One of the most interesting exchanges occurred when Moyers asked what the senior Galbraith might have thought about the recent financial crisis:
Moyers: Shortly before his death someone wrote that your father’s lifelong sermon on social democracy was destined inevitably to fail in a society of rugged individualism; but at the end of his life, in that little book called The Economics of Innocent Fraud, he seemed optimistic about the ability of government to improve the lot of the fortunate.Watch this exchange:
Galbraith: The less fortunate.
Moyers: Yes, the less fortunate.
Galbraith: The government’s ability to improve the lot of the fortunate was never in doubt. [laughter]
Moyers: Yes. Do you think he’d take that back today. . . I’m asking you to channel him and that’s unfair.
Galbraith: Yes, I agree with that [laughter]. . . Let me just recharacterize dad’s position on the American economy which goes back to the start of his career as a major writer in this area with American Capitalism in 1952. He was a quintessential realist about who we are, and he saw that his fellow economists were essentially mythmakers, that they had this view of small, competitive enterprises and rugged individuals. But in fact, the American economy was a colossus of industrial power which was rooted in large corporations, powerful unions, and a strong government.
That was clearly the case and anybody who had come through the Second World War and been part of the management had dealt with that on an hour-to-hour basis. And he continued to develop that vision through The Affluent Society and especially in The New Industrial State, which was written at a time when this system was at its zenith in terms of the kind of stability and prosperity that it brought to the population as a whole. So he, on the whole, was quite optimistic about the ability of American institutions to deliver an acceptable outcome. . . .
Let me say another word about him as an economist. He was in some sense one of the very few economists of the last century who were pure-bred economists. He did not come to the subject from some place else. He was not a failed mathematician or a second-rate physicist or bringing in the tools of another discipline. He came up in agriculture, matured in the management of the wartime control system, studied the effects of strategic bombing. It was economics and economic processes all the way through for him.
So he felt that what economics should do is cope with the system as it is. And from that point of view, given the problems that we have now, I think his approach would have been—well, I have to say I think it was very similar to mine: Let’s analyze the fundamental causes of the crisis. Let us see what went wrong. And let’s see what tools we happen to have that we can use. In this case, as I said earlier, the fundamental problem was a breakdown in the rule of law in the financial sector. The essential solution is rooted in the use of the Department of Justice in an effective way, in the first instance. And then you have to use powers to restructure the institutions that you will have dealt with at that time.
Related LOA works: John Kenneth Galbraith: The Affluent Society and Other Writings 1952–1967