Susan Strange

He Has No Solution

The World Economy Since the Wars: A Personal View

By

Sinclair-Stevenson 320pp £17.99 order from our bookshop

It’s easy to read – just twenty-five bite-sized chapters painlessly combining autobiography and potted economic history from the First World War to the present. At points when I began to yawn and wonder when he was going to tell me something I didn’t know, he came up with a juicy tale of financial swindling or a vivid sketch of social history – President Hoover, for example, in the election campaign of 1932 haranguing a crowd of jobless hoboes camping out in makeshift huts in an Oakland freightyard about the virtues of private enterprise. Galbraith also introduces the sixth-former to economic theory, interspersing the narrative with brief explanations of the ideas of Keynes – his hero – Schumpeter, Hayek, Marx and the development theorists, all properly set in their political context.

If it’s easy to read, it was also easy to write, judiciously drawing as it does on material and ideas already developed in Countervailing Power, The Great Crash, Money, Whence it Came, the books written from his experience as US ambassador to India and all the rest. The subtitle could have been ‘Thirty-for-the-price-of-one’, although clearly some of the useful statistical stuff was newly contributed by Galbraith Jr from the University of Texas. But easy writing is rare among economists. It was no surprise to learn that Galbraith learnt how from Henry Luce, just as Paul Kennedy cut his literary teeth writing reviews for The Economist. (His tip to fellow academics: choose a subject that is sexy and popular – and take care to find a good title.)

That, of course, is one reason why ‘real’ economists – as they think of themselves – are so snooty about Galbraith. They can’t write for toffee, and they’re jealous of a man whose sales must have made him wealthy. They’re also jealous of his political clout in Washington, his concern with policies and outcomes. That’s why they dismiss his professional origins in agricultural economics, as if he still had pigshit on his boots. In fact, of course, this feet-on-the-ground quality is just what readers can relate to. All his clear and trenchant criticisms of the foolish premises of neoclassical economics ring bells with them when he tells stories of the follies of financial speculation from the 1700s to the crash of ’29 and the junk-bond mania of the 1980s.

If there are touches here and there of vanity – me-and-my-old-Harvard-student-Jack-Kennedy stuff – that is easily forgiven. Some partiality, too, for McGovern and Stevenson, but not Hubert Humphrey. But what is important is that the old man has kept his mental vigour and his warm compassion for the underdogs – farmers, soldiers, immigrants and the unemployed. As a true political economist, he always asks the right questions: who pays? Who runs the risks, to life and to wealth? Who cares?

It’s the end that’s disappointing; too glib, too stuck in the mind-set of the Sixties. What he concludes is that the future will depend on the outcome of two great dialectics of our times. One is the tug of war between the transnational and the national, between the broad thrust towards closer economic and political union – and not only in Europe – and the cumulating demands upon and attachment to the individual state.

The other dialectic is the clash between the interests of the comfortable, educated and affluent – see his previous book, The Culture of Contentment (1992) – and the unskilled, marginalised and voiceless millions who can’t or don’t vote because they know only too well where power lies. So what is to be done? we wonder. What is lacking is any recognition that the old heroes’ theories won’t work any more. International finance and accelerating technology have between them made obsolete the old Keynes-plus-Beveridge remedies for the defects of capitalism. Big business is reluctant to pay for social welfare, save within the firm, and governments’ revenues will no longer cover escalating costs. And now that national economies leak like colanders, national pump priming and demand management no longer work against hard times – as France discovered all of ten years ago. National politics stop us going forward to collective action; global economics make it impossible to go back. Galbraith does not know what is to be done. But neither do we.

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