Word: galbraithe
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...economic theory, when unemployment is high and factories are running at less than full tilt, prices are not supposed to shoot upward. Increasingly, however, they have-as indeed they are doing now. That anomaly poses a formidable challenge to economists, and it is the paradox to which John Kenneth Galbraith addresses himself in his latest book: Money: Whence It Came, Where It Went (Houghton Mifflin, $10). His conclusion: "Corporate and union power" is the heavy; it "can defeat efforts to combine high employment with stable prices" regardless of the state of business, and can be curbed only by wage-price...
That is a theme Galbraith has argued many times before. Nonetheless, any new book by the retired Harvard professor and onetime (1961-63) Ambassador to India is an event-even if he is a compulsive overstater of his positions. Connoisseurs of civilized wit and stylish prose will be particularly pleased with this work. In recent books-notably Economics and the Public Purpose, published in 1973, which argued for a "new socialism"-Galbraith has seemed tediously preachy. In Money he has recovered the gently acerbic touch that he displayed as a reformist capitalist, and that made popular such books...
Fool's Choice. Galbraith sugarcoats his familiar plea for controls with an engaging and eminently readable economic history that speeds through no fewer than 27 centuries in 300 pages. From 700 B.C. to A.D. 1975, says Galbraith, national leaders have wrestled ineptly with the problems of economic management-in recent years by trying to make "a fool's choice" between inflation and high employment. No such choice is necessary, says Galbraith, with an obvious eye on the 1976 U.S. elections: Government could stimulate the economy as much as might be necessary, without causing inflation, if only the public...
Alternative remedies to the problem of inflation in an underemployed economy are brushed aside with a few strokes of the pen. Keynesian faith in fiscal (tax-and-spending) policy to end recessions and damp down inflations is questioned in a chapter titled "The New Economics at High Noon." Galbraith argues that the reluctance of governments to raise taxes or cut spending during booms proves "the fatal inelasticity of the Keynesian system." Monetary policy is dismissed as "a perverse and unpredictable lever" and Economist Milton Friedman's carefully documented thesis that rapid expansion of a nation's money supply...
...this overall analysis is clearly hyperbolic. Corporate power is checked by what Galbraith himself in 1952 described as the "countervailing power" of unions, Government and rival big corporations. It is also checked by the trustbusters and, more important, the customers. Even in industries dominated by a few big companies (autos, oil, steel, computers, etc.), those firms compete fiercely for market shares. Advertising has failed to sell products as varied as the Edsel and maxiskirts. Strong consumer resistance can occasionally force price reductions, as the recent auto rebates proved anew. "When even the auto companies are cutting prices," cracks Okun, "then...