GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
John Kenneth Galbraith
Canada 1908–2006
Over the course of the twentieth century, the center of gravity in economic thought gradually shifted from Europe to the United States. One of the best-known American economists is undoubtedly John Kenneth Galbraith, who was born in Canada in 1908. Galbraith was not what one would call a typical economist. Over the course of his long life, he did not concern himself exclusively with economics: he wrote extensively on non-economic topics and played a role of some significance in American politics.
His academic life took place almost entirely at Harvard University from the mid-1920s onward. But in between, he was politically active, always on behalf of the Democratic Party. He served as an advisor to President Kennedy and took part in the election campaigns of left-leaning Democrats such as McCarthy and McGovern. He also served as U.S. ambassador to India, wrote several novels, an autobiography, and even a book on stamp collecting. No one could accuse Galbraith of having led an idle life.
Not only was his life as an economist markedly different from that of his peers, his theories also set him apart from the mainstream of economic thought. Galbraith was never a mainstream economist. He stood in the tradition of American institutionalism, whose founding figure was Thorstein Veblen (1857–1929), the son of Norwegian immigrants. Veblen positioned himself in opposition to the dominant neoclassical economics, which he felt was far too abstract and lacked any sense of historical awareness. People are not merely rational decision-makers aiming to maximize utility or profit, but flesh-and-blood beings shaped to a great extent by the historical context in which they live. Hence Veblen’s emphasis on institutions — that is, the social structures and arrangements, the whole complex of customs and conventions within which the economic process unfolds.
One of the impulses behind the rise of institutionalism was the emergence of cartels at the end of the nineteenth century. Veblen describes the colluding entrepreneurs as a band of robber barons, never missing a chance to hoodwink each other and the consumer. Galbraith was strongly influenced by this perspective. In The New Industrial State (1967), he shows that the actual workings of the American economy bear little resemblance to the elegant world of perfect competition served up in the textbooks. He introduces the concept of the “technostructure” to give shape to his ideas. The idea behind this concept is that the classical entrepreneur — who produces for an uncertain market and constantly takes on risk — is increasingly disappearing from view. He is being replaced by the professional manager, who “plays it safe” and engages in long-term planning.
The development of new products has become so costly that the entire process of production and sales must be planned well in advance. Demand for the product is likewise steered as much as possible through advertising campaigns. Planning is thus increasingly taking the place of competition. To gain even more control over demand, the technostructure urges the government to stabilize it through weapons procurement and space programs.
In general, power is a recurring theme in Galbraith’s work — the power of a few large, oligopolistic firms over the economy. Galbraith recognized that these large corporations made a significant contribution to economic growth and believed that they should not be viewed so much as enemies, but rather that their power ought to be curtailed. This gave rise to his concept of countervailing power: the idea that trade unions, consumer organizations, and government price controls were needed to limit the power of the large oligopolists.
An earlier theme, addressed by Galbraith particularly in The Affluent Society (1958), is the structural imbalance between the public and private sectors. In 1950s America, he observed great wealth — but wealth that was distributed in the wrong way. In the private sector, for example, there was plenty of money to buy the most luxurious cars — but the public sector lacked the funds to provide adequate and well-maintained roads and parking facilities. There was, in other words, public poverty in a world of private affluence — a theme that, since Galbraith first pointed it out, has never disappeared from political debate.
You won’t easily come across the ideas of Galbraith — who died in 2006 — in a standard economics textbook. They lie too far outside the mainstream of economic thought. Another problem with the institutionalists is that they never developed a coherent system. Their intellectual world consists of a number of individually interesting ideas, but these remain quite disconnected.