JK Galbraith remains a giant of economics

Happy birthday, JK
As he turns 97, the 6ft 8ins JK Galbraith remains a giant of economics

William Keegan
Sunday October 9, 2005The Observer

If ever there was a legend in his own lifetime, it is John Kenneth Galbraith, professor emeritus of Harvard University, adviser to Presidents from Roosevelt to Kennedy and Lyndon Johnson, author of more than 40 books, and a man due to celebrate his 97th birthday next Saturday.

Known as JK Galbraith to most and Ken to his close friends, he is the tallest (at 6ft 8in) and oldest economist in America. He is also the most famous living economist in the world - and indeed the best-selling.

In common with many of my generation, I first came across Galbraith's work in The Affluent Society (1958), a hugely successful book - so brilliant and so unmathematical that it incurred the envy and wrath of a certain cohort of his fellow economists.It was a book that challenged many assumptions about economics and politics (which, for Galbraith, have always been closely linked) and which gave the world some great insights and lasting sayings, including 'the conventional wisdom' and 'private affluence and public squalor'.

The phrases were good summaries of Galbraith's argument that the goals of economic policy had been distorted and more attention should be paid to the quality of economic growth and the distribution of its fruits.

I first met Galbraith in 1980, after we at The Observer asked him - a redoubtable Keynesian - to comment on Mrs Thatcher's adoption of Milton Friedman's monetarist policies, under which unemployment rose to 3.5 million.He famously wrote: 'Britain has, in effect, volunteered to be the Friedmanite guinea pig. There could be no better choice. Britain's political and social institutions are solid and neither Englishmen, Scots nor even the Welsh take readily to the streets.'

Galbraith has certainly lived to see Nemesis descend on Friedman. In the Financial Times of 7 June 2003, Friedman conceded: 'The use of quantity of money as a target has not been a success ... I'm not sure I would as of today push it as hard as I once did.'Galbraith was introduced to Keynesian ideas for curing unemployment in the 1930s and never forgot them. As a wonderful new biography, John Kenneth Galbraith, His Life, His Politics, His Economics by Richard Parker, makes clear, despite some minor differences he adhered to the essential teachings of Keynes.

In advising Kennedy, Galbraith warned of the inflationary consequences of tax cuts and was more interested in channelling any 'Keynesian' budgetary measures towards public spending. By that he did not mean military spending, of which there was quite enough already under what was known as 'the military-industrial complex'.

Galbraith was so close to Kennedy he could have been in White House chief economist Walter Heller's job, but preferred to be ambassador to India, a position from which he was still able to advise his young protégé in a series of letters, of which he once told The Observer: 'First he would call me up to ask what to do. Then to tell me what he was doing. Then he would not call me at all.' Perhaps Kennedy's biggest mistake was in not taking Galbraith's advice over Vietnam ('Don't do it'), although the evidence from the new biography is that the young President certainly took that advice seriously.

Before The Affluent Society, Galbraith had already written a best- seller in The Great Crash, 1929, published in the 1950s and never out of print. But many regard his greatest work as The New Industrial State (1967), a study of the power of big business and large corporations.

And it is a subject that still fascinates him. For some years now I have had the privilege of calling on him at his home in Massachusetts on my way back from annual meetings of the World Bank and International Monetary Fund in Washington.This year he was showing his age and clearly did not want a full- scale interview. But he certainly wanted to talk about corporations. 'The modern corporation operates under the mystique of the market, which is extensively under its control. This is a matter which modern economics recognises but does not pursue.'

And the man who warned Kennedy about the championing of war in Vietnam added: 'Our military operations, including notably Iraq, are under corporate direction through Rumsfeld and a compliant military staff. In the absence of corporate initiative and power we would not be in Iraq. And, a more poignant matter, we would not have George Bush.'

The great man is still in fighting form.