Post by Joe Costello – author, OF BY FOR

Sep 27, 2012 by

You’re born with nothing
and better off that way
left running burned and blind
chasing something in the night

I was rereading JK Galbraith’s Money: Whence it Came, link Where it Went, which should be read by all as a clear and invaluable history of money and banking. The book was published in 1975, as the New Deal deflation institutions were failing in the midst of America’s greatest ever inflationary decade, propagated by two main causes — military spending and the oil spikes.

Galbraith was one of the 20th century’s great economic heretics, summing it up simply, “What is called sound economics is very often what mirrors the needs of the respectably affluent.” He worked in the New Deal, Truman, Kennedy, and Johnson administrations, so his liberal credentials were impeachable.

He had great respect for JM Keynes, enough to offer a devastating critique, which still remains unanswered by all upholding the Keynesian fetish. Galbraith’s critique was simple. Keynes and the rest of the economist lot refused to acknowledge power. Specifically in the 30s, as one of the great truisms of economics failed, how supply and demand impacted price and employment, Galbraith noted how Keynes’ General Theory failed to mention corporate power, yet it was essential in understanding both the national scope of the downturn and the reaction both in the 30s and 70s, and I would add today.

Galbraith writes of corporate power,

More logically, the market power of monopoly meant that prices remained high in face of falling demand. It was output and employment that suffered….The difficulty was that market power and price administration were not a problem of a few firms; they were pervasive in the American economy. To spend money, as the experience of the early 30s with public works was by now showing, took time. But it was a marvel of immediacy as compared with the time that would be needed to bring antitrust laws on all American corporations that had power of over their prices.

Today, corporate power is even more pervasive, completely in control of political economy. Corporate power stifles the necessity of banking reform and attempts of government to “stimulate” the economy. We need to understand that reviving and revitalizing the economy is not going to come without breaking-up and reforming the mega-corporation and this is only going to happen by reforming our politics and government.

Mr. Galbraith’s important ideas remain just as heretical now as they were four decades ago, the corporations more entrenched, and that’s why you’ll never hear about Mr. Galbraith.

by Joe Costello ofbyforthebook

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