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Economist Urged Using Wealth for Social Needs

April 30, 2006|Barry Stavro | Times Staff Writer

John Kenneth Galbraith, a longtime professor of economics whose bestselling books challenged the idea that a surging economy was a measure of social excellence and instead urged government to divert more of the nation's wealth to social needs, died Saturday. He was 97.

Galbraith died of natural causes at Mount Auburn Hospital in Cambridge, Mass., according to his son Alan.

Galbraith's fame was cemented with the 1958 publication of "The Affluent Society," a title that soon became a watchword, and "The New Industrial State," a follow-up work published in 1967. When his books were published, America was without peer as an economic power, and Galbraith, an esteemed Harvard University professor, argued that the free-market economy was a myth and that the 1,000 largest American corporations dominated both the nation's economy and its social life.

Giant corporations essentially operated free of competition, he said, often turning out frivolous goods for an increasingly consumer-minded society, while the capitalistic economy ignored more pressing social needs. "Americans still have an extraordinary capacity to ignore poverty," Galbraith told an interviewer in 1983. "I am struck by our superb capacity to manufacture consumer gadgetry, including electronic games, versus our capacity to produce schools."

He pleaded for a change in public values in favor of supporting everything from the arts to better housing for the poor, and he favored intervention by the federal government to rein in corporate power. He believed that more tax money should be used to address social needs, such as improving education and protecting the environment.

"The Affluent Society" was translated into a dozen languages and sold more than 1 million copies. It also helped influence a surge of federal spending on social programs in the 1960s, in what came to be known as the Great Society during Lyndon B. Johnson's administration. Forbes magazine, no fan of Galbraith's liberal ways, called him "overbearing, witty, acid-penned" but conceded that he was "America's favorite economist."

Galbraith was a man of varied talents. He also worked as a journalist and held various jobs in four Democratic presidential administrations, including deputy administrator of the Office of Price Administration for President Roosevelt during World War II and ambassador to India under President Kennedy.

Galbraith wrote more than 30 books, including fiction and a volume on his Scottish family history, but his celebrity was earned from his works in politics and economics. His books, which include "Ambassador's Journal" and "The Great Crash, 1929," were marked by a caustic wit and elegant prose that turned arcane economic theories into readily understood ideas.

Galbraith was a Keynesian, inspired by British economist John Maynard Keynes, whose theories gained wide currency during the Great Depression. Keynes argued that governments could smooth out the boom and bust cycles of capitalistic economies by spending more to prime the economy and create jobs during bad times and raising taxes in boom times to build budget surpluses and check inflation.

Keynesian theory lost its gloss after the 1970s, when oil prices jumped and inflation jumped too, despite frantic governmental efforts to keep it under control. Toward the end of his life, some of Galbraith's theories were discredited by the marketplace, notably his idea that major corporations basically need not worry about competition and that small businesses and entrepreneurs were imperiled by the long shadows of giant corporations.

By 2002, Japanese car companies controlled 28% of the American passenger vehicle market, at the expense of General Motors, Ford and Chrysler, and the economic recovery of the 1980s and '90s was credited in large part to the steady growth of small companies.

Microsoft Corp., for instance, was founded as a tiny enterprise in 1975 by Bill Gates and Paul Allen. And their business grew from a mere supplier for mighty IBM to the most valuable company on the planet as Microsoft's computer software became more lucrative than the computer boxes that contained it.

Not surprisingly, Galbraith attracted many critics.

Columnist Donald Lambro wrote in The Times in 1987: "Perhaps no single set of predictions and observations in modern economics has been so misguidedly wrong as the ones Galbraith set forth in a body of work noted for its myopia over corporate bigness."

Galbraith retired from Harvard in 1975 but was still widely sought out despite his theories having fallen somewhat from favor. Economist Adam Smith wrote, "Mr. Galbraith may sometimes be hard to take, but he is still worth taking."

The economist was born on a modest cattle farm in Ontario, Canada, in 1908. His father was a teacher and county official, and Galbraith grew up with a keen interest in agriculture.

He earned a doctorate in agricultural economics from UC Berkeley in 1934 and became a naturalized U.S. citizen in 1937.

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