Conventional Heretic

November 14, 1960

In the last issue, space did not permit me to discuss certain aspects of the doctrine of J.K. Galbraith, present idol of the left. Further examination seems warranted.

The professor is nothing if not ironical; he is a fountain of perpetual paradox; and I do not get the impression that he cares very much whether or not a given proposition is true. He is out to épater le bourgeois, to demonstrate his iconoclasm, his superiority to what he disdainfully calls “the conventional wisdom.” But his claims to originality have been shown to be groundless. David McCord Wright has pointed out that Galbraith’s basic argument is simply an expanded rehash of one of Keynes’s essays, “Economic Possibilities for Our Grandchildren.” George Schwartz of The London Sunday Times has pointed out that 130 years ago, Southey, in his “Colloquies on Society,” was proclaiming that a people may be too rich but a government cannot be:

“A state cannot have more wealth at its command than may be employed for the general good, a liberal expenditure in national works being one of the surest means for promoting national prosperity; and the benefit being still more obvious of an expenditure directed to the purposes of national improvement. But a people can be too rich.”

BACK TO MERCANTILISM

I myself am tempted to trace the “Galbraith” thesis as far back as 1705, two generations before the appearance of Adam Smith’s The Wealth of Nations, to Mandeville’s “Fable of the Bees,” in which that satirist argued that jobs depended on the production of needless luxuries for the rich. The heretical Galbraith, like the heretical Keynes, ends by sliding back into seventeenth-century mercantilism.

It is interesting to notice one reason why he does so. Adam Smith considered it “too ridiculous to go about seriously to prove, that wealth does not consist in money . . . but in what money purchases.” Say and Mill pointed out that, when we remove “the monetary veil,” we find that we buy goods with other goods; each buys the production of others with his own. But Galbraith, whose disdain of the classical economists apparently caused him to skip the beginners course, never learned this elementary lesson. He treats “goods” and “income” as two entirely separate things. The “income” that men get from the production of “goods” he insists, is vital; but the “goods” themselves are excessive and unimportant.

What on earth is his concept of “income”? Is it paper dollars, which we could turn out on the printing press to any desired amount? Or is it not precisely the output of goods and services?

PLANNED IDLENESS

Galbraith praises unemployment compensation because “it provides income apart from production.” (My italics.) Hence his preposterous scheme to pay workers, as soon as unemployment gets beyond 4 million, seven-eighths as much for staying idle as for working at a job. How this enormous handout would be paid for, who would work under such conditions, how much goods would be produced for anybody to consume, and what the purchasing power would finally be of dollars handed out to promote nonproduction, seem to him problems hardly worth considering.

The old socialist contention was that the poor were getting poorer and that capitalism could not get optimum production, could not deliver the goods. Galbraith abandons this argument. He admits that production in the United States today far exceeds the most utopian dreams of the past. But instead of asking himself what has wrought this miracle—instead of examining the role of free markets and free enterprise, of competition for the consumer’s dollar, of incentives to production, of capital accumulation—takes it all for granted, as if it happened automatically, and would automatically continue, notwithstanding his own plans for drastic taxation, socialized spending, redistribution of income, and planned idleness.

Galbraith has overlooked one of the oldest discoveries of the conventional wisdom: That the workers of the world have enormously more to gain from continuous increase in per capita production than from any conceivable redistribution.