The Economics of Innocent Fraud: Truth for Our Time

Galbraith remains the best 20th century economist because he understood that Economics isn't real science. Economists occupy a role that the Catholic Church occupied in Medieval Europe. Most clergy are corrupt or useless or filling some office of prestigious busy work with high qualifications and little talent. But there are a few good ones. Galbraith was one of the good ones.

Although professor Galbraith has little proclivity for numbers not all economic ideas are best expressed as such. To reach the masses one must present simple valid arguments with suitable justification for assumptions. Dr. Galbraith does just this in his essay. He makes explicit what the masses know implicitly especially in light of Enron, Worldcom, ad infinitum. Contrary to what some readers have posted ( I sometimes wonder if they actually read the book ) the author does not advocate "socialism, marxism," etc ( as if these terms had an unambiguous meaning ) but simply points out certain beliefs prevalent in society and proceeds to show that they are indeed myths. Some beliefs he clearly states are "innocent" by-products of circumstance. I thoroughly enjoyed the book unable to put it down until it was read. I can only hope Dr. Galbraith continues to publish and provide us with his unique perspective.

This book is a 62-page essay on fraudulent aspects of the current economic and political reality in the United States as seen by an illustrious economist and one of the most influential men of our time. Noteworthy is the fact that John Kenneth Galbraith was 95-years old when he wrote this a year ago. Judging from the wisdom and clarity of his expression, I can only say (to recall a line from a Meg Ryan movie, if you will): "I'll have what he's having." I identified ten "frauds" as I was reading, but I think I may have missed one or two. Before I list them and comment, let me quote the last line in the book because I think it is important: "War remains the decisive failure." Why Galbraith chose the word "decisive" is something of a puzzle. Decisive for what or for whom? Is he implying some sort of "decision" as regards humankind? Does he think we are going the way of the dodos? For myself it is clear that unless the war system is ended, most human beings will never progress beyond a tribal mentality, and will continue to suffer what Galbraith calls "death and random cruelty, [and the] suspension of civilized values..." (p. 62) The "innocent" frauds that Galbraith calls to our attention are actually not all that innocent. What he means by "innocent" is that for the perpetrators, there is "no sense of guilt or responsibility" as though the fraudulent were children. Indeed from the perspective of Professor Galbraith's extensive experience and learning, many of the people who run our economies and our political systems are children. At any rate, there is a somewhat lofty and even grandfatherly tone to this treatise. The first "fraud" is the use of the euphemistic "market economy" instead of the slightly stained "capitalism" to describe the present economic system. (By the way, Galbraith does not number his frauds. I do it for the sake of keeping them straight in my mind.) The second is the fact that in the modern corporation, ownership--that is, the stockholders--have little to no authority while the professional managers call all the shots including setting their own compensation (fraud #7). Galbraith attributes this to the fact that corporations have become so vast and complex that the relatively unsophisticated ownership cannot really understand how to run the enterprise and so must yield to management. Fraud number three is one that interests me a lot. Galbraith writes, "Reference to the market system as a benign alternative to capitalism is a bland, meaningless disguise of the deeper corporate reality--of producer power extending to influence over, even control of, consumer demand." (p. 7) This really is one of the most pressing problems of our time because the corporate power, through its ability to influence and control its legions of employees and the media, also has "influence over, even control of" who runs for office and who is elected in national and state governments. Indeed, in fraud #8 Galbraith notes that "A lar

JKG is brilliant! I just wish we would all listen better - and try to change our current path. Ken Galbraith doesn't suggest fancy things which won't work. It would be possible to achieve and well worth it! I recommend it to everyone to read it! And if you have a free minute read "The good Society" too!

John Kenneth Galbraith says he had fun writing this compact treatise, but it makes for painful reading. The much-honored Harvard professor claims that the gap between common wisdom about national economics and reality has widened alarmingly in recent years.The center of the book's thesis is that what we once called "capitalism", and now usually call a "Market System", has morphed into a "Corporate System" controlled by management bureaucracy. Here are two short fragments to give the flavor of Galbraith's tract:Myth: Shareholders own corporations."No one should be in any doubt: Shareholders-owners-and their alleged directors in any sizable enterprise are fully subordinate to the management. Though the impression of owner authority is offered, it does not, in fact, exist."Myth: The public sector is entirely independent of the private sector."At this writing, corporate managers are in close alliance with the President, the Vice President and the Secretary of Defense. Major corporate figures are also in senior positions elsewhere in the federal government; one came from the bankrupt and thieving Enron to preside over the Army."In earlier times, this book would have been burned in the public square. These days, it may simply be pushed off the bookshelves by a blizzard of withering reviews.