Galbraith's Criticism of Keynes
By David Henderson
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.