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�C RITIHCIASLT O�
Economics as now taught and read and as it
serves to guide both public policy and pri
vate decision is very much the product of
the past. It cannot be understood apart from
its history. And that history cannot be
understood apart from the circumstances
that shaped the economic beliefs of the
time, including the powerful influences
that bent those beliefs to what best served
the financial advantage of those who
espoused them.
Such is the essence of this important,
intensely interesting, and highly func
tional book. Nothing quite like it has ever
been attempted before. The history of eco
nomic ideas has often been written. This
book puts those ideas securely in the life of
their times and it tells especially of those
ideas that have survived to influence our
present beliefs and action.
Here are the ethical judgments that
remain from the household and slave
economies of the Greeks, from biblical
thought and from the feudal world of
St. Thomas Aquinas, from the pre
revolutionary French philosophers in
defense of agriculture, and from the mer
chant capitalists in the infant days of mod
ern capitalism. There is Adam Smith,
viewing the beginning stages of modern
industrial life, and Marx, reacting to the
cruelties of nineteenth-century capital
ism. The book continues to Keynes, the
Great Depression, and the modern welfare
state.
Economics in Perspective is a work that
reflects years of effort and the special
advantage of a scholar who has known per
sonally nearly all of the major players of the
last fifty years. It also demonstrates that a
history such as this need not be tedious or
dull. Indeed, the story is alive with interest.
Finally, as Galbraith shows, there are no
important ideas in economics that cannot
be phrased in clear, understandable lan
guage. This book is fully as available to the
concerned layman as to the professional
economist.
10194587
-395-35572-9
ECONOMICS IN PERSPECTIVE
BOOKS BY
JOHN KENNETH GALBRAITH
American Capitalism:
The Concept of Countervailing Power
A Theory of Price Control
Economics and the Art of Controversy
The Great Crash, 929
I
The Affluent Society
The Liberal Hour
Economic Development
The Scotch
The New Industrial State
The Triumph
Indian Painting
(with Mohinder Singh Randhawa)
Ambassador's Journal
Economics, Peace and Laughter
A China Passage
Economics and the Public Purpose
Money: Whence It Came, Where It Went
The Age of Uncertainty
Almost Everyone's Guide to Economics
The Nature of Mass Poverty
Annals of an Abiding Liberal
A Life in Our Times
The Voice of the Poor
The Anatomy of Power
A View from the Stands
Economics in Perspective:
A Critical History
ECONOMICS
IN
PERSPECTIVE
A CRITICAL HISTORY
JohKne nnGeatlhb raith
HOUGHTON MIFFLIN COMPANY
BOSTON
1987
Copyright© 1987 by John Kenneth Galbraith
All rights reserved. No part of this work may be reproduced
or transmitted in any form or by any means, electronic or
mechanical, including photocopying and recording, or by
any information storage or retrieval system, except as may
be expressly permitted by the 1976 Copyright Act or in
writing from the publisher. Requests for permission should
be addressed in writing to Houghton Mifflin Company,
2 Park Street, Boston, Massachusetts 02108.
Library of Congress Cataloging-in-Publication Data
Galbraith, John Kenneth, date.
Economics in perspective.
Includes bibliographical references and index.
r. Economics - History. 2. Economic history.
I. Title.
HB75.G274 1987 330'.09 87-3644
ISBN 0-39 5-3 5 5 72-9
PRINTED IN THE UNITED STA TES OF AMERICA
9 8 7 6 5 4 3
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TO ACKNOWLEDGE
ALL WRITERS are more in debt to friends than they usually know.
My obligation is especially great, and without doubt even greater
than I realize. Two of my Harvard colleagues, Robert Dorfman and
Henry Rosovsky, gave me help on particular points, and Professor
Dorfman read the entire manuscript through in an earlier form.
Therese Horsey managed my office affairs while I was writing it
and absorbed a myriad of distractions that would otherwise have
engaged my time or aroused my temper. Eric Roll, Lord Roll of
lpsden, my friend for many, many years, to whom this book is ded
icated, has been an enduring source of ideas on all these matters.
But special in all respects is my debt to two beloved allies. Edith
Tucker typed and then retyped these pages and did the infinity of
research and checking that was required. I once asked her if she
was not tired of the task; with great skill she evaded the question.
Andrea Williams, my partner in all writing enterprises for nearly
thirty years, read and reread the manuscript and, as ever, persuaded
me to the clarity of expression and rules of grammar from which I
too often lapse. To her, my exceptional word of thanks.
And, finally, my love and thanks go to Catherine Galbraith, who
over the three years of this writing gave me the encouragement,
affection and, above all, the tolerance for which all writers yearn
and which only the fortunate are accorded.
CONTENTS
I. A Look at the Landscape 1
II. After Adam 9
III. The Enduring Interim 20
IV. The Merchants and the State 31
V. The French Design 46
VI. The New World of Adam Smith 57
VII. Refinement, Affirmation - and the Seeds of Revolt 73
VIII. The Great Classical Tradition, 1: Around the
Margins 89
IX. The Great Classical Tradition, 2: The Mainstream 103
X. The Great Classical Tradition, 3: The Defense of the
Faith 113
XI. The Grand Assault 126
XII. The Separate Personality of Money 140
XIII. American Concerns: Trade and Trusts; Enriched and
the Rich 155
XIV. Completion and Criticism 178
XV. The Primal Force of the Great Depression 193
XVI. The Birth of the Welfare State 210
XVII. John Maynard Keynes 221
XVIII. Affirmation by Mars 237
XIX. High Noon 25 1
XX. Twilight and Evening Bell 266
XXI. The Present as the Future, 1 282
XXII. The Present as the Future, 2 292
Index 301
ECONOMICS IN PERSPECTIVE
