEN
BEGAN HIS TALK BY APOLOGIZING
FOR SPEAKING FROM THE TORY
PLATFORM.

[Audience Chuckles]

Richard continues SO GALBRAITH LEARNED VERY EARLY
ON THAT HAVING A POINT OF VIEW
AND HAVING A POINT OF VIEW ABOUT
POWER WITHIN THE SOCIETY WERE
CENTRAL TO DOING WORK WHICH HE
WOULD DO LATER ON IN HIS LIFE.
WHAT I EXPLAIN ALSO IN THIS
BIOGRAPHY, WHICH GALBRAITH HAS
NEVER MADE CLEAR IN HIS OWN,
HOWEVER, IS THE SECOND EARLY
LESSON THAT COMES FROM CANADA,
WHICH IS THAT, AS OF COURSE MANY
OF YOU KNOW, DURING THE FIRST
WORLD WAR THE LIBERAL PARTY
SPLIT APART OVER THE ISSUE OF
CONSCRIPTION MID-WAY THROUGH THE
WAR, AND ARCHIE, HIS FATHER, AND
HIS MOTHER, KATE, DECIDED TO GO
WITH THE GROUP THAT WOULD VERY
QUICKLY AFTER THE WAR FORM THE
UNITED FARMERS OF ONTARIO,
INAPPROPRIATELY INITIALED
U.F.O., BUT WE WON'T PURSUE THAT
PARTICULAR LINE.
THE U.F.O., UNDER E.C. DRURY,
REPRESENTED A REMARKABLE,
PROGRESSIVE, POPULOUS STEP
FORWARD FOR THE FEW YEARS THAT
IT HELD OFFICE.
AND IN MANY WAYS YOU COULD SEE
IN DRURY AND THE UNITED FARMERS
OF ONTARIO AND A PERIOD OF THE
EARLY 1920s THE ANTECEDENCE OF
THE NEW DEAL.
AND FRANKLIN ROOSEVELT IN THE
UNITED STATES A DECADE LATER.
AND SO I THINK HERE AGAIN,
GALBRAITH OWES MUCH TO HIS EARLY
YEARS IN CANADA IN TERMS OF
SHAPING AN IMAGINATION AND A
MORAL STANCE THAT WILL THEN BE
FILLED IN BY THE ACADEMIC
DISCIPLINE OF ECONOMICS AS HE
PURSUES THE FIELD AS A GRADUATE
STUDENT.
NOW, WHY DID JOHN KENNETH
GALBRAITH LEAVE CANADA?
A QUESTION THAT SEEMINGLY EVERY
CANADIAN REPORTER ASKS WHEN
THEY'VE COME TO INTERVIEW KEN
GALBRAITH OVER THE LAST 50
YEARS, AND WHICH WAS IN FACT THE
OPENING QUESTION ASKED A WEEK
AGO BY "THE GLOBE and MAIL."
REPORTER, AND WHICH GALBRAITH
HAD IN FACT FOREWARNED ME IN
ADVANCE WOULD BE THE OPENING
QUESTION OF ANY CANADIAN
REPORTER WHO CAME TO INTERVIEW
HIM, AS IT HAD BEEN FOR SOME
YEARS.
GALBRAITH SAYS THAT THE
EXPLANATION IS QUITE SIMPLE.
WHEN HE GRADUATED FROM O.A.C. IN
1931 WITH A DEGREE OF, IN ANIMAL
HUSBANDRY, YOU WERE INTO THE
TEETH OF THE DEPRESSION STORM
HERE AS IN THE UNITED STATES,
AND HE HAD ONE OF TWO CHOICES.
ONE WAS TO RETURN TO THE FARM
AND TO ELGIN COUNTY AND PURSUE A
LIFE OF HARD AND DREARY WORK ON
THE FARM, OR TO ACCEPT A
FELLOWSHIP THAT WOULD TAKE HIM
TO SUNNY CALIFORNIA.
AND AS HE TOLD A GROUP OF
CANADIAN REPORTERS WHO ONCE
ASKED HIM THAT QUESTION HERE IN
TORONTO, "I DON'T THINK THERE'S
ONE AMONG YOU WHO WOULD HAVE
MADE A DIFFERENT CHOICE THAN I."
TO GALBRAITH TOOK OFF AND GOES
TO BERKELEY.
AND GALBRAITH THERE SPENDS THE
NEXT SEVERAL YEARS EARNING A
Ph.D IN AGRICULTURAL ECONOMICS.
THE EXPERIENCE AT BERKELEY WAS
REALLY QUITE SEMINAL, BECAUSE HE
WAS INTRODUCED THERE TO A
FACULTY AT THE GIANNINI CENTRE
WHERE HE STUDIED, TO MEN WHO HAD
ALREADY FOR THE LAST 15 YEARS
PLAYED PROMINENT ROLES IN
DEVELOPING THE IDEAS IN THE
1920s THAT WOULD BECOME NEW DEAL
AGRICULTURAL POLICY AND WOULD
REVOLUTIONIZE FARMING IN THE
UNITED STATES OVER THE NEXT TEN
YEARS.
IT ALSO GAVE HIM AN ENTRE TO
HARVARD AND TO WASHINGTON.
JOHN D. BLACK, WHO WAS HARVARD'S
SOLE AGRICULTURAL ECONOMIST
IN THE 1930s AND ON INTO THE
1940s AND 1950s, WAS HIMSELF ONE
OF THE TWO OR THREE MOST
INFLUENTIAL FIGURES IN AMERICAN
AGRICULTURAL POLICY IN THE NEW
DEAL, ONE OF THE CO-AUTHORS
THE FOUNDATIONAL LEGISLATION
THAT BECAME AGRICULTURAL POLICY
UNDER ROOSEVELT.
AND BLACK WAS LOOKING FOR A
TALENTED YOUNG MAN WHO KNEW
ECONOMICS AND HAD THE ABILITY TO
WRITE.
AND A COLLEAGUE OF HIS, WHO WAS
THE DEAN AT BERKELEY,
RECOMMENDED GALBRAITH.
AND SO IT WAS AGRICULTURAL
ECONOMICS THAT CARRIED JOHN
KENNETH GALBRAITH FIRST TO THE
URBANE AND QUITE DISTANT FROM
AGRICULTURAL WORLD OF CAMBRIDGE,
MASSACHUSETTS.
IT WAS ALSO THAT SAME
ASSOCIATION BECAUSE THE DEAN WHO
RECOMMENDED GALBRAITH, THEN LEFT
BERKELEY AND BECAME A SENIOR
OFFICIAL IN THE DEPARTMENT OF
AGRICULTURE WHO GOT GALBRAITH
HIS FIRST NEW DEAL JOB.
THAT IS GALBRAITH TOOK OFF FROM
BERKELEY KNOWING THAT HE HAD A
ONE-YEAR APPOINTMENT AT HARVARD,
BUT NO MONEY AND NO PROSPECTS
THAT SUMMER, AND DEEPLY IN NEED
OF PAYING OFF HIS DEBTS, STOPPED
TO SEE THIS FORMER DEAN IN
WASHINGTON AND WAS HIRED WITHIN
THE NEXT 30 MINUTES BY THE
DEPARTMENT OF AGRICULTURE TO DO
RESEARCH FOR THE SUMMER.
NOW, ONE OF THE CHARACTERISTICS,
BEFORE WE GOT INTO THE WAR ON
TERRORISM AND THE GRANTING OF
VISAS AND CONCERNS ABOUT THE
DANGER OF FOREIGNERS, WAS THAT
GALBRAITH WAS QUITE SURPRISED
THAT NO ONE BOTHERED TO ASK HIM
WHETHER HE WAS AN AMERICAN
CITIZEN OR NO HE WAS SIMPLY PUT
ON THE PAYROLL AND THE ONLY
THING HE WAS ASKED WAS "DO YOU
SUPPORT FRANKLIN ROOSEVELT IN
THE NEW DEAL?"
AND ANSWERING IN THE
AFFIRMATIVE, GALBRAITH WENT TO
WORK THE FOLLOWING MONDAY.
NOW, I MENTION THIS BECAUSE
ALTHOUGH IT MAY SEEM DISTANT
FROM HIS LATER WORK, THERE WAS A
MOMENT IN THAT COMING YEAR IN
AGRICULTURAL POLICY THAT PROVED
VITALLY FORMATIVE FOR HIM IN HOW
HE THOUGHT ABOUT THE
RELATIONSHIP BETWEEN PUBLIC
POWER AND PRIVATE INFLUENCE.
AT THE TIME, THE BEGINNING OF
THESE VAST AGRICULTURAL PAYMENTS
TO FARMERS FOR NON-PRODUCTION AS
A MEANS TO LOWER THE SURPLUS
THAT EXISTED IN AMERICAN
AGRICULTURE WAS JUST STARTING.
AND IT WAS GOING OUT TO HALF A
DOZEN PRINCIPLE CROPS.
AND ONE OF THEM WAS TO COTTON.
NOW, THE CORN PAYMENT STARTED
AND WENT WELL.
THE WHEAT PAYMENT STARTED AND
WENT WELL.
AND THEN THE COTTON PAYMENT
STARTED.
AND THE COTTON PAYMENTS
IMMEDIATELY PRODUCED A POLITICAL
CRISIS.
WHAT WAS THE CRISIS?
CRISIS WAS VERY SIMPLE.
THE STRUCTURAL CHARACTER OF
COTTON, UNLIKE WHEAT AND CORN,
WAS THAT IT WAS AN AGRICULTURAL
INDUSTRY IN WHICH THE GREAT
MAJORITY OF ACTUAL GROWERS WERE
POOR TENANT FARMERS.
AND THEY WERE DISPROPORTIONATELY
BLACK, AND THEY WERE ALMOST
ENTIRELY POOR.
THE LAND WAS OWNED BY THE OLD
PLANTATION OWNER, THE WEALTHY
LAND OWNER, AND WAS THEN LEASED
OUT.
AND THE LAND OWNER THEN TOOK A
SUBSTANTIAL PORTION OF THE
HARVESTED CROP EACH YEAR IN
PAYMENT FOR THE TENANCY.
AND THE IMMEDIATE QUESTION WAS
TO WHOM SHOULD THE FEDERAL
PAYMENTS GO?
WAS IT TO THE LAND OWNER FOR NOT
PLANTING COTTON ON HIS LAND?
OR WAS IT TO THE TENANT FARMERS
WHO WERE NOT PLANTING THE COTTON
THAT WOULD OTHERWISE BE GROWN?
AND OF COURSE THE PLANTATION
OWNERS HAD A QUITE DISTINCT
VIEW, DIFFERENT FROM THAT OF THE
TENANT FARMERS.
AND GALBRAITH GOT FIRST HAND
EXPERIENCE OF THIS VIEW WHEN ONE
OF HIS COLLEAGUES WAS CALLED
OVER TO THE SENATE.
THE CHAIRMAN OF THE SENATE
AGRICULTURE COMMITTEE WAS A MAN,
COINCIDENTALLY KNOWN AS COTTON
ED SMITH, SENIOR SENATOR FROM
THE STATE OF SOUTH CAROLINA,
WHICH HAS PRODUCED SO MANY
EMINENT PROGRESSIVE FIGURES IN
AMERICAN POLITICAL HISTORY.
AND COTTON ED SAID WE NEED TO
TALK ABOUT THE PAYMENTS.
THE YOUNG MAN ALLOWED THAT THEY
DID, AND THE DEPARTMENT OF
AGRICULTURE WOULD LIKE IT MAKE
THE PAYMENTS TO THE TENANT
FARMERS.
THEY WERE THE ONES MOST IN NEED.
A CERTAIN PORTION COULD
CERTAINLY GO TO THE LAND OWNERS,
BUT IF THE NEW DEAL WAS ABOUT
ANYTHING, IT WAS ABOUT DEALING
WITH THE POOR AND HELPING THOSE
MOST HURT BY THE DEPRESSION.
AND COTTON ED LOOKED THE YOUNG
MAN IN THE EYE AND HE SAID, "YOU
MAKE THE PAYMENTS TO US, WE'LL
TAKE CARE OF THE NIGGERS."
AND THE PROBLEM WAS THAT THE NEW
DEAL NEEDED THE SUPPORT OF
SENATORS IN ORDER TO CARRY OUT
ITS PROGRAMME.
AND SO IN THE FIRST YEAR OF
GALBRAITH'S EXPERIENCE OF THE
NEW DEAL, THIS VESSEL OF LIBERAL
HOPE AND OPTIMISM, HE SAW WHAT
IT MEANT TO TRY TO LEAD IN A
COUNTRY WHERE POWER WAS
CONCENTRATED IN PROPERTY AND
TRADITION AND CONSERVATISM.
AND THE LESSON, LIKE THAT OF HIS
FATHER STANDING ON THE TORY
PLATFORM 15 YEARS EARLIER, NEVER
LEFT HIM.
NOW, GALBRAITH SPENT SEVERAL
YEARS AT HARVARD TEACHING.
HIS CAREER GREW STRONGER AND
STRONGER, AND HE ENTERTAINED
SOME IDEA THAT HE MIGHT ENJOY
TENURE.
AND PROFESSOR BLACK ARRANGED FOR
HIM TO TAKE A FELLOWSHIP TO
CAMBRIDGE UNIVERSITY BECAUSE
THERE WAS GREAT TALK OF AN ODD
FELLOW NAMED KEYNES WHO WAS AT
THAT TIME TEACHING AT CAMBRIDGE
AND HAD A NEW THEORY.
SOMETHING CALLED THE GENERAL
THEORY.
AND IT SEEMED TO SUGGEST THAT
THE HODGE-PODGE, AD HOC ECONOMIC
POLICIES OF THE NEW DEAL MIGHT
IN FACT HAVE A COHERENT AND
CONSISTENT INTELLECTUAL
RATIONALE AFTER ALL.
RATHER THAN BEING A REACTION,
THEY CAN BE STRUCTURED INTO AN
OVERALL, INTELLECTUAL PLAN FOR
ADDRESSING AND IMAGINING AND
DEALING WITH AN ECONOMY, WHETHER
IT WAS THE AMERICAN, CANADIAN,
OR OTHER ECONOMY.
THE ESSENCE OF KEYNESIANISM, FOR
THOSE YOU WHO ARE NOT
ECONOMISTS, IS QUITE SIMPLE.
THE PRECEDING AND DOMINANT
INFLUENCE IN WESTERN ECONOMICS
WAS WIDELY KNOWN AS
NEO-CLASSICAL ECONOMICS AND IT
RESTED ON TWO RATHER SIMPLE BUT
STILL QUITE INFLUENTIAL
COMPOSITIONS, WHICH IS FIRST
THAT INDIVIDUALS ARE RATIONAL
MAXIMIZERS OF THEIR OWN
SELF-INTERESTS, AND SECOND, IN
THE HURLY BURLY STRUGGLE OF
MARKETS, COMPETITION PRODUCES
SOMETHING CALLED EQUILIBRIUM,
WHICH IS THAT STATE IN WHICH ALL
FACTORS OF PRODUCTION -- LABOUR,
LAND, NATURAL RESOURCES, CAPITAL
ARE OPTIMALLY DISTRIBUTED BY
VIRTUE OF THE MARKET'S ABILITY
TO MOVE FACTORS AROUND TO SEEK
AN OPTIMAL OUTCOME.
NOW THE TEXTBOOK PROOF OF THIS
WORK, WHICH HAD BEEN DONE BY
ALFRED MARSHALL IN THE 1880s AND
1890s EXERCISED POWERFUL AFFECT,
NOT ONLY IN ENGLAND BUT IN THE
UNITED STATES AND ALSO IN A
NUMBER OF CANADIAN UNIVERSITIES.
THE PROBLEM WAS THAT THE
DEPRESSION WAS PUTTING THE LIE
TO.
OR AT LEAST MANY THOUGHT WAS
PUTTING THE LIE TO IT.
HERE WAS A SOCIETY, HERE WAS AN
ECONOMY IN WHICH THE RULES OF
INDIVIDUAL PROFIT MAXIMIZATION,
SELF-INTEREST MAXIMIZATION AND
MARKET EQUILIBRIUM SHOULD HAVE
PRODUCED A STEADILY GROWING
ECONOMY IN WHICH THERE WAS FULL
RESOURCE UTILIZATION OF CAPITAL
AND LABOUR, AND EVERYTHING ELSE,
BUT INSTEAD ONE OUT OF FOUR
AMERICAN WORKERS WAS WITHOUT
WORK.
THE STOCK MARKET IN 18 MONTHS
HAD FALLEN BY 90 percent, AND THE RISKS
POLITICALLY WERE ENORMOUS.
ADOLPH HITLER HAD JUST TAKEN
POWER IN GERMANY.
MUSSOLINI HAD BEEN IN POWER FOR
A NUMBER OF YEARS IN ITALY AND
JOSEF STALIN WAS IN MOSCOW, AND
THE PROGNOSIS OFFERED BY
NEO-CLASSICAL ECONOMICS WAS YET
QUITE SIMPLE.
SIMPLY LET WAGES FALL FARTHER,
CLOSE MORE BUSINESSES, AND
EVENTUALLY A NEW LOW WAGE, LOW
OUTPUT EQUILIBRIUM WILL BE
REACHED THAT WILL BE STABILIZED,
AND FROM WHICH THE ECONOMY WILL
RECOVER IN THE LONGs
TO WHICH, OF COURSE, KEYNES
FAMOUSLY REPLIED, "YES, BUT IN
THE LONG RUN WE'RE ALL DEAD."
AND HE MEANT THIS IN MORE THAN
JUST A PHYSICAL SENSE.
HE MEANT THAT IN AN
INSTITUTIONAL AND POLITICAL
SENSE BECAUSE LITERALLY
DEMOCRACY IN MANY OF THESE
COUNTRIES STOOD AT RISK.
THE POTENTIAL FOR FASCISM OR
COMMUNISM'S EMERGENCE AS A
POWERFUL, INDEED DOMINANT
POLITICAL FORCE WAS ENORMOUS
UNDER THOSE CONDITIONS.
AND SO LEADERS IN A DEMOCRACY
WERE CALLED UPON TO MAKE OTHER
DECISIONS.
AND OF COURSE THE SIMPLE
DECISIONS WERE THOSE MADE TO
GIVE AID OF ONE KIND.
PUBLIC WORKS OF ONE KIND OR
ANOTHER.
BUT THIS HAD BEEN DONE AND TRIED
BEFORE.
AND IN FACT MARSHALL HIMSELF
WOULD PROBABLY NOT HAVE ARGUED
AGAINST IT AND AT TIMES HAD
ARGUED FOR IT UNDER SIMILAR
CONDITIONS.
SIMILAR, BUT NOT AS SEVERE
CONDITIONS.
BUT NOW KEYNES STEPPED FORWARD
AND SAID IT IS NOT SIMPLY A
MATTER OF AD HOC RESPONSE THAT
WE PROVIDE THIS AID, BUT RATHER
THAT WE SHOULD UNDERSTAND THAT
MARSHALL'S MODEL OF EQUILIBRIUM
IS FLAWED.
AND HERE ARE THE CONDITIONS
UNDER WHICH THAT FLAW CAN ACT TO
CREATE A PERM -- NOT A
PERMANENT, BUT SUCH A LONG RUN
CONDITION OF UNDER INVESTMENT
AND UNEMPLOYMENT THAT ONLY
GOVERNMENT INTERVENTION WILL
BEGIN TO BRING THE ECONOMY
QUICKLY BACK TO THE FULL
EMPLOYMENT EQUILIBRIUM, WHICH IS
THE IDEAL OF NEO-CLASSICAL AND
KEYNESIAN ECONOMISTS ALIKE.
THAT THEORY SWEPT THROUGH
GALBRAITH'S GENERATION IN A WAY
THAT I THINK CAN ONLY BE
COMPARED TO THE IMPACT OF
MICHAEL JACKSON ON SOME YOUNGER
GENERATION TODAY.
I DON'T KNOW WHAT THE
INTELLECTUAL EQUIVALENT OF JOHN
MAYNARD KEYNES IS TODAY.
IT CERTAINLY ISN'T MILTON
FRIEDMAN.
AND WITH IT GALBRAITH AND HIS
GENERATION WERE NOW SUDDENLY
ONLY TO ANB
WHICH THEY LIVE, BUT TO
PRESCRIBE IN THE WORLD IN WHICH
THEY LIVED.
AND THE ADVENTURE WHICH THEN
DEFINES THE POST-WAR WORLD, THAT
WORLD WHICH COMES AFTER THE
SECOND WORLD WAR, AND REALLY
RUNS FOR THE NEXT 30 YEARS, IS
OF KEYNESIAN VICTORY AFTER
VICTORY.
NOW WHY IS THIS ALL IMPORTANT,
THIS HISTORICAL ELEMENT?
WELL, THERE ARE TWO REASONS.
ONE IS THAT WE NEED TO LOOK AT
THE SUCCESS OF THAT KEYNESIAN
PERIOD THAT RUNS ROUGHLY IN THE
UNITED STATES FROM 1945 TO 1975.
AND THEN CONTRAST IT WITH THAT
WHICH HAS FOLLOWED.
MANY PEOPLE TALK ABOUT THAT
WHICH HAS FOLLOWED AS BEING A
CONSERVATIVE AND ANTI-KEYNESIAN
PERIOD IN WHICH THE MARKET OR
THE MARKETS HAVE BEEN RESTORED.
WHAT I INTEND TO ARGUE IN A FEW
MINUTES IS THAT THAT'S NOT THE
WAY TO UNDERSTAND IT.
BUT FIRST I NEED TO HELP YOU
UNDERSTAND WHAT THE PERIOD 1945
TO 1975 ACTUALLY LOOKED LIKE.
THE IMPORTANT THING IS THAT IN
THE POST-WAR WORLD, THOSE FIRST
30 YEARS, AMERICAN GOVERNMENT,
MOST WESTERN GOVERNMENTS, CAME
TO ACCEPT THE IDEA THAT IT WAS
ALL RIGHT TO RUN LARGE BUDGET
DEFICITS IN PERIODS OF RECESSION
IN ORDER TO STIMULATE THE
ECONOMY BACK TO FULL OR
NEAR-FULL EMPLOYMENT.
AGAIN, THAT'S THE POLICY,
ONE-SENTENCE SUMMARY OF WHAT
KEYNESIANISM IS ABOUT.
WHAT THAT GENIUS PRODUCED IN
RELEASING WESTERN ECONOMIES FROM
THE INTELLECTUALLY OSSIFIED HAND
OF BALANCED BUDGETS AT ALL
COSTS, AND MARKETS UNTOUCHED BY
PUBLIC HANDS, WAS A KIND OF
PROSPERITY THAT WAS UNKNOWN IN
AMERICAN HISTORY.
ONE THAT REALLY WAS
UNPRECEDENTED AND BECOMES THE
GROUND WHICH IN THE 1950s JOHN
KENNETH GALBRAITH DEFINES AS THE
AFFLUENT SOCIETY.
NOW THERE IS NO QUESTION THAT BY
COMPARISON TO YEARS PRIOR,
SOMETHING EXTRAORDINARY DID
EMERGE IN THOSE YEARS.
A LEVEL OF AFFLUENCE, OF
SUBURBAN AND MALL SHOPPING
OPPORTUNITIES UNLIKE ANYTHING
AMERICANS HAD SEEN BEFORE.
THE AVERAGE AMERICAN INCOME, FOR
EXAMPLE, AFTER INFLATION AND
AFTER TAXES, DOUBLED IN REAL
TERMS, DOUBLED IN REAL TERMS IN
THOSE 30 YEARS.
BY CONTRAST, AND I'LL TALK ABOUT
THIS IN SOME MORE DETAIL, IN THE
SUBSEQUENT 30 YEARS SINCE 1975,
THE AVERAGE AMERICAN INCOME HAS
RISEN ABOUT 5 percent.
SO THE CHOICE IS A PERIOD THAT
WE NEED TO LOOK AT BETWEEN AN
ECONOMY THAT GREW BY 10 percent AND AN
ECONOMY THAT GREW BY 5 percent IN TERMS
OF THE AVERAGE PURCHASING POWER
OF THE AMERICAN FAMILY.
THE OTHER DIFFERENCE, OF COURSE,
AS WE ALL KNOW, IS THAT IT NOW
REQUIRES BASICALLY TWO INCOME
EARNERS, NOT ONE IN ORDER TO
MAINTAIN THAT MIDDLE CLASS
AFFLUENCE.
AMERICANS TODAY WORK MORE HOURS
THAN THEY EVER DID IN THAT
EARLIER PERIOD.
IN FACT THEY NOW WORK THE
LONGEST HOURS OF ANY POPULATION
IN ANY INDUSTRIAL COUNTRY.
THEY ENJOY FEWER BENEFITS, THEY
TAKE FEWER VACATIONS AND THEY
EXPERIENCE MORE JOB INSTABILITY.
SO SOMETHING HAS CHANGED FROM
THAT FIRST KEYNESIAN PERIOD AND
THIS OTHER PERIOD THAT HAS
SECEDED IT.
WITHOUT GETTING AROUND TO NAMING
WHAT THIS OTHER PERIOD IS, LET
ME JUST HIGHLIGHT THAT FACT.
NOW, THERE WAS, HOWEVER, A DARK
CLOUD THAT HOVERED -- TWO DARK
CLOUDS THAT OFFERED OVER THIS
AMAZING KEYNESIAN PROSPERITY OF
THAT 30-YEAR PERIOD.
THE FIRST WAS THE COMPOSITION OF
THE PUBLIC SPENDING THAT WAS
STIMULATING THAT ECONOMIC
GROWTH.
THE FACT WAS THAT BY THE
MID-1950s, THE FEDERAL
GOVERNMENT, WHICH JUST BEFORE
FRANKLIN ROOSEVELT TOOK OFFICE,
HAD CONSUMED ROUGHLY 3 percent OF U.S.
GROSS DOMESTIC PRODUCT, WAS NOW
TAKING 20 percent OF U.S. GDP.
IT WAS LARGER THAN STATE AND
LOCAL GOVERNMENTS.
THE SUM TOTAL OF STATE, LOCAL
AND FEDERAL SPENDING WAS NOW ON
THE ORDER OF 30 OR EVEN 35 percent OF
U.S. GDP VERSUS LESS THAN 10 percent30
YEARS EARLIER.
SO THERE HAD BEEN A MASSIVE
INCREASE IN GOVERNMENT SPENDING.
AND WITH IT HAD COME NOT ONLY
THE PROSPERITY THAT KEYNES
ARGUED THAT IT WOULD, BUT ALSO
THE AVOIDANCE OF THE KIND OF
SEVERE RECESSION THAT THE GREAT
DEPRESSION IN ITS MOST RADICAL
FORM REPRESENTED.
BUT IT HAD COME AT A PECULIAR
COST.
IN THE MIDDLE OF THE COLD WAR,
THE FEDERAL GOVERNMENT WAS
SPENDING OVER HALF OF ALL ITS
DOLLARS ON THE MILITARY.
WE HAD CREATED KEYNESIANISM BUT
IT WAS A MILITARY KEYNESIANISM,
AND IT REPRESENTED A SPECIFIC
COMBINATION OF OPPORTUNITIES AND
PROBLEMS THAT COULDN'T BE LOOKED
AT AS SIMPLY GOOD OR BAD BUT HAD
TO BE UNDERSTOOD IN ITS TOOK
COMPLEXITY.
BECAUSE WHAT HAD ARISEN NOW WAS
A POWERFUL AND LEADING FEDERAL
GOVERNMENT, WILLING TO
INTERVENES IN THE MACRO ECONOMIC
MANAGEMENT OF THE SOCIETY, BUT
IT WAS ONE INTO WHICH
INCREASINGLY THE GOVERNMENT WAS
POURING MORE AND MORE MONEY, FOR
BOMBERS, FOR MISSILES, FOR
SUBMARINES AND THE LIKE.
AND THERE WAS, I DISCOVERED, AND
I QUOTE IT HERE, BECAUSE IT
COMES UP IN THE CHAPTER ON THE
NEW FRONTIER, A FRIGHTENING
DISPOSITION ON THE PART OF TOO
MANY AMERICAN LEADERS THAT TO
BELIEVE THAT WE HAD THOSE
WEAPONS WE OUGHT TO USE THEM.
IN FACT THERE'S A REMARKABLE
MEMO THAT I UNCOVERED FROM WALT
ROSTOW TO PRESIDENT KENNEDY IN
THE SECOND MONTH KENNEDY WAS IN
OFFICE THIS WHICH ROSTOW, WHO
WAS THE DEPUTY NATIONAL SECURITY
ADVISOR WROTE TO KENNEDY.
"Mr. PRESIDENT, WE HAVE SPENT AN
ENORMOUS AMOUNT OF MONEY TO
CREATE THESE TOYS," AS HE CALLED
THEM.
"IT WOULD BE A SHAME NOT TO USE
THEM."
NOW FOR MOST CITIZENS, I THINK
IT'S QUITE REMARKABLE TO IMAGINE
ADVISOR TO LEADER OF THE FREE
WORLD AS OFFERING ADVICE THAT WE
USE TOYS, WHEN WHAT HE WAS
TALKING ABOUT WAS THE FULL
ARSENAL OF AMERICAN POWER.
BUT THAT WAS IN FACT THE WAY
MANY OF THESE ADVISORS THOUGHT.
AND GALBRAITH EARLY ON
RECOGNISED THIS DANGER.
AND HE RECOGNISED IN IT A FLAW
IN THE ORIGINAL KEYNESIAN MODEL,
THEREBY, BECAUSE KEYNES HAD
NEVER THOUGHT TO SPECIFY THE
CONTENT OF PUBLIC SPENDING THAT
WOULD IN FACT SECURE KEYNESIAN
PROSPERITY.
IN FACT KEYNES HAD FAMOUSLY SAID
HE WOULD BE JUST AS HAPPY TO SEE
MEN DIG DITCHES IN THE MORNING
AND OTHER MEN FILL THEM IN IN
THE AFTERNOON, AS LONG AS THEY
WERE PAID AND AS LONG AS THAT
MONEY WAS THEN USED TO CREATE
CONSUMER DEMAND THAT WOULD HELP
REBUILD THE ECONOMY.
BUT OF COURSE IF YOU WERE
DIGGING MISSILE SILOS, THAT WAS
DIFFERENT FROM DIGGING TRENCHES
TO PIPE WATER TO SUBURBAN
COMMUNITIES, AND A LOT OF MONEY
WAS BEING SPENT TO DIG MISSILE
SILOS, NOT WATER PIPES OR
ELECTRICAL LINES ACROSS THE
COUNTRY.
NOW THE SECOND WAS AN ERROR OF
NO SMALL CONSEQUENCE AMONG
KEYNESIANS BUT NOT KEYNES.
THAT IS, AS YOU UNDERSTAND
GALBRAITH HAD EMERGED AS A
SIGNIFICANT FIGURE IN AMERICAN
ECONOMICS IN THE 1950s, BUT HE
WAS COMPETING WITH ANOTHER
STRAND IN AMERICAN ECONOMICS
THAT BECAME KNOWN AS THE
NEO-CLASSICAL SYNTHESIS.
THIS IS PAUL SAMUELSON, THIS IS
M.I.T., THIS IS BOB SOLOW, THIS
IS FRANCO MODIGLIANI, THIS IS
KEN ARROW, THE GREAT CORE OF
AMERICAN NOBEL LAUREATES IN
ECONOMICS, WHOSE CONTRIBUTION TO
KEYNESIANISM WAS TO
MATHEMATICISE IT AND ALSO TO
WELD IT INTO THIS QUITE
INTERESTING -- AND WHAT I
BELIEVE CAN NOW BE ARGUED --
QUITE UNSTABLE MARRIAGE WITH
PRECEDING MICROECONOMIC
ASSUMPTIONS THAT COME OUT OF
MARSHALL.
NOW THE POLICY IMPLICATIONS OF
THIS WERE QUITE LARGE.
LARGE BECAUSE WHATEVER THE
BLACKBOARD DISCUSSION, WHICH
ISN'T OF ITSELF THAT IMPORTANT
TO POLICY, IN POLICY TERMS
BECAME THE CONFIDENCE OF LIBERAL
KEYNESIANS LIKE SAMUELSON AND
SOLOW, WHO WERE JUST AS GOOD
DEMOCRATS AS JOHN KENNETH
GALBRAITH, AND IN FACT WHO
AGREED WITH GALBRAITH ON AS MANY
THINGS, IF NOT MORE THAN THEY
DISAGREED ABOUT.
BUT THE CONFIDENCE WAS THAT
ECONOMIC ADVISORS ADVISING THE
PRESIDENT COULD IN FACT
MICRO-MANAGE THROUGH MACRO
MANAGEMENT POLICIES THE ECONOMY
SO THAT IT WOULD PRODUCE A
CONTINUOUS RISE IN CURVE OF FULL
EMPLOYMENT PROSPERITY.
THAT IS THAT WE COULD ADJUST
MAINLY FISCAL POLICY, BUT A
COMBINATION OF FISCAL AND
MONETARY POLICY SUCH THAT WHAT
WAS CREATED WAS A WORLD IN WHICH
FULL EMPLOYMENT, WHICH COULDN'T
BE REACHED, THE KEYNESIAN
ARGUED, BY MARSHALLIAN METHOD,
COULD IN FACT BE REACHED BY
KEYNESIAN METHODS.
IT JUST REQUIRED BRIGHTER
ECONOMISTS THAN WE'D EVER HAD
BEFORE.
ONE CAN'T DENY THAT IN THAT
PERIOD THESE WERE THE ECONOMISTS
WHO HELD SWAY OVER THE
DISCIPLINE, AND THAT IT WAS
GALBRAITH WHO WAS RELATIVELY
MARGINALIZED WITHIN THE
PROFESSION.
GALBRAITH WAS NOT A MATHEMATICAL
ECONOMIST.
THE RISING POPULARITY OF
MATHEMATICAL ECONOMICS GAVE IT
PRECEDENT.
IT'S CLAIMED TO BE THE PHYSICS
OF A SOCIAL SCIENCES, EXACTED A
KIND OF STATUS AWE AMONG THE
SOCIOLOGISTS IN THE POLITICAL
SCIENCE, WHICH I TO SAY STILL
SEEMS TO LINGER IN SOME FIELDS.
AND WHAT WE FOUND WAS A GROUP OF
ADVISORS WHO CAME INTO SERVE
JOHN F. KENNEDY AND LYNDON
JOHNSON, WHO TRIED TO IMPLEMENT
THIS POLICY OF FULL EMPLOYMENT
MICRO MANAGEMENT OF THE ECONOMY.
BUT UNLIKE KEN GALBRAITH, UNLIKE
KEN GALBRAITH, WHO WHEN JOHN F.
KENNEDY, HIS CLOSE FRIEND WAS
ELECTED PRESIDENT CHOSE NOT TO
GO TO WASHINGTON, BUT RATHER TO
GO TO INDIA AS THE U.S.
AMBASSADOR TO INDIA, UNLIKE HIM,
THESE ADVISORS WERE CONVINCED
THAT THEY COULD MAKE THE SYSTEM
WORK IF ONLY THEY COULD GET THE
PRECEDENT'S EAR.
BUT WHAT THEY WEREN'T HEARING AT
THE COUNCIL OF ECONOMIC ADVISORS
WAS WHAT THE NATIONAL SECURITY
COUNCIL WAS WHISPERING IN THE
OTHER EAR.
WHAT WE KNOW NOW FROM
DECLASSIFIED DOCUMENTS IS THAT
THROUGHOUT THE KENNEDY YEARS,
BEGINNING WITH THE BAY OF PIGS
INVASION, FOLLOWED BY A
NEAR-INVASION OF LAOS IN THE
SPRING OF 1961 IN WHICH KENNEDY
WAS BEING ADVISED TO SEND 60,000
U.S. TROOPS INTO LAOS TO PREVENT
THE FALL OF THIS ISOLATED AND
REASONABLY DESCRIBED
INCONSEQUENTIAL KINGDOM TO THE
COMMUNISTS, THAT HIS JOINT
CHIEFS OF STAFF WERE URGING HIM
TO PREPARE FOR NUCLEAR WAR WITH
CHINA OVER THIS PARTICULAR
TERRITORY.
NOW, IN THE MIDST OF THIS,
GALBRAITH, WHO ENJOYED A
REMARKABLE AND UNIQUE
RELATIONSHIP WITH PRESIDENT
KENNEDY, BEGAN TO CABLE BACK
THROUGH BACK CHANNELS TO KENNEDY
HIS WARNINGS ABOUT ANOTHER
SOUTHEAST ASIAN COUNTRY CALLED
VIETNAM.
WHAT HE SAW IN VIETNAM, AND HE
SAW IT BECAUSE INDIA WAS THE
CHAIR OF SOMETHING CALLED THE
INTERNATIONAL CONTROL
COMMISSION, WHICH FOR A TIME WAS
MEANT TO OVERSEE UNSTABLE PEACE
IN SOUTHEAST ASIA, WHAT HE SAW
FROM HIS POSITION IN NEW DELHI
WAS THAT THERE WAS A GROWING
RISK OF DISASTER FOR THE UNITED
STATES IF IT MARCHED INTO
VIETNAM.
COUNCIL AND ECONOMIC ADVISORS
DIDN'T KNOW THAT THE NATIONAL
SECURITY COMMISSION WAS EVEN
DISCUSSING THIS OPTION.
GALBRAITH, AS A DIPLOMAT WITH
TOP SECRET SECURITY CLEARANCE
AND SITTING ON TOP OF THE CABLES
THAT WERE COMING TO NEW DELHI
ALONG WITH OTHER CRITICAL
OUTPOSTS NEW FULL-WELL THAT BOTH
THINGS WERE ON THE TABLE.
AND HE BEGAN A REMARKABLE
CORRESPONDENCE, WHICH I DETAIL
IN THIS BOOK, AND THEN A NUMBER
OF TRIPS BACK TO WASHINGTON TO
URGE KENNEDY TO STAY OUT OF
VIETNAM.
ONE MOMENT I'LL TELL YOU ABOUT,
WHICH I THINK IS QUITE
EXTRAORDINARY AND YET EXEMPLARY
OF KEN'S LIFE, AND IT RELATES TO
THIS ISSUE OF POWER, BUT ALSO
IT'S A CHOICE OF MORAL CHOICE
AND STANCE, IS THAT IN NOVEMBER,
1961, HE COMES BACK TO
WASHINGTON FOR A STATE VISIT
WITH PRIME MINISTER NEHRU.
AT THE SAME MOMENT, MAXWELL
TAYLOR, THE PRESIDENT'S ADVISOR,
AND WALT ROSTOW, THE DEPUTY
NATIONAL SECURITY ADVISOR,
RETURNED TO WASHINGTON AS WELL
FROM SAIGON WITH A NEW PLAN TO
INTRODUCE THOUSANDS OF U.S.
TROOPS IN 1961 INTO VIETNAM.
GALBRAITH HEARS RUMORS THAT THIS
IS THE PLAN THAT'S TO BE
PRESENTED AND IMMEDIATELY RUSHES
TO ROSTOW'S WHITE HOUSE OFFICE
AND SITS DOWN IN ROSTOW'S --
ACROSS THE TABLE FROM ROSTOW AND
SAYS WALT, WE'VE KNOWN EACH
OTHER FOR 15 YEARS, I WANT TO
SEE WHAT THIS TAYLOR REPORT
SAYS.
ROSTOW SAYS, YOU'RE JOKING!
THIS IS TOP SECRET, EYES ONLY
THE PRESIDENT OF THE UNITED
STATES.
I CAN'T SHOW YOU THIS THING.
GALBRAITH LOOKS AT HIM AND HE
SAYS YOU AND I HAVE THE SAME
LEVEL SECURITY CLEARANCE, WHICH
GALBRAITH DID AS THE HEAD OF A
MAJOR U.S. EMBASSY.
AND HE SAID I WANT TO SEE THE
TAYLOR REPORT BEFORE IT'S
PRESENTED TO THE PRESENT.
ROSTOW SAID ABSOLUTELY NO WAY.
AND AT THAT MOMENT THE PHONE
RINGS.
NOW YOU KNOW THE SIGNIFICANCE OF
TELEPHONES IN THE WHITE HOUSE,
RIGHT?
FROM THE NIXON YEARS.
WELL IN THE KENNEDY YEARS, THAT
SAME THING HAPPENS, BECAUSE
ROSTOW TURNS TO ANSWER THE
PHONE, GALBRAITH IS SITTING
HERE, AND IN BETWEEN THEM IS A
COPY OF THE TAYLOR REPORT.
GALBRAITH REALISING THAT ROSTOW
IS PREOCCUPIED, SIMPLY LEANS
OVER THE TABLE, PICKS UP THE
REPORT AND WALKS OUT OF THE
WHITE HOUSE.
NOW I DON'T KNOW A LOT OF
AMERICAN GOVERNMENT OFFICIALS
THAT WOULD HAVE THE PECULIAR
PROPERTIES OF MIND OR HABIT THAT
WOULD ALLOW THEM TO DO THAT IN
THE WAY THAT HE DID IT.
NOW YOU ALSO HAVE TO APPRECIATE
WHAT MUST HAVE GONE THROUGH POOR
ROSTOW'S MIND WHEN HE REALISED
THAT HERE WAS GALBRAITH, KNOWN
TO BE TROUBLE.
KNOWN TO BE A DANGEROUS
DISSENTER, KNOWN TO HAVE THE EAR
OF THE PRESIDENT OF THE UNITED
STATES, AND HE'S WALKING OUT OF
THE WHITE HOUSE WITH A COPY OF
THE TAYLOR REPORT.
BUT ROSTOW CAN'T DO A THING
BECAUSE YOU KNOW WHAT THE PRESS
HEADLINE WOULD BE THE NEXT DAY.
U.S. AMBASSADOR ARRESTED IN
WHITE HOUSE WITH TOP SECRET
DOCUMENT.
THIS WAS NOT SOMETHING THAT
ROSTOW COULD RISK.
WELL GALBRAITH TAKES THE TAYLOR
REPORT AND SPENDS THE NEXT TWO
DAYS WRITING A RESPONSE TO THE
TAYLOR REPORT, WHICH HE PRESENTS
TWO HOURS BEFORE THE PRESIDENT
RECEIVES THE TAYLOR REPORT.
AND WHAT FOLLOWS ARE TWO WEEKS
OF REMARKABLE POLITICAL
MANOEUVRING.
AND AGAIN THE LESSON HERE IS
ABOUT POWER, AND THE INTERSTICES
OF POWER AT THE HIGHEST LEVELS
WHERE GALBRAITH IS OPERATING.
AND LESSONS THAT HE ACTS UPON,
THAT HE DRAWS FROM HIS EARLIER
CAREER IN WASHINGTON DURING THE
SECOND WORLD WAR.
KENNEDY IS SURROUNDED BY
ADVISORS.
WE THINK SOMETIMES OF THE
PRESIDENT AS HAVING AUTONOMY AND
HAVING ADVISORS WHO SERVE ONLY
THE INTERESTS AND THE AMBITIONS
OF THE PRESIDENT.
WHAT ALL OF US SHOULD REALISE,
FROM ANY CLOSE STUDY OF THE
PRESIDENCY, OR ANY LEADERSHIP OF
ANY MAJOR COUNTRY, IS THAT
ADVISORS HAVE THEIR OWN AGENDAS.
ADVISORS HAVE THEIR OWN PLANS
AND HAVE THEIR OWN IDEAS OF WHAT
LEADERS SHOULD BE FOR.
AND WHAT HAPPENS IS THAT KENNEDY
IS SURROUNDED BY A RETINUE OF
AIDES WHO WOULD LIKE NOTHING
BETTER THAN TO SEND U.S. TROOPS
INTO VIETNAM, FOR A WHOLE HOST
OF REASONS THAT I DETAIL IN THE
BOOK HAVING TO DO, AT ROOT, AT
THE HIGH LEVEL WITH THE BELIEF
THAT COMMUNISM -- A COMMUNIST
VICTORY IN ANY COUNTRY WAS A
DEFEAT FOR THE UNITED STATES, AT
A LOWER LEVEL THIS IDEA OF USING
"THE TOYS THAT WE HAD PAID FOR."
NOW, WHAT GALBRAITH IS ABLE TO
DO OVER THE NEXT TEN DAYS IS TO
SUCCESSFULLY FORCE THE AIDES TO
SCALE DOWN THEIR PROPOSAL.
McNAMARA HAD WANTED TO SEND
200,000 TROOPS IN.
TAYLOR, REALISING THAT KENNEDY
WOULD NEVER GO FOR THIS,
PRODUCES A REPORT THAT SAYS
10,000 TROOPS.
KENNEDY, USE GALBRAITH, THEN
BEGINS TO LEAK TO THE "NEW YORK
TIMES," TO "THE WASHINGTON
POST," SAYING PRESIDENT LIKELY
TO OPPOSE TAYLOR COMMISSION
RECOMMENDATIONS, HOPING THEREBY

- AND AGAIN THIS IS AN
INTRODUCTION TO THE WORKINGS OF
POWER -- HOPING THEREBY TO RALLY
SUPPORT.
RALLY SUPPORT IN THE PRESS,
RALLY SUPPORT IN THE CONGRESS,
RALLY SUPPORT IN THE PUBLIC.
BUT IN 1961, ALL THIS FLOATS BY.
AND KENNEDY FINDS HIMSELF STILL
ISOLATED AMONG HIS OWN ADVISORS.
AND AS A YOUNG PRESIDENT, WITH A
PAPER THIN MARGIN AND ADVISORS
WHO REPRESENT THE HEART OF THE
AMERICAN POLITICAL AND ECONOMIC
ESTABLISHMENT AROUND HIM, FINDS
HIMSELF TEN DAYS LATER IN A
NATIONAL SECURITY COUNCIL
MEETING WITH HIS ADVISORS
PROPOSING THAT HE ENDORSE THE
TAYLOR COMMISSION AND ITS
RECOMMENDATION FOR THE SENDING
OF THE U.S. TROOPS.
THE IMPORTANT THING THAT WE NOW
KNOW IS THAT KENNEDY, THROUGHOUT
THAT MEETING AND THROUGHOUT THE
NEXT TWO YEARS OF HIS LIFE,
RESISTED.
YOU CAN FIND NOW IN DECLASSIFIED
NOTES TAKEN BY THE CHIEF -- THE
CHAIRMAN OF THE JOINT CHIEFS OF
STAFF LYMAN LEMNITZER, THAT IN
THE CONVERSATION THAT TAKES
PLACE, THE AIDES SAY WE MUST DO
THIS, WE MUST DO THIS, WE MUST
SEND THESE, WE MUST ARM THIS.
AND BOBBY KENNEDY SAYS NO
TROOPS.
NO FUCKING TROOPS.
EXCUSE MY AMERICAN ENGLISH.
IRISH-AMERICAN ENGLISH, THE
ORIGINAL.
AND THE PRESIDENT SAYS I WILL
NOT COMMIT AMERICAN TROOPS
UNLESS A NUMBER OF IMPORTANT
CRITERIA ARE MET.
NOW THESE, THESE RULES THAT
KENNEDY LAYS DOWN FOR HIS
ADVISORS BEAR LISTENING TO
BECAUSE THEY HAVE RELEVANCE TO
TODAY.
ONE, HE SAYS I WILL ONLY
INTRODUCE TROOPS IN COUNTRIES
WHERE THE PEOPLE THEMSELVES
KNOWINGLY SEEK DEMOCRACY.
NUMBER TWO, I WILL ONLY SEND
U.S. TROOPS ABROAD UNDER THE MAN
DATE OF THE UNITED NATIONS AND
THE GENERAL -- AND THE SECURITY
COUNCIL.
THAT'S WHAT WE DID IN KOREA.
IF WE HAVE TO DO IN VIETNAM, I
WILL ONLY DO IT THAT WAY.
NUMBER THREE, I WILL ONLY SEND
U.S. TROOPS AS PART OF A
MULTILATERAL FORCE, ALSO
ENDORSED BY THE SECURITY
COUNCIL.
AND FOUR, HE SAYS TO SECRETARY
OF DEFENCE McNAMARA, AND I WANT
AN EXIT STRATEGY.
NOW, UNFORTUNATELY, THAT LIST
WAS LOST IN A RECENT AMERICAN
ADMINISTRATION, BUT MIGHT WELL
HAVE BEEN USEFUL FOR
CONSIDERATIONS THAT THE WHITE
HOUSE WAS MAKING IN THE LAST
YEAR OR TWO.
I THINK VITALLY USEFUL, BUT OF
COURSE THE WHEEL OF TIME TURNS
AND TURNS AND TURNS.
THE IMPORTANCE OF THAT MOMENT,
AND OF THE FACT THAT KENNEDY,
WITH GALBRAITH'S COUNSEL, AND
THAT OF A FEW OTHERS, CONTINUED
TO RESIST INCURSION INTO
VIETNAM, OF COURSE ENDS
TRAGICALLY.
IN THE SPRING OF 1963, WE NOW
KNOW THAT KENNEDY, IN FACT, GAVE
ORDERS TO THE SECRETARY OF
DEFENCE AND JOINT CHIEFS THAT
ALL OF THE 12, 14,000 AMERICAN
TROOPS THAT BY THEN WERE THERE,
WHICH WERE NONE COMBAT TROOPS,
THEY WERE ADVISORY TROOPS,
TRAINING THE SOUTH VIETNAMESE
MILITARY, THAT KENNEDY WANTED
THEM ALL REMOVED WITHIN SIX
MONTHS AFTER HIS RE-ELECTION IN
1964.
THE ORDERS ARE THERE.
AND IN FACT HE WANTED THE FIRST
TROOPS, THE FIRST THOUSAND OF
THOSE TROOPS OUT OF VIETNAM NO
LATER THAN NOVEMBER, 1963.
BUT OF COURSE KENNEDY DIES IN
1963, AND SOMETHING ELSE
UNFOLDS.
NOW, WHY IS THIS IMPORTANT TO
ECONOMICS?
WHY IS THIS IMPORTANT TO POWER?
WELL, ITS LESSON FOR ECONOMICS
IS WHAT UNFOLDS OVER THE NEXT
TEN YEARS.
WHICH IS THAT KENNEDY'S ECONOMIC
ADVISORS ARE ULTIMATELY ABLE TO
PERSUADE JOHNSON TO PASS A TAX
CUT, WHICH LOCKS IN PLACE A
FEDERAL STIMULUS OF THE ECONOMY,
WHICH IN COMBINATION WITH THE
ENORMOUS RUN-UP IN SPENDING
ASSOCIATED WITH THE VIETNAM WAR
CREATES AN OUTBREAK OF
SIGNIFICANT INFLATION.
THE TAX CUT IS INFLEXIBLE
POLITICALLY, WHICH THE
ECONOMISTS HAD NOT FOCUSED ON,
BUT WHICH GALBRAITH HAS A SERIES
OF MEMOS TO KENNEDY AND TO
JOHNS, SO WARNING ABOUT THE WAY
TO STIMULATE THE ECONOMY IS
THROUGH PUBLIC SPENDING, NOT
THROUGH TAX CUTS.
THE DANGER OF TAX CUTS IS ONCE
THEY'RE IN PLACE, THEY'RE VERY
DIFFICULT POLITICALLY TO PUT
BACK ON WHEN INFLATION BREAKS
OUT.
PUBLIC SPENDING COULD BE
ADJUSTED UPWARD OR DOWNWARD,
DEPENDING ON MACRO ECONOMIC
CONDITIONS BUT OF COURSE, THEY
KNEW BETTER.
THEY WERE THE MATHEMATICAL
ECONOMISTS.
THEY WERE THE ONES WHO HAD DONE
THE MODELLING AND THEY WERE THE
ONES WHO BELIEVED THE MODELS
WOULD SHOW THEM HOW TO DO THE
TYPE, THE TYPE MANAGEMENT THAT
WOULD LEAD TO STABLE, FULL
EMPLOYMENT AND DYNAMIC GROWTH.
WELL OF COURSE THE LEGACY
ULTIMATELY IS NOT JUST VIETNAM
AND ITS LOSS IN TERMS OF
AMERICA, BUT ITS COST FOR THE
DEMOCRATIC PARTY AND THE COST
FOR LIBERALISM IN GENERAL,
BECAUSE THE PRICE PAID FOR THOSE
ERRORS, WHICH ARE FUNDAMENTALLY A
COMBINATION OF A MISUNDERSTOOD
KEYNESIANISM IN TERMS OF
SPENDING PRIORITIES AND A BELIEF
THAT MILITARY SPENDING IS THE
SAME AS DOMESTIC SPENDING, AND
SECONDLY THE ARROGANCE OF
INCREDIBLY TECHNICALLY
SOPHISTICATED ECONOMISTS WHO
DIDN'T UNDERSTAND THE
FUNDAMENTALS OF POWER, WHICH
GALBRAITH DID, CREATE A
CONDITION WHICH DYNAMITES WITHIN
THE NEXT 20 YEARS, NOT JUST THE
DEMOCRATIC PARTY AND LIBERALISM,
BUT THE POSSIBILITY FOR
CONSCIOUS KEYNESIAN MANAGEMENT
OF THE ECONOMY.
NOW, I WANT TO EMPHASIZE HERE
THAT AGAIN, THE LESSON THAT
GALBRAITH DRAWS OUT OF THIS IS
NOT THAT WE NEED ALTERNATIVE AND
MORE SOPHISTICATED MATHEMATICAL
MODELS, BUT A MORE SOPHISTICATED
UNDERSTANDING OF THE INTERPLAY
OF POLITICS AND ECONOMICS AT ALL
LEVELS.
AND AN UNDERSTANDING THAT
REACHES MORE DEEPLY INTO THE
RELATIONSHIPS OF POWER, THAT
SHAPE ECONOMIC AND POLITICAL
STRUCTURES AND POSSIBILITIES.
AND SO WHAT YOU FIND, AS
GALBRAITH FINISHES HIS CAREER AT
HARVARD IN THE MID-1970s, IS
THAT IT PRODUCES A FRESH
OUTPOURING OF VITAL NEW WRITING
ON HIS PART THAT CONTINUES
THROUGH THE '70s, THROUGH THE
'80s, THROUGH THE '90s.
IN FACT PROFESSOR GALBRAITH,
LAST YEAR AT THE AGE OF 95,
PUBLISHED HIS 48th BOOK, "THE
ECONOMICS OF INNOCENT FRAUD,"
HIS REFLECTIONS ON THE
EXTRAORDINARY SUCCESSES OF THE
AMERICAN STOCK MARKET AND THE
SUBSEQUENT DISCOVERY, THAT
PERHAPS THE BOOKS WEREN'T AS
GOOD AS THE MARKETS THOUGHT THEY
WERE, WHICH LED TO THE CRASH OF
THE -- EARLY IN THIS NEW
CENTURY.
HERE, AS THROUGHOUT HIS CAREER,
THE CONNECTION, THE PIVOT POINT
IS POWER.
THE PIVOT POINT IS AN
UNDERSTANDING NOT THAT ECONOMICS
IS A BRANCH OF PHYSICS APPLIED
TO THE WORLD OF SOCIAL
RELATIONS, BUT RATHER THAT
ECONOMICS IS A NUMERICAL
EXPRESSION OF A POLITICAL
UNDERSTANDING OF BOTH THE
REALITY AND THE MORAL
POSSIBILITIES OF THE WORLD.
THAT'S A RADICALLY DIFFERENT
APPROACH.
AND IT IS, WITHOUT DOUBT,
DRAMATICALLY ABSENT FROM MOST
MAJOR ECONOMICS DEPARTMENTS
TODAY.
AND YET WHAT ONE NEEDS TO LOOK
BACK ON, AND WHICH I TRY TO DO
IN THIS BOOK, IS TO LOOK NOT
ONLY AT THE PROMISE OF THE POST
THE SECOND PERIOD, WHICH I'LL
SAY JUST A LITTLE BIT MORE ABOUT
IN A MOMENT, BUT IN GALBRAITH'S
ANALYSIS OF WHAT WILL LIKELY
FOLLOW FROM THE POLICIES
IMPLEMENTED IN THAT SECOND
PERIOD.
OF COURSE IN THE '70s AS
KEYNESIANISM CRUMBLES IN TERMS
OF PUBLIC POLICY POSSIBILITY,
WHAT ARISES?
MONETARISM.
WHAT ARISES IN ACADEMICS?
RATIONAL EXPECTATIONS THEORY.
TALK ABOUT RATIONAL EXPECTATION,
THE ECONOMISTS, THE REST OF YOU
DON'T WANT TO KNOW ANYTHING
ABOUT IT.
AND WHAT ALSO ARISES?
SUPPLY SIDE ECONOMICS.
REMEMBER SUPPLY SIDE ECONOMICS?
SPECTACULAR.
MONETARISM.
LET'S LOOK AT MONETARISM'S
CAPACITY FOR SECEDING
KEYNESIANISM AS A POWERFUL
DRIVING MODEL OF ECONOMIC
BEHAVIOUR.
IT WAS ACTUALLY IMPLEMENTED IN
THE UNITED STATES IN THE EARLY
1980s, AND IT WAS SIMULTANEOUSLY
IMPLEMENTED UNDER MARGARET
THATCHER IN THE SAME PERIOD.
WHAT HAPPENED TO MONETARIST
POLICY AND MILTON FRIEDMAN'S
IDEA OF AN ALTERNATIVE TO
KEYNESIANISM USING MONETARY
RATHER THAN FISCAL POLICY?
ABANDONED WITHIN 28 MONTHS.
MARGARET THATCHER HUNG ON A
LITTLE BIT LONGER.
THE BRITISH ECONOMY STAGNATED
SOMEWHAT LONGER.
AND THEN WHEN THE BANK OF
ENGLAND FINALLY GAVE UP, TOO, AS
THE FEDERAL RESERVE ALREADY HAD,
THE BRITISH ECONOMY SPRANG BACK
TO LIFE.
SO MUCH FOR MONETARISM.
SUPPLY SIDE?
WELL IT'S STILL BEING USED BY
GEORGE W. BUSH TO JUSTIFY TAX
CUTS IN THE WAY THAT RONALD
REAGAN DID IN THE 1980s.
BUT AGAIN, WHAT GALBRAITH SAYS
IS LET'S SEE WHAT IT PRODUCES.
WHAT DOES IT PRODUCE?
IN THE 1980s, DESPITE MASSIVE
TAX CUTS AND A DEREGULATORY
POLICY MEANT TO RELEASE THE
NATURAL ENERGIES OF MARKET
ECONOMY, WE GET SLOWER GROWTH
THAN WE HAD IN THE 1970s, 1960s,
OR 1950s.
WHAT DOES CHANGE IS IN
COMMONWEALTH DISTRIBUTION, AND
IT CHANGES IN A RADICALLY NEW
DIRECTION.
IN FACT THE VECTOR TURNS IN A
180 DEGREE -- MAKES A 180 DEGREE
TURN FROM THE DIRECTION IT HAD
BEEN FOLLOWING SINCE THE SECOND
WORLD WAR, WHICH WAS TOWARD LESS
AND LESS INCOMMONWEALTH AND
EQUALITY.
NOW INCOMMONWEALTH AND EQUALITY
TAKE OFF.
WE DON'T GET THE GROWTH BUT WE
GET THE GREATER INEQUALITY.
POVERTY DOESN'T DECLINE.
IN FACT ONE SHOULD UNDERSTAND
THAT TODAY UNDER GEORGE W. BUSH,
THE POVERTY RATE IN THE UNITED
STATES IS NOT SUBSTANTIALLY
DIFFERENT FROM WHAT IT WAS UNDER
RICHARD NIXON.
THAT'S 33 YEARS NOW, THAT THE
POVERTY RATE HASN'T BASICALLY
CHANGED IN THE UNITED STATES?
WHEREAS IN THE PERIOD PRIOR, IT
HAD GONE FROM SOMETHING LIKE 28 percent
OR 30 percent DOWN TO UNDER 15 percent IN
THOSE 30 YEARS OF ORIGINAL
KEYNESIAN POLICY, WITH ALL OF
ITS FLAW, THESE MILITARY
KEYNESIANS.
AND THE QUESTION AGAIN ARISES.
ARE WE TO IMAGINE THAT ECONOMICS
CAN BE UNDERSTOOD AS THE PHYSICS
OF SOCIAL RELATIONS OR MUST WE
IN FACT ENTERTAIN THE IDEA THAT
GALBRAITH ADVANCES?
THAT WE CANNOT, THAT BECAUSE THE
ATOMS OF SOCIAL RELATIONS ARE
HUMAN BEINGS.
AND HUMAN BEINGS POSSESS A
CONSCIOUSNESS WHICH ELECTRONS,
NEUTRONS AND PROTONS DON'T.
THAT THE POSITION OF THE
OBSERVER IS NEVER NEUTRAL IN THE
ANALYSIS OF THE SUBJECT.
THE OBSERVER HAS ALWAYS MADE
CHOICES ABOUT HIS OR HER STANCE
IN RELATIONSHIP TO FIELD OF
STUDY IN FRONT OF HIM OR HER.
THESE ARE NOT ATOMS WHICH ARE
ALIENABLE FROM US, ALTHOUGH WE
ARE MADE UP OF ATOMS.
THESE ARE CONSCIOUS HUMAN BEINGS
LIKE US, WITH AMBITIONS IN MANY
CASES LIKE US, WITH MORAL
UNDERSTANDINGS, WITH
COMMUNITIES, WITH COMMITMENTS
LIKE US.
AND TO TREAT HUMAN BEINGS AS
DIVORCEABLE OBJECTS FROM THE
POSITION OF THE OBSERVER, FROM
THE POSITION OF THE ANALYST,
DOES IT SOMEHOW BREAK A MORE
FUNDAMENTAL MORAL RELATIONSHIP
THAT SHOULD EXIST BETWEEN HUMAN
BEINGS THAN SCIENCE HAS EVER
IMAGINED IN ITS RELATIONSHIP
WITH THE MANIPULABLE NATURAL
WORLD?
NOW THE FACT OF THE MATTER IS,
OBVIOUSLY, THAT LIBERALISM HAS
NOT DONE WELL, HOWEVER, IN THE
LAST 30 YEARS.
FOR THIS, GALBRAITH HAS A NUMBER
OF EXPLANATIONS, AND I'D BE GLAD
TO TALK TO YOU ABOUT THEM IN THE
QUESTION AND ANSWER PERIOD.
BUT IT DOES REMAIN A PARADOX FOR
HIM IN HIS OWN THINKING ABOUT
WHY THE WORLD HASN'T CHANGED IN
A DIFFERENT DIRECTION THAN IT
HAS IN THE RECENT PAST.
IN AN ABSTRACT WAY, GALBRAITH
BELIEVED THAT IN FACT MUCH CAN
BE EXPLAINED BY THE DIMINISHING
PARTICIPATION RATES OF VOTERS IN
ELECTIONS.
NOW, WE CAN EXAMINE WHAT THIS
LAST ELECTION REPRESENTS, BUT
HIS ARGUMENT IS THAT WE HAVE
CREATED A CULTURE OF CONTENTMENT
IN WHICH THE FAILURE OF THE
DEMOCRATIC PARTY TO STAND BY THE
LIBERALISM THAT GALBRAITH
BELIEVED WORKED FOR 30 YEARS,
AND BEFORE THAT WORKED IN THE
NEW DEAL, AND WORKED IN THE
SECOND WORLD WAR WHEN GALBRAITH
WAS THE PRICE CZAR OF THE
AMERICAN ECONOMY, BY TURNING
AWAY FROM THAT, THE DEMOCRATIC
PARTY HAS PRODUCED THE WORST OF
ALL POSSIBLE WORLDS, WHICH IS
THAT IT IS A "ME TOO" REPUBLICAN
PARTY IN A WORLD IN WHICH THE
WORLD NEEDS ONLY ONE REPUBLICAN
PARTY.
THAT MAY BE THE EXPLANATION.
I'M NOT QUITE CERTAIN.
WHAT I DO KNOW, THOUGH, IS THAT
THE OTHER EXPLANATION, HIS
EMPHASIS ON CONVENTIONAL WISDOM
IS NOT TO BE UNDERESTIMATED.
THAT THE POWER OF CORPORATELY
ORGANISED INFORMATION AND THE
ACCEPTANCE OF A NARROWING OF THE
POSSIBILITIES FOR SOCIAL CHANGE,
ACCEPTED BY LEADERS OF BOTH
PARTIES IN THE UNITED STATES,
HAS PRODUCED A CONDITION IN
WHICH THE NATURAL VOTING BASE OF
THE DEMOCRATIC PARTY, AT ALL
DIFFERENT SOCIAL ECONOMIC
LEVELS, NO LONGER BELIEVES THERE
IS AN ALTERNATIVE.
THAT NEO-LIBERALISM IS THE
ALTERNATIVE BECAUSE NOTHING
GREATER CAN BE CONCEIVED.
GALBRAITH WON'T LIVE TO SEE
WHETHER HE'S RIGHT OR WRONG
ABOUT THIS.
WHETHER OR NOT THERE IS A PERIOD
THAT WILL COME AFTER
NEO-LIBERALISM VERSUS
CONSERVATIVISM.
WE WILL, HOWEVER.
AND I WOULD ARGUE, AND I WILL
SUSTAIN IN THE QUESTION PERIOD,
THE BELIEF THAT GALBRAITH HAS
GIVEN US THE OPPORTUNITY TO LOOK
OVER THOSE MOST FUNDAMENTAL
ISSUES THAT WOULD ALLOW US TO
TAKE UP THAT CONVERSATION AGAIN.
WHAT I WANT TO DO IS CLOSE BY
READING JUST A FEW SHORT WORDS
FROM AMARTYA SEN.
AS YOU MAY KNOW, AMARTYA IS AN
EXTRAORDINARILY GIFTED
MATHEMATICAL ECONOMIST BUT WITH
A KIND OF MORAL SENSITIVITY THAT
HAS MADE HIM FOR MANY YEARS A
CLOSE PERSONAL FRIEND OF KEN
GALBRAITH'S.
AND AN ADMIRER OF GALBRAITH AS
WELL.
AND I TALKED WITH AMARTYA ABOUT
THIS BEFORE WRITING IT.
AND HE POINTED ME TOWARD A
COUPLE OF INTERVIEWS THAT HE'S
GIVEN.
AND I'LL READ YOU THE LAST FEW
WORDS OF MY BOOK.
WHAT I DO IS DESCRIBE HOW THERE
ARE CHANGES GOING ON NOW IN
ECONOMICS.
MOVEMENT AWAY FROM THE SIMPLE
KIND OF MATHEMATICAL PHYSICS
MODELED ECONOMICS THAT MY
GENERATION GREW UP LEARNING.
BEHAVIOUR ECONOMICS IS AN
EXTRAORDINARILY IMPORTANT
MOVEMENT IN THIS, IN WHICH MY
GOD, A PSYCHOLOGIST HAS NOW WON
A NOBLE PRIZE IN ECONOMICS.
THIS FOR MY GENERATION IS ALMOST
UNIMAGINABLE.
WE HAD NO IDEA THAT
PSYCHOLOGISTS WERE GOOD FOR
ANYTHING, OTHER THAN KEEPING THE
SOCIOLOGISTS AT BAY.
AND YET NOW ONE HAS A NOBLE
PRIZE IN ECONOMICS.
SO THINGS ARE CHANGING.
AND I'LL BE GLAD TO TALK ABOUT
SOME OF THE OTHERS THAT ARE.
"THERE IS A NEW BREATH IN
ECONOMICS TODAY THAT CASTS FRESH
LIGHT ON GALBRAITH'S CAREER AND
ITS SIGNIFICANCE.
YET AS AMARTYA SEN HAS NOTICED,
GALBRAITH'S CONTRIBUTION "STILL
DOESN'T GET ENOUGH PRAISE."
IN JUNE 2000 GALBRAITH GAVE THE
COMMENCEMENT ADDRESS AT HARVARD
ON THE SUBJECT OF
GLOBALIZATION, AND HE USED IT
TO OFFER AN ELOQUENT
ARTICULATION OF THE CAPABILITY
CHALLENGES THE WORLD NEEDED TO
MEET.
"IN ORDER TO DO THIS," HE SAID,
"WE MUST FULLY UNDERSTAND HOW TO
BALANCE AND DIRECT COMPETING
POWER IN SOCIETIES WHICH HAVE
CONFLICTING INTERESTS AND
UNEVENLY DISTRIBUTED STRENGTHS,
FOR POWER IS AT THE CENTRE OF
ACHIEVING TRUE FREEDOM."
THE GREAT IMPORTANCE OF THIS
TOPIC HAD FIRST DAWNED ON HIM AS
A YOUNG COLLEGE STUDENT IN
CALCUTTA, ALMOST A HALF CENTURY
EARLIER, HE ADDED TO THE
ASSEMBLED HARVARD AUDIENCE.
SITTING IN A COFFEE HOUSE,
READING A LITTLE BOOK ENTITLED
"AMERICAN CAPITALISM."
BY
AN AMERICAN ECONOMIST NAMED
GALBRAITH.
AND IT HAD NEVER LEFT HIM SINCE.
SOME MONTHS LATER A REPORTER
ASKED SEN WHETHER HE THOUGHT
THAT GALBRAITH'S WORK WOULD
ENJOY LASTING INFLUENCE, AND IF
SO, WHY SEN'S REPLY -- AND IF
SO, WHY?
SEN'S REPLY WAS THAT GALBRAITH
AND HIS WORK WOULD INDEED
ENDURE, AND FOR A SIMPLE REASON
THAT COULD BEST BE SEEN IN THE
AFFLUENT SOCIETY.
"THE BOOK WAS AN EXAMPLE OF
GALBRAITH'S GREAT INSIGHT," HE
SAID, "WHICH HAD BECOME SO MUCH
A PART OF OUR UNDERSTANDING OF
CONTEMPORARY CAPITALISM THAT WE
FORGET WHERE IT BEGAN.
IT'S LIKE READING HAMLET," HE
SAID, "AND DECIDING IT'S FULL OF
QUOTATIONS.
YOU REALISE SUDDENLY WHERE THEY
CAME FROM."
THANK YOU.

[Applause]

Watch: John Kenneth Galbraith on Legacy for the 21st Century