Galbraith, wrong then and always.
I was clearing out some things for packing and one item I came across was a review of the book Human Action by Ludwig von Mises. The review was written by John Kenneth Galbraith in 1949. Galbraith was one of those men endowed with what Hayek called a “fatal conceit.” He was a strong believer in the ability of men like himself to plan the lives of others.
Mises, on the other hand was one of those men, who while convinced of the rightness of his own views felt he had no right to try to control the lives of other peaceful individuals. He and Galbraith were miles apart. Mises is credited with stopping inflation in his native Austria, Galbraith came to the US from Canada and took a top position FDR’s “Office of Price Administration” where his job was to invent mandated prices for most items items sold in the US and then to decide how to ration the resources that became scarce due to his own price controls.
Where Galbraith lived a comfortable life as a central planner Mises was a refugee from Nazi tyranny forced to begin his life over again in the United States. Mises envisioned an economy controlled by the natural feed back loops of supply, demand, prices and profits. Galbraith saw an economy controlled by big, activist government in co-operation with big business and big unions. Milton Friedman said of Galbraith, that he dislikes markets because they “frustrate” his reforms and “enables people to have what they want” instead of what he and other reformers want.
So to say the least Galbraith’s review of Mises is a sneering attack. He suggest that anyone yearning for laissez faire, perhaps out of “nostalgia” would want to read Mises. He notes that Mises is a hard core advocate of freedom and “has not surrendered an inch of ground.’ And he does confess that the book is “a subject matter treatise in the grand manner” and “displays the impressive scholarship of its builder”. But Galbraith simply can’t understand why Mises is concerned about oppressive government and notes that when it comes to state control “Mises would have very little of it”.
He appears genuinely shocked that Mises “has grave doubts even about public schools.” Perhaps in 1949 that might be a bit shocking but if recent decades are any indication Mises had good reason to have those doubts and Galbraith’s faith in state planning seems sorely tested indeed.
Galbraith said that Mises was “a vigorous foe of autocrats and dictators but he also has little respect for people at large.” Oddly it was Mises who wants those people left free to control their own lives and Galbraith, shortly before writing these words, was the price czar of the United States imposing his wishes on every single citizen.
Galbraith ends his review with an attack on Yale University Press for publishing Mises. While he said the book should be published the publisher has “some obligation to scholarly restraint.” And we find a comment that shows how petty and small minded Mr. Galbraith must have been. He asks: “Does the publisher believe with [Mises], for example, that the war should have been fought without any allocation, priority, price or other controls, apart from high taxes and inflation?”
Ah, so Galbraith the Price Czar, the economic dictator, was upset that this book challenged the value of his work. Of course it could have been just a coincidence.
And the one remark I found most entertaining, and I use the word loosely, was this: “What are the ‘malignant’ consequences of not having followed Professor Mises’ advice in the last decade?”
This is astounding when you realize the last decade would have been 1939 to 1949. What were the malignant consequences of ignoring the kind of advice Mises gave? Well, shall we name a few: Stalin, Hitler, Mussolini, Franco, Peron and Salazar for starters. Galbraith never admitted that. He still had faith in the theory that it was right for him to act as economic dictator for millions of people.
One of Galbraith’s fellow planners, Robert Heilbroner said: “It turns out, of course, Mises was right” because “no Central Planning Board could ever gather the enormous amount of information needed to create a workable economic system.” In another confession he wrote:
“Capitalism has been as unmistakable a success as socialism has been a failure. Here is the part that's hard to swallow. It has been the Friedmans, Hayeks, and von Miseses who have maintained that capitalism would flourish and that socialism would develop incurable ailments. All three have regarded capitalism as the 'natural' system of free men; all have maintained that left to its own devices capitalism would achieve material growth more successfully than any other system. From [my samplings] I draw the following discomforting generalization: The farther to the right one looks, the more prescient has been the historical foresight; the farther to the left, the less so.”
Other than mischaracterizing a free economy with being on the Right, Heilbroner is correct. These men, all classical liberals were right. Heilbroner, Galbraith, Marx, Roosevelt, Mussolini and other central planners were wrong. And as one last warning from Heilbroner: “democratic liberties have not yet appeared, except fleetingly, in any nation that has declared itself to be fundamentally anticapitalist.”
Photo: the man who was wrong, John Kenneth Galbraith.