John Kenneth Galbraith: His Life, His Politics, His Economics

INTRODUCTION

On First Coming to Cambridge

THE SUMMER SUN had risen shortly after five that early September morning, and by seven the sky already promised both faint warmth and a fine New England day. Out in Cape Cod Bay, the S.S. Acadia, a coastal steamer of the old Merchant & Miners line, was cutting northward through calm waters on her regular two-day run from Baltimore to Boston. She was due to dock in less than three hours, and at the rail of her upper deck a lanky young passenger was peering carefully westward at the low Massachusetts coastline off her port side.

He’d been up since dawn, as the ship passed through the Cape Cod Canal; now he watched as the gray rocky shore slid by, its beaches backed with green pine and oak, the treeline broken here and there by occasional houses and compact little villages and towns. A crew member had paused momentarily to point out Plymouth, where the Pilgrims had landed three centuries earlier and he’d thanked the man politely, then continued to watch as fishing boats made their way out from small harbors in search of the day’s catch in the quiet bay. He noticed that a few other of the Acadia’s passengers were up now, too, strolling the decks, ready to start their own day.

Several of his fellow passengers, as they passed, took note of the young man, as they had casually ever since they sailed: at six feet eight inches, after all, he quickly and naturally stood out among them. At dinner the night before, he’d chatted pleasantly with his table companions and, in response to their questions, told something about himself.

He was an economist, they’d discovered, with a freshly minted Ph.D. from the University of California, awarded that June. Just twenty-five years old, he’d been in Washington for the summer, working for one of President Roosevelt’s new alphabet agencies, something called the Agricultural Adjustment Administration. His listeners, all East Coast city dwellers, weren’t quite sure what the year-old Triple A did exactly, but they understood that now, in 1934, with America mired deep in the Depression, the one out of three Americans who still farmed were in desperate need of help—and were a priority for the New Deal.

He’d worked, they’d learned, on the question of abandoned, tax-delinquent farmlands—a very large problem, he assured them, involving millions of acres across the country. At issue, he said—and here a couple of his Republican tablemates had winced—was the possibility of their takeover by the federal government. His companions seemed calmed and duly impressed, however, when the young man explained that he was now sailing to Boston to begin teaching at Harvard University. Harvard, they must have felt, would surely shield him from further exposure to the dangerous and radical currents then flowing in Washington.

Something about the young man would have struck them, though. He was very confident, clearly intelligent, and over the course of their leisurely evening meal, able to range across a wide variety of topics having to do with the country’s immense economic crisis. His tan summer suit, slicked-back chestnut hair, horn-rimmed glasses, and polished brown shoes all bespoke attentiveness to the academic style of the day. Handsomely attractive in a rugged way, with strongly drawn features, he projected great vitality and ambition, making him appear the sort of man Harvard valued. There was this troublesome issue of his working for Roosevelt, and his obvious admiration for the new President and his policies, but Harvard would no doubt smooth that out with time, settle him down, point him in the right direction.

As they finished their coffees and made their good nights, several at the table might even have guessed that this young fellow would be going places, someone who with good luck and time would leave a mark.

CELEBRITY, IN MODERN AMERICAN LIFE, is a transient, ephemeral thing, bestowed almost randomly nowadays by the media, especially the omnivorous cyclops lens of television. Sitcom stars, popular singers, athletes, accident victims, lottery winners, successful (or disgraced) politicians all race past us in an unending cavalcade, forgotten the next week or next year, displaced by whatever new face has been chosen to replace them.

True fame is something different. The ancient Greeks understood it to reflect character, and mere celebrity had nothing to do with it. To them, character was a tapestry woven of innate abilities and virtues, imprinted with the stamp of experience and with destiny. Unlike celebrity, it rightly marked only a few and endured much longer.

Today—seventy years after that voyage, and more than a half century since his writing first won him widespread acclaim—the Harvard professor John Kenneth Galbraith remains the world’s most famous living economist. The author of four dozen books and more than eleven hundred articles, recipient of nearly fifty honorary degrees, former president of the American Economic Association as well as a former ambassador and presidential adviser, he has continued writing, traveling, and lecturing into his nineties. And as his dinner-mates instinctively understood that night aboard the Acadia, he has in innumerable ways left his mark upon his times.

In the late summer of 1934, though, striding down the gangplank of the Acadia after she docked at Boston’s Commonwealth Pier, Ken Galbraith (as he has always preferred to be known) was just a young, unknown university instructor. To be sure, he was going to be teaching at America’s premier university, but he was one of several hundred young men like him, just then pouring into Cambridge as others like them had for years, young men full of promise but still untested for real achievement. Yet as we look back at the scene now, seven decades later, we can see that three defining influences on Galbraith’s later, mature character were already evident, influences that would mark his subsequent Harvard career, his relation to the larger world of economics, and his ultimate fame.

The first revealed itself in the way he got to Cambridge. Unlike most of the other faculty and students arriving to begin their fall classes, Galbraith’s choice of the Acadia set him apart. Choosing to come by ship wasn’t happenstance; the Baltimore & Ohio Raid Road’s overnight train from Washington would have been faster and cheaper, hence more efficient, a notion almost sacred to most economists then as now. But to this young economist, efficiency alone was already only one criterion among many worth considering, and he had wanted something distinctive to mark his first coming to Cambridge as memorable. Because he’d never seen the Atlantic Ocean, the choice of ship’s travel had thus been an easy one. The leisurely voyage, for which he paid $18 (berth and meals included), offered plenty of time for contemplation of expansive sea vistas and, not surprisingly, had filled his mind with a sense of life’s vast possibilities. Harvard itself, he realized even then, promised to be the start of a future rich with opportunity.¹

The choice of a sea voyage revealed a second important characteristic: it was the latest twist and turn in a career path that already showed signs of being distinctively circuitous and often challenging. He’d been born in 1908 into an Ontario farm family, and his early academic experience hardly seemed to prepare him for a Harvard faculty appointment. Unlike so many of the other young men around him, there had been no prep-school training, no trips to Europe for polish, no Ivy League education. Instead he’d grown up in tiny Iona Station, a farming hamlet just north of Lake Erie with only twenty-five or thirty inhabitants then, and been educated at Willey’s School, the local one-room schoolhouse, with a dozen or so other students, and then at the high school in nearby Dutton Township.² From Iona Station, he’d graduated to the singularly undistinguished Ontario Agricultural College, where he’d taken five years to earn a bachelor’s degree.

What’s more, although now he was about to join the economics department of America’s most distinguished university, at OAC he hadn’t even majored in economics, but in animal husbandry. Shorthorns and Herefords were what he’d studied, not cost curves or maximizing equations. Indeed, only after journeying nearly twenty-five hundred miles west to California had he been introduced to the issues and methods of modern professional economics. As he recalled years later, not until he went to graduate school at the University of California at Berkeley did he discover such prominent economic figures as Alfred Marshall or Thorstein Veblen, or learn much about Marx, apart from what one read in the papers.³

Galbraith’s arrival in Cambridge also revealed a third characteristic factor: Harvard’s distinguished faculty, its senior economists included, barely took notice of him that day, or in the weeks or months thereafter. Under the circumstances, this in itself was not unusual. Galbraith was only another new instructor appointed for a one-year term. Moreover, his specialty, agricultural economics, was hardly going to capture the attention of either the university’s urbane faculty or its well-groomed and privileged student body.

These three partly innate, partly imposed attributes—a cultivated and self-conscious singularity of thought and style, a certain circuitousness of career, and a marked distancing on the part of cautious or conservative colleagues—have helped to define much of what is distinctive in John Kenneth Galbraith’s life, and in his work in economics. By now, of course, the early promise of his character has been maturely realized, and few admirers or critics could argue that his life has been without influence or effect. By the time he retired in 1975 as Paul M. Warburg Professor of Economics at Harvard, he’d been elected president of the American Economic Association, and after, he was made president of the American Academy of Arts and Letters, a double honor no one else has shared and a measure of his intellectual range. He’d served as adviser to three American presidents, ambassador to India, an editor of Fortune, and, during World War II, tsar of consumer price controls. His writing on economics, not least the seven million copies of his books that have been published in nearly three dozen languages, had made him the most widely known American economist of the twentieth century. His distinctive voice and imagination added a lengthy list of memorable phrases to economic argument and the English language—the affluent society, the conventional wisdom, countervailing power, the technostructure, to name only a few.

Yet for all his successes, Ken Galbraith remains a disputed figure in American economics and public life. His unabashedly, eloquently liberal political views have in recent years (as in other times past) been out of step with dominant trends. His economics, deeply entwined with his politics, has brought discomfort, criticism, and even occasional scorn from a vocal coterie of colleagues, who sometimes label his notions as perhaps interesting but finally marginal contributions to what they think of as the mathematically sophisticated mainstream of contemporary economic thought. The MIT economist (and Nobel laureate) Paul Samuelson, for example, no doubt spoke for many lesser-known colleagues when he dryly described Galbraith as America’s foremost economist for non-economists.

But is this description of his work, and its contributions to how we think about economics and its relationship to politics and power, fair or, more important, accurate? To be sure, there is no Galbraithian school per se as, say, there have been Keynesian or Marshallian schools in modern economics. Yet Galbraith’s persistent critiques of the mainstream’s dominant assumptions and research methods have had much more effect than Samuelson’s slighting words might suggest.

Consider a survey of economists published in 1979 by the American Economic Review that measured consensus about key theoretical points within the profession. Among the thirty questions asked, only one mentioned a specific economist by name—the often-dissident Galbraith. The question concerned his famously corrosive assault on the corporate state, the centerpiece of perhaps his most controversial major work, The New Industrial State. Asked whether his critique accurately depicted the context and structure of the U.S. economy—even though it eschewed mathematical models and flew in the face of mainstream notions like market efficiency and hence the very foundations of economic orthodoxy itself—52 percent said they agreed with Galbraith.⁴ Hearing the news, Galbraith declared himself satisfied that 48 percent disagreed.⁵

BUT IN SEPTEMBER 1934, this young economist, fresh off the Acadia and staring up at Boston’s modest skyline, could hardly anticipate the career or achievements that lay ahead, or the complicated, sometimes contradictory, turns modern economics itself would take. For the moment, he could satisfy himself that he was now a member of America’s most highly regarded economics department, at the country’s most prestigious university, and leave the rest while he attended to the mundane matters of beginning a new life.

From Boston Harbor, Galbraith rode over to Cambridge by subway, crossing the Charles River in the early afternoon’s heat to Harvard Square. By arrangement, his luggage was meanwhile forwarded directly to the simple lodgings he had booked in the home of two elderly Yankee ladies named Bradford, a short walk from Harvard Yard.

Leaving the subway station, he gazed on the red-brick outer walls of Harvard Yard, the center of the university’s life and its home since 1636. Around him, traffic coursed noisily up and down Massachusetts Avenue, and pedestrians crowded the sidewalks. The Harvard students stood out: confident young men distinguished by the coats and ties that were then still customary undergraduate dress, who carried bags toward their lodgings or books freshly purchased from the Harvard Cooperative Society across the Square.

Later that day, after paying his first call on the economics department, Galbraith was shown to his own office—a large, gloomy room, he still glumly recalls, on the top floor of Widener Library, some distance from the main economics faculty. Here he would begin his Harvard career.

That evening, the young instructor, perhaps hoping to create a positive first impression, shared with his new landladies, the Misses Bradford, an account of his just-finished heady summer’s foray into the New Deal and the AAA. Whatever he intended, the tales of Rooseveltian activism apparently caused the two old Yankee Republicans to take umbrage, because the next morning they invited him to leave. At first taken aback, Galbraith soon found lodgings on Irving Terrace, nearby. His new landlady was an Irish woman of ferocious aspect who tolerated me for the academic year, he warmly remembers, and the Boston Irish have ever since been deep in my affection.⁶

But if his first few hours in Cambridge brought rather sudden change to the young Canadian’s new life, it was small compared to the momentous change then sweeping not just the department and university he was joining, but the economics profession as well, and, most important, the United States itself. As part of a textile workers strike stretching from Maine to Georgia, 20,000 militant workers in nearby Lowell, Lawrence, and New Bedford had clashed that same day with state police armed with truncheons, outside darkened mills protected by barbed wire and wooden barricades. In Maine, Rhode Island, and Connecticut, governors had called out the National Guard to deal with more than 150,000 strikers, and the Boston papers were reporting a looming insurrection in the South. Nearly a dozen strikers had been killed, riots had occurred in several cities, and the White House was being beseiged by calls to use troops to quell them.⁷

Franklin Roosevelt had been in office barely eighteen months, and for the new President this strike was only the latest, and by no means largest, crisis he’d faced. In March 1933, he had come down from his Albany governorship into the midst of the worst collapse American capitalism had yet—or has since—known. An estimated 13 million Americans, one quarter of the U.S. workforce, were out of work (though some put the real number closer to 20 million); national income had fallen by well over half in the previous four years, foreign trade by two thirds.⁸ During the same period, annual auto production had dropped from 2.7 million new cars to just 600,000, while agricultural prices had plummeted 40 percent, and the New York Stock Exchange, where the average share price had fallen from $90 to just $17, now bore, as one journalist caustically remarked, striking resemblance to Flanders Field.⁹

Roosevelt’s Republican predecessor, the ill-starred Herbert Hoover, had presided over this unprecedented collapse, and until too late he had failed to grasp the magnitude of the crisis. In June 1930, for example, to reassure a delegation of frightened business leaders who had come to the White House seeking federal action, he had blithely announced, Gentlemen, you have come sixty days too late. The depression is over.¹⁰ Speaking at the very moment when, as the economist Joseph Schumpeter later wrote, people felt the ground give way beneath their feet,¹¹ President Hoover’s flawed sense of timing was impeccable: it was, of course, just the beginning. (Hoover’s aides didn’t help his popularity with the electorate. After initially insisting there was no cause for worry and that stocks were cheap at current prices, his millionaire Secretary of the Treasury, Andrew Mellon, came around to believing there was only one solution to the crisis: Liquidate labor, liquidate stocks, he declared, liquidate the farmers, liquidate real estate.¹²) In reward, Hoover had been swept from office after one term in a landslide defeat without precedent in American history.

In his inaugural address, FDR clearly sought to reassure his frightened countrymen in the depths of their nightmare, especially when he promised that the only thing we have to fear is fear itself. But even Roosevelt was unprepared for the response his words evoked. During the next few days, more than half a million letters flooded the White House mailroom. The overwhelming majority declared their support for the new President, but among them were thousands that carried simpler and more direct messages: Mr. President, can you get me a job?; Mr. Roosevelt, please save my farm; Dear Mr. President, I can’t feed my family. Please help. After seven decades of mostly Republican political domination, with the once-booming economy lying shattered and in ruins, the country was ready not only for Democrats in the White House and Congress, but for dramatic change. But what exactly needed to be done? And what risks did such change entail?

Eleanor Roosevelt later recalled Inauguration Day as very, very solemn, and a little terrifying. It was terrifying most of all, she wrote in her diary that night, because when Franklin got to that part of his speech where he said it might become necessary for him to assume powers ordinarily granted to a President in war time, he received his biggest demonstration. Adolf Hitler had become the new Reich Chancellor a month earlier, and with Stalin and Mussolini in power, what could this possibly mean for the future of American democracy? One has a feeling of going it blindly, she wrote in anguish that night, because we’re in a tremendous stream, and none of us knows where were going to land.¹³

Mrs. Roosevelt wasn’t alone in her fears. Several years later, and still pledging them to secrecy, the President told some of his aides of his own feelings during his first moments in the Oval Office. The morning after the inaugural, one of them later recounted, Roosevelt said he awakened

with a pressing sense of work to be done, ate an early breakfast and had himself wheeled over to his new office. There, seated for the first time in the presidential chair, he found himself suddenly alone in the empty room. The desk was empty, the drawers were empty, the President could not even find pencil and pad to make a note. He looked for buzzers on the desk, but found no button to push, no way to signal the outside world. He sat for a moment, the great chamber echoing and silent, the center of action cut off from the nation at the moment of crisis. At last he bestirred himself and gave a mighty shout, which brought [his aides] Missy LeHand and Marvin McIntyre running from adjacent rooms.¹⁴

Fortunately for the rest of the country, only a trusted few would hear that story until after The Boss was dead. But realizing that the President himself felt adrift that first morning in office only underscores why his wife spoke of those early days as terrifying.

As Roosevelt began to face not just the burdens but the dangers of his office, throughout much of the country many of his own supporters and nominal allies were engaged in ferocious debates. What should the new administration do? What were its programs? What were its goals, its visions? And was Roosevelt in fact the man for the job?

The fashion of the liberal left in the election of 1932, it is now forgotten, was to dismiss Roosevelt and Hoover as equally hopeless, Galbraith still vividly recalls. People of perception supported [the Socialist Party candidate] Norman Thomas, and the intellectually uncompromising were for the Communists or else they disdained involvement. The country’s conservative and established citizens meanwhile predictably greeted such views with unalloyed alarm, and in some cases with the darkest fears, in their own minds quickly linking Roosevelt to his Socialist and Communist challengers.

To Galbraith, who closely followed these debates (even though, as a Canadian citizen, he was ineligible to vote), support for either the Socialists and Communists or their conservative opponents (not all of them Republicans) seemed unimaginable. As a youngster in Canada, I had a different instruction. There were two parties and you chose, or more likely were born to, one or the other. Every family was known for its party as it was known for its church.¹⁵

Birthright (or birth duty) for Galbraith was augmented by his own fathers active work as a Liberal Party figure of some note back in Ontario. From the age of nine or ten, Ken had regularly accompanied his father to local electoral events for tutelage in the arts of political persuasion. Years later he still loves to recall his father’s lesson about humor’s power by telling how Galbraith senior once mounted a manure pile at a farm rally to address the audience—and then proceeded to apologize for speaking from the Tory platform.¹⁶

Though FDR’s taking office was marked by an initial momentary uncertainty, the President moved swiftly to overcome this sense of dazed paralysis. Within days, his aides were furiously working to draft a series of extraordinarily bold acts and declarations designed, in the clichéd words of every can-do politician since, to get the country moving again. Vigor and swift action set the tone, even when the legislation and proclamations, on later, more sober reflection, left much for the measure.

Now enshrined in our history as the Hundred Days, those first few months of the Roosevelt administration have formed the benchmark for activist government ever since, whether liberal or conservative—a measure of presidents as keenly understood by Ronald Reagan as by John F. Kennedy or Lyndon Johnson. What Roosevelt himself recognized was that, more than a consistent program, the country hungered for consistent action, for a sense that something was being done in Washington to make things better, or at least not make them worse.

The historian Arthur Schlesinger, Jr., has captured the breathtaking output of America’s new leader:

In the three months after Roosevelt’s inauguration, Congress and the country were subjected to a presidential barrage of ideas and programs unlike anything known to American history … In this period Franklin Roosevelt sent fifteen messages to Congress, guided fifteen major laws to enactment, delivered ten speeches, held press conferences and cabinet meetings twice a week, conducted talks with foreign heads of state, sponsored an international conference, made all the major decisions in domestic and foreign policy, and never displayed fright or panic and rarely even bad temper. His mastery astonished many who thought that they had long since taken his measure. [White House aide] Norman Davis, encountering [his colleague] Raymond Fosdick outside the presidential office, expressed the incredulity of those who had worked with him during the Wilson administration: Ray, that fellow in there is not the fellow we used to know. There’s been a miracle here.¹⁷

Roosevelt’s activism inspired his admirers, and worried—in some cases terrified—his detractors. Republican congressmen and the Hearst newspapers, which had stridently supported his Republican opponent in 1932, began talking darkly of the President’s communistic policies; among the wealthy, he was famously reviled as a traitor to his class. In one telling sign of just how heated such conservative fears were, in March 1934 several newspapers (including The New York Times, on its front page) reported allegations that plans for an imminent coup were being secretly drawn up by some of the President’s own aides. Based on purported conversations with members of FDR’s Brains Trust, the papers claimed that Roosevelt himself was personally unaware of the plans and would be replaced by an unnamed American Stalin.¹⁸

Opposition to Roosevelt’s programs, and their thrust toward an activist government’s deep involvement in America’s capitalist economy in order to save it, wasn’t solely the province of the President’s radical left or conservative critics. Among America’s then-small fraternity of professional economists, the direction in which FDR seemed to be heading was a cause for alarm.

Debates over economics and public policy were hardly new to America, of course. In the late 1760s, hatred of Britain’s Stamp Act, for example, which had been intended to regulate America’s colonial trade in the mercantilist tradition, had fueled calls for the American Revolution. The early republic had found itself repeatedly embroiled in contentious struggles over issues such as government land policy, tariffs, monetary and banking questions, and of course most violently over free labor versus slavery. Even though the Civil War brutally settled the slavery issue, other questions endured as the Industrial Revolution took root, and were joined by new debates over unions, railroad and utility regulation, immigration, monopoly, stock market fraud, wages and working conditions, and the manifold problems of America’s burgeoning new cities.

But economics as an academically trained profession was something much newer. Harvard awarded the nation’s first Ph.D. in economics only in the late 1870s, and as late as 1900 there were no more than a hundred or so U.S.-trained Ph.D. economists in the country. On the eve of the Depression that number still probably exceeded no more than 2,000 to 2,500, in a population of 120 million.¹⁹ Guided by the model of the natural sciences that had emerged in the nineteenth century, the dominant group among these new scientific economists still struggled to present themselves as value-free, dispassionate, neutral analysts. In this, they were aided immeasurably by publication of Alfred Marshall’s Principles of Economics (1890), an eight-hundred-page work that set forth the field’s fundamental ideas and methods. As the foundation of what is called neoclassical economics, this book still broadly guides the profession today, and by the 1920s was the principal introduction to the field for students (Galbraith at Berkeley included).

To most of those who embraced Marshall’s views, the ideas embodied in the New Deal were anathema, because they represented an overt interference by government in the otherwise efficient workings of markets. To be sure, Marshall himself had recognized that markets might fluctuate and thereby produce, on occasion, troubling recession or inflation, but left alone they were self-correcting and would return to an equilibrium that fully and efficiently utilized capital, workers, and natural resources. To Marshall’s followers, this was the inviolate and core axiom of scientific economics itself.²⁰

But the reputation of these economists, with their calculus- and geometry-based mathematical proofs that markets know best, had suffered at the start of the Great Depression. Irving Fisher of Yale, perhaps the best-known of them, had, for example, after careful study, confidently assured investors that stock prices have reached what looks like a permanently high plateau. Unfortunately, he spoke just weeks before the Great Crash in October 1929. Yale’s finest was not alone in his error. Joseph Stagg Lawrence of Princeton, in a similarly mistimed statement that achieved minor notoriety, insisted that stocks are not at present over-valued, even though price/earnings ratios in some industries had by then soared above 50 (much as Internet stocks did in the 1990s), five times the market’s long-run average.

A month after the Great Crash, not to be outdone, Harvard economists ventured their own scientific appraisal of the situation through the Harvard Economic Society, one of America’s first ventures in academic forecasting for private clients. Although it had been mildly bearish in early 1929, the society now, with the wreckage of the New York exchanges in plain view, reassured its wealthy patrons that a severe depression like that of 1920–21 is outside the range of probability. We are not facing protracted liquidation. The society kept reiterating this view until it was itself liquidated not long thereafter.²¹

Their predictive errors notwithstanding, the election of Franklin Roosevelt in November 1932 brought new cause for alarm to many of these men. If Roosevelt carried through on the assumptions behind the torrent of legislation passed in the Hundred Days, there was more than a problem of prediction; it was a matter of fundamental policies that threatened the very theories on which Marshall’s economics had until then operated and, they feared, the free market structure of the American economy itself.

In late 1933, in a hastily published volume entitled The Economics of the Recovery Program, a group of Harvard economists struck hard at the President’s early New Deal policies. Because the book denounced the government’s various interventions in the markets virtually across the board and did so from an ostensibly scientific, not political, point of view (and because it came from Harvard, no less), it earned widespread attention from the press and for a time threatened to precipitate an authentic political crisis in Washington. The crisis eventually passed, but the book was a clear sign of the mood not just among professional economists but specifically at Harvard. It underscores even today the currents roiling the young profession, millions of people in the economy itself, and America’s dramatically shifting views about the proper interconnection between the private and public sectors in national life.

Through the accident of luck, timing, and circumstance, then, Galbraith began his work at what would turn out to be perhaps the twentieth century’s single most important juncture, not just for modern economics but for the American economy and government. As surely as the Great War had overturned vast swaths of Europe’s ancient monarchies and empires, here now America was about to overthrow many of the patterns and convictions that had governed it since the Revolution. And in this, the new profession of academic economics not only was going to lead the way, but would find itself transformed.

It has recently become common—indeed fashionable—to talk about the end of the New Deal legacy that was born in 1934. In this view, Franklin Roosevelt’s idea of activist government, and the kind of economic theory eventually (if somewhat inaccurately) labeled Keynesian—activist, interventionist, and liberally purposive—with which Galbraith is associated, has come to a close. Replacing it, we are told, is our new era; the Information Age has replaced the Industrial Age; computers, fiber optics, and biotechnology are the new iron and steel of American economic power; and with them is coming a new way not just of doing things, but of living itself. We’re told we’ll be set free to change our jobs (and careers) repeatedly, to manage our health care, investments, and retirement on our own, to compete globally, and thereby to win (if we compete successfully) an unprecedented new prosperity alongside our new freedom.

But how new is all this? And what can we learn from reexamining the origins of, and reasons for, that world we are now said to be leaving? Americans notoriously are given to constant reinvention of themselves, their assumptions, and their dreams. But that was true in 1934, too, when both leaders like Roosevelt and young men like Galbraith set out to reinvent the world they had inherited.

What issues were they facing? What divisions of belief, habit, prejudice—let alone class, religion, race, and background—explain how their generation arrived at their crossroads? In 1934, the United States was living through its worst economic crisis. The economic crises of the recent past—oil-price hikes, stagflation, the savings-and-loan debacle, Third World debt and Asian, Russian, or Mexican collapse, Social Security’s presumed perils, the country’s widening wealth and income gaps, to note but a few—all pale compared to the crisis of the 1930s.

The United States survived, and it did so in the context and as a result of the material and intellectual world that was being reborn and slowly rebuilt out of the disaster. For our own sake, then, we should consider what that generation did, where it came from, and how it created the world we were born into.

To be sure, market capitalism’s greatest political challenge is now gone, swept away with the rubble of the Berlin Wall. And so, too, new technologies abound that promise to reshape the way we live. On this we can agree. But those realities alone don’t have guaranteed outcomes. The revolutions in science and technology of the early twentieth century—the airplane, automobile, radio, motion picture, phonograph, the stunning advances in physics and chemistry and medicine—were as important as the Internet and the personal computer, cellular phones, satellites and optic fibers, and advances in genetics that we rush to celebrate today. Yet they did not guarantee unending peace and prosperity. Likewise, with the Middle East unstable, China and Russia immense question marks, and much of the Third World in worse economic straits than it was twenty-five years ago, who can say for certain what the new century holds for us?

What John Kenneth Galbraith’s life gives us is more than the chance to see the prodigious career of a single man. It is the opportunity to revisit not only his own views about how modern economies (and governments) should operate, but the larger world of transformed, and still transforming, economic theories of which they are a part and with which they sometimes clash, to gauge the economies they seek to guide, and thus to understand something larger about where we are all now going.

1

Growing Up in Special Places

IN THE FALL of 1934, a twenty-five-year-old Canadian economist freshly arrived at Harvard stood at a crossroads. How had he gotten there? What forces had propelled him, and what had brought his world to such a juncture? We need to turn back a quarter century to 1908, which for many today feels like a simpler time, to answer those questions.

On October 15 of that year, John Kenneth Galbraith was born into one of the world’s quieter and more remote corners, the hamlet of Iona Station, Ontario, Canada. He was delivered, at home, as most children were in those days, in the back upstairs bedroom of his family’s two-story, white clapboard farmhouse. Several days later, the local weekly, The Dutton Advance, duly noted the baby’s healthy arrival, the third child born to William Archibald Galbraith and his wife, Sarah Catherine Kendall Galbraith.

Archie and Kate, as his parents were known, owned not one but two modest farms totaling a comfortable 150 acres. Archie had inherited much of the original farm from his father in the mid-1890s, and then built a home on it for his new bride, adding a second nearby property shortly after. Painted white with green trim and wrapped by a wide veranda, the Galbraiths’ four-bedroom house stood along a two-lane gravel road, surrounded by oak, maple, apple, and pear trees; a large garden in back supplied much of the family’s produce, and several green frame outbuildings included a large barn and a garage for their Model T Ford.

Like neighboring farms along Hogg Street, as the road was known, the Galbraith property gave off an air of a modestly comfortable and secure prosperity. Although farm equipment and livestock shared the various structures scattered across the large yard, the neighborhood itself felt quietly genteel by rural standards. (According to local legend, boosters had added the second g to Hogg Street to betoken the gentility.¹)

It is easy now to imagine such a setting untouched by the momentous forces even then forging our modern world—and in many respects Iona Station was just that. Galbraith has recalled the quality with slightly mixed affection:

I remember it … as having a breathtaking loveliness … On a dozen winter mornings the snow was deep over the fields and fences and sat in great patches on the evergreens in the yard. The purity of color was matched by equal purity of line. Even the steep roofs of the houses disappeared under a white mantle, with somewhat of the architecture of an English thatch curving gently out from the eave … [and] a full moon turned everything into a shimmering fairyland. On such nights we went skating at Gow’s gravel pit and came home in subdued wonder at what we saw.

[T]here were other moments—one of them when the apple trees blossomed and the grass was rich and green against the newly seeded land … [T]he spring brought thick patches of violets and forget-me-nots and a little later of wild phlox … Every three or four years circumstances favored blackberries and one picked them for hours under a bright green and red canopy of sumac, encountering at intervals one’s neighbors similarly engaged.

Yet Galbraith is quick to poke holes in his own recollections, lest a modern urban reader view them solely as pastoral reverie:

Other children of which one read had streams to patrol and mountains to climb and some natural curiosities such as caves or springs. We had none of these. A spring was only a muddy hole where the cattle watered. One brook ran in a dull way from the end of a tile drain just beyond our farm to the lake five or six miles to the south. It had water in it for only a few weeks in the spring and after especially heavy rains … The only available hill could be climbed in a matter of four or five minutes.²

But however pastoral and remote, this rural countryside was far from untouched by the outside world. Iona Station is located about as far south as a Canadian town can be, set low in the province of Ontario just a few miles above Lake Erie’s northern shore. Cleveland lies only sixty miles south, across the lake; Detroit is a hundred miles west and Buffalo only a bit farther east. Regularly each morning, the big-city newspapers would arrive from Toronto, Ottawa, and Windsor, pitched along with the mailbag onto the local station platform from a passing express train.

Each evening, the local farmers would pause after dinner and final chores to read from those papers, typically from the Toronto Globe, known locally as the Bible for its stalwart Liberal Party support and progressive views, and the faith these Scots-Canadians placed in it.³ Some read by kerosene light, others (including the Galbraiths) by their recently installed electric lamps. Most checked the grain and livestock prices in Chicago or Toronto first, then the car-loadings of wheat in Minneapolis or Winnipeg or the tons of flour processed by mills in nearby Buffalo. After that, some readers—though not all—turned back to the front pages, to learn about broader matters, including affairs in Ottawa and Washington and the events and larger forces that shaped them.

The world those papers described in 1908 often appeared to their readers as convulsive as it would seem in 1934. It was one of those historical moments when on a dozen fronts simultaneously, an entire age seemed to be giving way to the next. That year in Detroit, the first Model T went on sale, and the first oil well was drilled in the Middle East. The Grand Canyon became a national park, and the FBI was formed; both J. C. Penney and the first exhibit of Cubist paintings opened to the public. Mother’s Day was inaugurated and the first international meeting of psychiatrists convened; the Geiger counter was invented, and the Austro-Hungarian Empire annexed Bosnia and Herzegovina. The Geiger counter’s significance wasn’t fully understood until 1945, but the effects of Vienna’s actions came quickly.

By 1914, the bloodiest and most extensive war the world had ever seen would unfold from an assassin’s bullet in the Balkans. Within a decade, the United States would start to displace Britain as the world’s dominant political and financial power. In both Europe and Asia, empires that had survived centuries of turmoil came crashing down, and the specter of Marxist revolution triumphed in Russia after a long struggle over the rights and powers of industrial workers.

Since prehistoric times agriculture had employed most men and women, but it was now in a downward employment spiral on both sides of the Atlantic, as farmers everywhere well knew. In 1908, farming and farm-related work still occupied a majority of Canadians and Americans, but just barely. (By 1911, Canada’s rural population outnumbered city dwellers by about 1 million out of a 7 million total, though in Ontario, a slight majority was by then urban.⁴) The direction of change toward cities, factories, shops, and services was irreversible.

Technology’s vast modern sweep—electricity, the automobile, the telephone, the airplane, even common household appliances now taken for granted—was the source of endless wonder, discussion, and excitement. Since the mid-nineteenth century, the custom of organizing world’s fairs had become popular in Europe, and it transferred easily to North America, especially after the success of the Philadelphia Centennial Exposition, in 1876. These celebrations of technology’s wonders, with their glass palaces and iron towers, immense networks of electrical lighting, mechanical amusements, and the latest machinery, transfixed those who came to see them, or who heard of them from neighbors or relatives lucky enough to attend, as was the case in Iona Station. In the public imagination, these great pageants captured the benign promise that science and technology held out for humankind.

Politically and economically, the world of 1908 was also in change, and here the change felt less benign, for industrialism’s advances had created new poverty and suffering. South of Iona Station, in the United States, politics by 1908 was in the midst of the Progressive Era, when an alarmed middle class sought to stem the sufferings the new capitalist order imposed on its workers, and simultaneously to secure a new, scientific kind of state and social order that placed public rationality, nonviolent but far-reaching reform, and extensive new democratic structures at the heart of public life. Theodore Roosevelt, the Rough Rider whose sharp attacks on malefactors of great wealth and trust-busting assaults on corporate power made him a new kind of Republican, was President. Muckraking journalists like Ida Tarbell, Lincoln Steffens, and Ray Stannard Baker were at the apogee of their influence, detailing how the power of Rockefeller, Morgan, Carnegie, and other titans threatened America’s ideals of freedom and equality of opportunity. Unions, suffragettes, prohibitionists, a dozen strains of socialists and radical social reformers, all preached redemption through even further-reaching changes.⁵

Canada was scarcely immune to the same forces and debates—indeed, the country’s official centenary history refers to the period as the time of Canada’s Great Transformation.⁶ During the tenure of Sir Wilfrid Laurier and his Liberal Party, between his first election in 1896 and his narrow defeat fifteen years later, Canada’s small population grew by nearly 50 percent, heavily augmented by immigrant growth, much of it from non-English-speaking countries. Industrialization redefined the balance between the city and countryside and, because many new factories were U.S.-owned, between Canada and its powerful southern neighbor. The western provinces acquired new power vis-à-vis Ontario and Quebec. New sources of mineral wealth and energy were opened in the north, and wheat became Canada’s signature export.

As in the United States, much of this dramatic change was welcomed and embraced. As one history puts it,

For the majority, optimism was the ruling passion, even after signs of collapse had begun to appear in the Edwardian world. Material expansion became, for most, the measure of national and moral progress. The potential for Canada seemed unlimited. The vast, empty spaces of the land would welcome millions of settlers that would challenge the United States and surpass Great Britain. That population would exploit the untold resources of the country, providing a standard of living envied by the rest of the world. The twentieth century would belong to Canada.⁷

But the optimism was shadowed with doubts, resistance, and conflict. Canada’s cities, like those in the United States, were all too typically, as one historian described them, a place of violent contrasts, a home for the very rich and the very poor, for the rural immigrant from a neighbouring county or a far distant land, and the native urbanite, for respectable church-goers and for prostitutes, a place of conspicuous consumption and forced destitution.⁸ One government study of Toronto’s housing conditions, published shortly before Galbraith’s birth, found, for example, that there is scarcely a vacant house fit to live in that is not inhabited, and in many cases by numerous families; in fact … respectable people have had to live in stables, tents, old cars, sheds (others in damp cellars), where we would not place a valued animal, let alone a human being.⁹ And on Canada’s farms, conditions were often equally harsh, since farmers faced falling prices for farm goods as acreage and productivity grew, rising prices for manufactured and consumer goods, high freight rates, processor monopolies, protective tariffs, and rural depopulation. They were becoming restive and, frequently, radical.*

During Laurier’s administration, the restiveness of Canada’s farmers spurred new forms of rural organization. More important politically, often radical new farmers’ unions also appeared, especially in the west, where wheat harvests multiplied a stunning tenfold in the Laurier years. These new unions, redolent with the same Populist sympathies that had sparked William Jennings Bryan’s 1896 campaign in the United States, swiftly displaced their politically quieter predecessors, like the Grange.

In Ontario, this new impulse for agrarian organizing led to formation of the United Farmers of Ontario a year before Galbraith’s birth.¹⁰ Mostly contained in their agitation during the Laurier years by the shrewd prime minister’s delicately balanced policies, by 1921 the UFO, with Galbraith’s father Archie active in it, would not just overthrow the provincial government but permanently reshape the nation’s traditional two-party system. In a stunning political stroke, which in many ways succeeded where Bryan’s 1896 Populist campaign in the United States had failed, it ushered in a new era in Canadian politics.

But in 1908, although farmers across Canada were restive, in Elgin County, Ontario, support still inclined strongly and steadily, as it had for many years, to Laurier and the Liberals. This was not because places like Iona Station escaped the economic pressures bearing down on all farmers then, but because local farmers had several particular advantages. First, they practiced a mixed agriculture of crops and livestock, never depending solely on a single crop such as wheat for their incomes, as did so many in western Canada. Second, time and again, they proved themselves adept at shifting the mix when market conditions changed. Third, they had the railroad.

Besides being blessed with a temperate climate (the weather’s extremes moderated by nearby Lake Erie), Iona Station was bisected by the major rail line connecting Buffalo to Detroit. Indeed, Iona Station owed its existence to the line and the entrepreneurs who’d built it in the 1870s. Originally intended to transport settlers and goods west to Michigan farmlands, within a few years it was bringing their products (and eventually, the industrial outpourings of Detroit and other Michigan cities) to eastern markets.¹¹ When the railmen encountered important farm roads crossing their right-of-way, they would build a small terminal of sorts to service the surrounding economy; hence Iona Station, the name chosen in recognition of the local Scottish majority who had long ago named the adjoining hamlet Iona.

The rail line—originally owned by the Canadian Southern, in Galbraith’s youth by the Michigan Central, and later the New York Central—had two important effects locally: it guaranteed that city goods, as well as city newspapers carrying the latest ideas and fashions, flowed easily into towns like Iona Station and the surrounding Dunwich Township;* more directly important to economic security, the higher wages paid by big-city assembly plants, steel works, and construction projects became powerful magnets that drew local farm youth to the cities. (It also meant for local people there that the distinction imposed by Canadian or U.S. citizenship exercised only a modest, sometimes irrelevant pull. Movement back and forth across the Detroit River was commonplace, Galbraith has said, and based on the secure knowledge that no immigration or customs official could tell a Canadian from an American by inspection alone.†)

Yet while the Michigan Central linked the land of Galbraith’s youth to larger urban worlds and allowed for easy passage of people and goods between them, Iona Station itself remained deeply rural. Throughout Elgin County and much of the surrounding peninsula, farmers were the dominant caste, and among them the Scots (or Scotch, as Galbraith calls them, respecting local custom) predominated. Surrounded by the McKillops, McPhails, Camerons, McFarlands, McKellers, Grahams, as well as the extensive Galbraith clan, the boy grew up with a steadfast sense of belonging to a people and a place with a history.

The Galbraiths’ own family history in southern Ontario dates back to the early nineteenth century and perhaps the late eighteenth—family records aren’t clear. Galbraith has written that his first Canadian ancestor was born in the 1770s in western Scotland, but never mentions when he reached Canada. Other family members date that arrival around 1820.¹² Back in Britain, the lines are clearer. The Galbraith clan traces its ancestry deep into Scottish history—Galbraith is an adaptation of the Celtic Gael Breaton, or strange Briton, suggesting an earlier, forgotten migration from the south. The clan’s chiefs dominated much of the territory to the south and west of Loch Lomond, and the earliest land records, for a Gellespick Galbrait (the h was added sometime later), appear in about A.D. 1210.

During the fifteenth century, the powerful MacDonald clan came to dominate the Galbraiths and several other clans in western Scotland, and the Galbraiths took to wearing the MacDonald tartan. Along with the MacDonalds, many of them apparently soon also took up the profitable occupation of piracy against English trading vessels that plied the area’s coastal waters. This practice ended only when Queen Elizabeth’s army succeeded in routing the MacDonalds and their allies in 1592, as part of her bloody subjugation of Scotland, a process that included the famous execution of her rival, Mary, and that put an end to Scottish claims to independence. Following their defeat by Elizabeth’s troops (and subsequent English occupation of their lands), parts of the Galbraith clan migrated to the north of Ireland, while others settled farther south in Scotland, in Argyllshire. It is from this Argyllshire branch of the clan that Ken Galbraith descends.

In the mid-eighteenth century a second wave of Galbraith (and Scottish) migration occurred, following parliamentary acts in 1744 and 1746. The ruthlessly enforced acts, meant to suppress a still-resistant Scottish nationalism, prohibited the wearing of clan tartans or the taking of clan oaths. While succeeding in their immediate goal, the laws set off a massive exodus from Scotland to overseas British colonies. Hundreds of thousands of Scots left their homeland, by one estimate 120,000 alone in the seven years prior to the American Revolution.¹³ Resentful of aristocracy and wealthy landlords, the Scottish emigrants to North America pioneered independent communities in a broad swath across northern New England, western New York, and greater Quebec, an area that then encompassed most of present-day Ontario, including Iona Station. With them came an abiding sense of Scottish identity, history, and dissent from reigning authority. (As late as World War I, Galbraith’s father, manifesting the region’s feelings toward the British Crown, volunteered to head the local draft board, and then promptly exempted all who saw no reason for serving in England’s bloody slaughter.¹⁴)

A third wave of Scottish emigration ensued at the end of the eighteenth century, fed by a complex wellspring of motives. One source was excitement throughout Europe inspired first by the American, then the French revolutions. When Tom Paine’s The Rights of Man was published in 1791, his insurrectionary defense of the French Revolution sold more than 50,000 copies in England and Scotland in the first few weeks. Given that most adults were barely literate at the time, the number was extraordinary. Over the decade, Paine’s work is said to have sold an even more unheard-of total of more than 1.5 million copies. Nowhere was the pamphlet’s impact more prominent than in Scotland. Early on, one Edinburgh bookseller reported selling 750 copies in a single week. Deeply alarming to the Crown in London, these sales levels earned Paine new celebrity in the form of a royal proclamation that denounced his divers wicked and seditious writings and brought booksellers themselves a series of arrests and celebrated state trials.¹⁵

The popular hunger for greater political liberty and independence, born of England’s repression and felt most bitterly and strongly in Scotland and Ireland, was fed by the punishing economic realities of life during Britain’s early Industrial Revolution. It was the time of the Enclosures, when wealthy landowners fenced off their tenants’ traditional farmlands and common grazing lands and turned them into private pasturage for sheep. For these big landowners, supplying wool for the immense new mechanized textile industry was vastly more profitable than their rents from traditional farming. But for the nation’s small-holders and tenant farmers, the resulting evictions were often an unmitigated disaster. Millions of families throughout Great Britain were peremptorily, often brutally, forced from their lands. In Scotland, the evictions fueled further mass exodus to the cities and colonies, and left a deep, festering scar on the land and its people.

For decades thereafter, Britain’s industrialization brought no relief to the remaining rural inhabitants in Scotland. As late as the 1850s, for example, a Galbraith cousin whose family had doggedly stayed in the Highlands awkwardly and painfully wrote to his uncle (Ken’s grandfather) in Ontario about the bitter conditions during this time when Britain was at the height of Victorian power and self-confidence:

Dear Uncle you wish us to go to that country [Canada], that we would be better off than here. Undoubtly that is true, if I had the means of going there. But my brother and me has nothing but our daily work and very poorly paid for the same, hardly what will support the body, when a man works all day for 1/shilling and 2 pence, and of that small sum keep himself and family. I leave yourself to judge how that man can be but poor …

If you wish us to go, which we fain wish ourselves, if you would assist us in immigrating there, I am of the opinion that we would be able to pay you back but to ask us to go there without support is quite impossible. It would be enough for any of us to pay our passage to Glasgow. Time is very hard in this part of the world and poor wadges [wages] and since the potatoes is entirely gone in this place, there is nothing to be got without the money and the money you cannot get … every day it is getting worse and I am much afraid it is not at its height yet.¹⁶

The letter closes somberly, I remain, Dear Uncle, yours truly, Nephew till Death, John Galbraith—and a poignant postscript adds: I forgot to let you know about my Brother Neill. We do not no [know] whether he is leaving [living] or not. We did not hear of him the last two years. We do not know what ship he is with or what has come over him.

By contrast, for those Galbraiths who had chosen emigration to Canada, the family records show that life by then seemed constantly to improve. Galbraith’s Canadian ancestors descend directly from an earlier Archibald Galbraith and his wife, Mary Campbell Galbraith (both born in Argyllshire, he in 1771, she eight years later). This first Archie Galbraith and his wife appear to have arrived as homesteaders in Canada in 1819 (possibly 1818) aboard a small passenger ship laden with several dozen like-minded Scottish families.¹⁷ With them, the couple brought four of their six children (the other two had died in Scotland as infants).

Like most of those aboard the ship, the Galbraiths had been persuaded by land agents in Scotland to begin their new lives on what was called the Talbot Settlement, an immense, supposedly fertile tract of southern Ontario purchased in 1803 by Colonel Thomas Talbot, a minor figure of the English-installed Anglo-Irish nobility Already approaching middle age, Archie and Mary had not made the decision lightly, but they had seen no future in Argyllshire.¹⁸

The passengers quickly discovered on their arrival at tiny Port Talbot on Lake Erie’s north shore that the Talbot Tract, far from being the prime farmland the colonel’s agents had described, was heavily wooded, with soil of uneven quality, loamy in some parts, sandy in others, and sparsely populated. Like their fellow settlers, the Galbraiths consequently would spend years working the land into first-rate condition. The fifty-acre plot they chose (not far from where Ken Galbraith was later born), and the work they put into it proved beneficent in one respect, though: having arrived when he was nearly fifty, Archie lived to be 103, his wife Mary, to 79.

Longevity, however, was not passed on to their children, including the youngest, John, who was a teenager when he arrived at the Talbot Settlement. Like his older brother, the sturdy young man took up farming on his own, near his parents’ homestead. Once his land was cleared, he soon married, and with his wife, Christina McCallum Galbraith, John had eight children, the second of whom they also named John. The family prospered as both parents and children (how many survived infancy isn’t clear) toiled steadily to improve their land. Then, without warning, John the father died in 1849 after a fall from a tree, when his son was just fourteen.

The family, now headed by his widow, kept working, aided by sympathetic neighbors when time allowed. But as the children grew, like their father before them, they struck out on their own. Young John cleared his own farm nearby when he was in his early twenties, on land then formally incorporated as Dunwich Township, Elgin County, Ontario. Even so, for several years, he returned as often as possible to work his mother’s farm, as she struggled to raise the remaining children. Then, having established himself, he married a neighbor’s daughter, Sarah Black. John and Sarah had four sons, two of whom survived infancy: the elder, born in 1865, whom they named John like his father and grandfather before him, and William Archibald, born three years later.

John and Sarah proved to be not only successful farmers but, like their forebears, well liked and respected in the surrounding Scottish community. By the 1870s, in a sign of this respect and popularity, John was chosen the reeve, or mayor, of Dunwich Township, a special honor considering he was then only in his late thirties. A photograph of the Elgin County Council from the time shows a very tall, handsome man, in tweed suit and vest, with bow tie, leather boots, a full beard, and neatly parted hair—sandy-red, according to family letters—solemnly posed and staring firmly back at the camera with his elected peers. (Height even then ran prominently in the Galbraith line.)

But sorrow haunted the family, as it did so many in the nineteenth century, when life was hard and medical care so primitive. And death came unexpectedly as it had with his father: just forty-seven, his wife, Sarah,