Government and the Market:
INTERVIEWER: Who knows best? government or the free-market system?
JOHN KENNETH GALBRAITH: I have no doubt on that. The correct balance is pragmatic. If the market system, as you call it, has its own things that it does very well, no one could question, for example, its ability to make automobiles or grow food or provide a large part of the substance of life. But then there's an area where it doesn't work, and the distinction between
the areas where it works and the areas where it doesn't work is the basis of sound policy.
We're not, as we talk, in the United States having a big, sometimes quite mindless, argument about education. Everybody agrees that education is a public service, or almost everybody, and has to be handled, financed by the state, by the government. On the other hand, there's nobody, so far as I'm aware, suggesting that the state should take over the manufacture of automobiles, which I just mentioned, or farm products, or a wide range of other things. So it's a practical judgment that has to be made in the specific case, and it doesn't lend itself to the kind of broad theory implied in your question.
INTERVIEWER: At the end of the day, is morality at the heart of economics?
JOHN KENNETH GALBRAITH: No, but it can be. We're talking today in a very rich country, at a very rich time, and at the time we talk a large part of the American population, 10, 15 percent, are living below the level of enjoyment. They're hungry, they're ill housed, they are sick, and very largely as the result of the lack of income, mostly as the result of the lack of income. I would like to see a minimum income for everybody so that you have a life-supporting safety net. I think it's something a rich country like the United States can afford. And I'm not the only one with that view. Conservatives will say that people endowed [that way] won't work. Well, that's quite possible, but I'm impressed with the fact that leisure, if you're rich enough, is also a very good thing. In the past, often I've walked through Harvard Yard and have had one of my colleagues say to me, "Ken, aren't you working too hard?" Excessive work, leisure can be very good for a college professor, or somebody of affluence. Work can be unnecessary.
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I'm not sure that I see what's great here. His answers to both questions are fairly vague. I suppose he seems left wing because he he (quite rightly) does not automatically trust corporations and believes in redistribution. Thanks to the rapid growth of the last 10-15 years everyone thinks corporations walk on water and we need to protect their cheap labour - so no layabouts, lots and lots of hungry workers.
ReplyDeleteStill, I think the left of the future will have to reject Galbraith too. He's far too trusting of the state. For example, a Galbraithian argument would be that private firms may not finance perfect health care because they're worried about profits but the state doesn't finance perfect health care either, as we hear about potentially life saving drugs that the NHS rules out. The state makes it difficult to run an efficient service because health is all part of a bundle with education, defense, road-building and it's difficult to find out what sort of health care people really want / are willing to pay for without a market. It's not just a question of making things well, it's a case of knowing what sort of things you should be making.
His second comment is also kind of hard to take. I'm not sure how far work is unnecessary. A large increase in leisure is probably more attractive for a college professor with a good library and stimulating people to spend time with than it is for someone on a council estate. And again the question comes up: even if America is a rich country, how do you decide what is the optimal amount to redistribute? Is there a risk of taking too much out of future investment needed to ensure we stay rich in future?
The social democratic left built up the state in the last century as counterbalance to the power of capitalist accumulators, but the state also ended up being pretty inefficient, probably as a result of trying to manage too much information. It's time to find a new way to restrain the megacorps.