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Engle lecture J.K. Galbraith takes a fresh look at the “unfinished business” of our century

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 1999
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Much has been accomplished in this past century—particularly in the advanced countries of the globe, Galbraith began. These accomplishments include a vast range of scientific discoveries and technical developments and of things to which we have become accustomed and on which we have become dependent.

We have also seen in this past century, Galbraith continued, an enormous change in the basic substance of life—particularly the production of food, shelter, and clothing. In the 1930s, when he began his career in economics with the study of agriculture, Galbraith said, just under half of all the gainfully employed people in the United States were engaged in producing food—as was most of the population for centuries before. Now, it is only a handful—maybe 5 or 6 percent. Only in the past century, Galbraith said, have men and women escaped the repetitive, dismal drudgery that was required to keep people fed. This is an extraordinary achievement.

What GNP leaves out

This century has also witnessed extraordinary technological advances. A consequence of these technological advances has been the realization of a greater intellectual equality and achievement. For many—although not everyone—the new technology has provided an escape from one of the worst features of modern existence—tedious, hard, repetitive, boring labor. In fact, in this century, the number of people who are engaged in what is called “work”—that is, the activity that some find fine and pleasant and others find hard, boring, and physically painful—has been reduced. It is an anomaly of our system, however, Galbraith said, that those who do fine work are also the best paid, and those who find their work most pleasant are those who are allowed the most leisure.

This anomaly—that those who bear the burden of the hardest and most tedious work are the least rewarded—is reflected in the way national economic achievement is measured, according to Galbraith—that is, by the gross national product. Doubtless, he said, the increase in the GNP—the total of everything we produce and everything we do for money—is an important measure. But there is also a major fault in measuring the quality and achievement of life by the total of economic production. There is a strong tendency for such a measure to override and obscure deeper and, indeed, more important aspects of economic life. In particular, the measure does not take sufficient account of the value and enjoyment of what is produced. We have to ask ourselves: what is the cultural and artistic content? Would we remember Florence or Paris if we relied exclusively on their production? he asked. The wonders of the artistic world are not economic. And the wonders of other countries depend on the cultural content as much as—and perhaps more than—simple economic production.

Instability

A more immediate legacy from the past century—in fact, one that goes considerably beyond the past century—is the ancient economic problem of instability, the succession of boom and bust, Galbraith noted. Ticking off the great speculative bubbles of the past three hundred years, he alluded to the tulip bubble that gripped Holland in the 1630s, the speculative boom in Paris at the beginning of the eighteenth century when investors bet on the prospect that gold would be discovered in Louisiana, and the famous eighteenth-century South Sea bubble that blew up in London, based on the seemingly wonderful prospect of trade with the Americas.

In the past century, in the United States, Galbraith continued, these boom and bust cycles continued. And, to this day, these cycles remain an uncorrected feature of the system. In fact, we may be having another exercise in optimism and speculation at the present time. Galbraith declined to go into detail, but he suggested that there may be far more people participating in common stocks, derivatives, and index funds—and above all, in the holding of stock funds—than there is intelligence to manage them. Galbraith said he was not predicting that a crash was imminent, “because I discovered some years ago that my right predictions were always forgotten and my wrong ones were always wonderfully remembered.” He did suggest, however, that it might be time to “run for cover” when people start saying too often that we have entered a new era of permanent prosperity with an absolute tendency for the prices of financial instruments to go up.

Poverty and income inequality

In spite of everything that has been achieved in this century, Galbraith said, two major problems persist that must attract the attention of anybody who speaks “in any degree from the heart.” The first is the continuing problem of the very large number of the very poor in the United States and in Europe, and the second is the persistence of and increase in income inequality.

In the United States, the very poor are now part of the mass of the great cities, partially disguised by being melded in with the larger urban mass, Galbraith observed. These are people who are still deeply in fear of the one thing that costs more people their liberty than anything else—the total absence of money. And that poverty, Galbraith said—particularly urban poverty—is perhaps the greatest of the economic and social legacies we have inherited.

To dissipate the effects of this legacy, Galbraith said he belonged firmly to the community that believes everybody should be guaranteed a basic income: “A rich country such as the United States can afford to keep everybody out of poverty, and I would like to see a renewed discussion of measures that would bring this about,” he said. There is a long-run security associated with the mitigation of hardship and anger that such a system could bring about.

A related and larger issue, Galbraith said, is that the United States also has the greatest concentration of income in the very top income brackets and the largest number of people in the lower income brackets. No other country, Galbraith stressed, distributes its income as badly, with the possible exception of modern Russia.

Unfinished business

One of the great transcending achievements of this century was the ending of colonialism in Africa and Asia, Galbraith said. But this achievement has created serious problems. In a considerable part of the colonial world, the end of colonialism meant the end of colonial govern-ment—and, too often, its replacement by either corrupt government or no government. We should be deeply aware, Galbraith said, that nothing ensures hardship, poverty, and suffering like the absence of responsible collective action—that is, responsible government. We should not doubt, he stressed, that while we can talk about economic aid or social reform, nothing is quite so serious in our time as the need for decent, competent government.

Finally, the most serious legacy of our century—particularly the latter part of it—Galbraith said, is the fact that we are living, and will continue to live, on the edge of the total destruction of civilization. Available in the United States, to some extent elsewhere, and to a serious extent in what was the Soviet Union are the nuclear weapons that have the potential for ending all civilized existence, and quite possibly all existence. This threat, he concluded, is the greatest piece of unfinished business of this century—and of the past millennium.

John Kenneth Galbraith’s talk will shortly be available as a video. Further information is available from the American College, 270 S. Bryn Mawr Avenue, Bryn Mawr, PA 19010; telephone: (610) 526-1450.

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