David R. Henderson  

Galbraith's Criticism of Keynes

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This is next in my continuing series of posts about Richard Parker's John Kenneth Galbraith: His Life, His Politics, His Economics. In May 1941, John Kenneth Galbraith had an article published in the prestigious Review of Economics and Statistics. It was titled "The Selection and Timing of Inflation Controls." Unfortunately, what might have been the best paragraph was deleted from the review. Here's his biographer, Richard Parker:

Then, in a long passage that displayed both the intellectual independence and a young man's self-confidence (and perhaps a wee bit of academic hubris, because the passage was deleted from the Review version), he warned:

I am inclined to believe that the development of the concept of full employment in recent years has given us a rather warped technical apparatus for dealing with this problem. Keynes, Mrs. Robinson, Harrod, and the rest have talked glibly about full employment as a flat ceiling which is approached uniformly by all sectors of the economy--they have assumed that the production functions for different industries are similarly shaped and, at any time, the rate of utilization is uniform. Nothing, of course, could be further from the truth.

This sounds like the kind of criticism our former guest blogger, Garett Jones, would have made or like criticisms Veronique de Rugy would make. I think it's one of the first criticisms that would occur to anyone with even a moderately strong microeconomics background.

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COMMENTS (2 to date)
Daniel Kuehn writes:

I wonder if it was deleted because he or the editors considered it unfounded. It seems like a really odd claim to make to me. I was just working through Book V the other day for something that someone pointed me to, where he was talking through Pigou, and he seemed to be saying precisely the opposite. He was discussing elasticities of employment functions and aggregating them across industries and noting that they would not be the same. This is the case in discussing differences between industries in his chapter on capital when he refers to Bohm-Bawerk's work. And I believe it's also pointed out when he's discussing the differences in marginal efficiency of capital across different activities.

I think there's probably a very good reason why this was dropped, whether it was Galbraith's ultimate decision or the editors.

I can't speak for Robinson or Harrod in any detail.

Greg Ransom writes:

Galbraith participated in Hayek's faculty and grad student seminar at the LSE -- this sort of criticism would have been second nature for anyone with that background.

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