Because I have no technical knowledge of economics, my love affair with money has so far gone unrequited. I love money, but money does not love me. My affection, it is true, is not all-consuming, being more like a smoldering flame (as they say in romantic novels) than a fierce passion. But I still live in hopes that one day money will suddenly declare its passion for me, and we shall be united for ever, or at least until death do us part. Of course, with the events of the last few months our relations have become even less close than they were before; tepid relationships, I have discovered, no less than grand love affairs, can result in at least temporary separation.
My ignorance of economics seems never to decrease, however many books by economists that I read. Like many a person who dabbles in a subject that interests him only mildly and intermittently, I am at the mercy of the last thing I read, all arguments being put forward with tolerable plausibility seeming good to me until I read a corrective. I don’t know what to think; but then I console myself with the reflection that economists don’t either. As Winston Churchill put it, "If you put two economists in a room, you get two opinions, unless one of them is John Maynard Keynes, in which case you get three
One of the economists whom I used to read was John Kenneth Galbraith, until I became irritated by the pseudo-patrician hauteur and mandarin superciliousness that some of his writings evinced, like the smell of violets from perfumed paper, which was particularly ill-assorted with his oft-declared sympathy for the small man, with actual examples of whom I suspect that he became less and less familiar throughout his life. Still, at the present conjuncture in world history, it is worth returning to his last slim volume, The Economics of Innocent Fraud, written when he was 96 years old. It was a distillation of his thought, a kind of testament to the world that he was soon (two years later) to leave. One cannot help but admire the spirit of a man who, at that advanced age, cares enough about the world still to issue warnings to it rather than, say, to reflect solipsistically upon the fleetingness of human existence.
Moreover, though you might not admire Galbraith as a thinker, honesty would compel you to admit that the current financial pig’s breakfast that made itself evident, though did not actually begin, during the centenary year of his birth, would not in the least have taken the author of A Short History of Financial Euphoria by surprise. Then again, it didn’t take me entirely by surprise either, though I didn’t anticipate the precise date of the implosion.
The innocent fraud to which he refers in his last book is primarily intellectual in nature, and consists mainly of our tendency not to call things by their name, substituting euphemisms or elisions, and subscribing to theories that suit our interests rather than that seek the truth.
Galbraith’s theory of knowledge is suspiciously like Marx’s: Dealt with in this essay is how, out of the pecuniary and political pressures and fashions of the time, economics and the larger economic and political systems cultivate their own version of the truth… It is what serves, or is not adverse to, influential economic, political and social interest.
In other words, consciousness does not determine being, but rather it is being that determines consciousness. I am sure that inhabitants of the Eastern Bloc above a certain age will remember this idea well enough.
Now of course there are two readings of the doctrine, a weak and a strong one. The weak, or sociological, one merely states that, as a matter of empirical fact, most people most of the time believe what it is in their interest, or at least in their superficial interest, to believe. The strong reading says that it is a necessary and inescapable fact of all human cognitions that they are determined by economic interest.
The weak and philosophically unimportant version of the thesis allows us whenever we please (which is usually quite often) to resort with a good conscience to ad hominem arguments about those with whom we disagree, not so much refuting as insulting them, without the logical necessity to examine where our own beliefs come from and what interests they serve. The strong thesis means that the only real question that can ever be answered is Lenin’s, Who, Whom?, that is to say who does what to whom.
Because we are beings with theories of mind, and furthermore with an inherent interest in the motives of others, it is natural that we should seek to explain a person’s views by animadverting on his personal interest in them: that, for example, Galbraith had long ago allied himself with the mandarinate wing of the Democrat party, and indeed had made a fortune and an eminent career by doing so. But this will not do, even if true at some level or another, to refute his actual views. It is always possible that Galbraith allied himself with the mandarinate wing because he thought its world outlook true and beneficial.
Some of what he says is undoubtedly true: that, for example, the management of large corporations is not so much by entrepreneurs as by bureaucrats, over whom the actual owners, or stockholders, being highly dispersed, have little or no control. The managers decide their own rewards, and not surprisingly they opt for large ones whose connection with merit or economic prowess is often not very evident. The spectacle of chief executives of corporations that they have driven into bankruptcy, or at least that they have presided over as they slid into bankruptcy, leaving their collapsed companies with large payments is by now lamentably familiar. To take one example alone: the contrast between the personal prosperity of the former chief executive of the Royal Bank of Scotland, and the state of the bank’s balance sheet (it made a $42 billion loss this year), is striking even to non-egalitarians such as I.
But from the fact that the managers of modern corporations are bureaucrats of some kind or another, Galbraith draws the unwarranted conclusion that there is nothing to choose, from the point of view of economic efficiency, between governmental and corporate bureaucracy, and that therefore the extension of state economic power is not to be opposed merely on the grounds that it is inherently bureaucratic. This is absurd.
Here Galbraith makes precisely the mistake that he accuses those who use the word ‘work’ to cover both unskilled heavy labor and Bill Gates’ activities of making, namely of hiding important distinctions by terminology. He ask a word to carry too much ontological baggage, and by doing so indulges in the old rhetorical trick of suppressio veri and suggestio falsi. This is something I never do: but then, of course, I have no economic interests (alas).