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19 November 2010
Basic Economics Part Nine
Some Leading Economists
William Graham Sumner,Thorstein Bunde Veblen, Joseph Alois Schumpeter, and John Kenneth Galbraith are just a few of the people who have added to an understanding of the complexity of economic theory
The British philosopher Herbert Spencer coined the phrase “survival of the fittest.” He was a believer in the notion that Darwin’s evolution theories could be applied to society as a whole.
William Graham Sumner (1840-
Spencer had a keen student in William Graham Sumner (left), a Yale professor who
was influential on economic matters in the United States in the second half of the
19th century.
Also a social Darwinist, he firmly believed that “The millionaires are a product of natural selection.”
This U.S. sociologist and economist, was a prolific publicist of Social Darwinism.
Like Spencer before him, Sumner, wrote many essays about his firm belief in laissez-
For him, the middle-
Foreseeing the drift toward the welfare state, but considering poverty the natural result of inherent inferiorities, he was against any reforms to help the poor because, in his view, they would impose excessive economic burdens on the middle class, his “forgotten man.”
Thorstein Bunde Veblen (1857-
Veblen was an American economist and social scientist, notable for his historical investigation of the economic structure of society and for his analysis of the contemporary economic system.
Veblen (right) was born in Cato, Wisconsin, the son of a poor Norwegian immigrant,
and educated at Carleton College, in Northfield, Minnesota, and at Johns Hopkins,
Yale, and Cornell universities.
He is best known for his book The Theory of The Leisure Class (1899), a classic of social theory that introduced the concept of “conspicuous consumption,” in which he characterizes the leisure class as parasitic and therefore harmful to the economy.
The book is centrally concerned with the deep sense of the superiority bestowed on the rich merely by their wealth. But, to be enjoyed, this superiority must be known; accordingly, a major preoccupation of the rich is the carefully considered display of wealth.
Veblen argued that a fundamental conflict exists between the making of goods and the making of money.
The industrial system, he wrote, required men to be diligent, efficient, and cooperative, while those who ruled the business world were concerned with making money and displaying their wealth; their outlook was a survival from a predatory, barbarian past.
Veblen examined with obvious relish the “modern survivals of prowess” in the amusements, fashions, sports, religion, and aesthetic tastes of the ruling class. The book caught the interest of the literary world, most of whom read it as a satire rather than as science, and Veblen soon had a reputation as a social critic extending far beyond his academic horizons.
Throughout his work was an underlying concern with business enterprise and its power; his ideas influenced the development of economic policy and particularly the policy trend toward more social control or governmental activity in the economy at a time when business enterprise dominated the economy.
Joseph Alois Schumpeter (1883-
The Austrian-
He began to practice law in Vienna in 1907, and, after winning recognition as an
economic theorist, he became an economics professor at various European universities
and eventually joined Harvard University permanently in 1932.
Schumpeter (below) remained
at Harvard for the rest of his career.
His primary contributions to economics were in the fields of growth, development, and the business cycle. In his writing he emphasized the entrepreneur’s role in stimulating investment and innovation, thereby causing “creative destruction.”
Creative destruction occurs as the new and improved product or method of production drives out the old.
His influence in the field of economic theory was powerful. In his widely read Capitalism, Socialism, and Democracy (1942), he argued that capitalism would eventually perish of its own success, that the increasing separation of ownership from management might be a factor leading to its demise, by creating bureaucracies that would smother entrepreneurial operations, and giving way to some form of public control or socialism.
His other well-
John Kenneth Galbraith (1908-
Galbraith (left) was born in Southern Ontario. After graduating from the Ontario
Agricultural College (now Guelph University), he went on to study agricultural economics
in the United States. He spent most of his working life at Harvard University.
In his book The Affluent Society (1958), he argued that the expanding United States economy needed more public services such as highways and educational institutions.
He wrote that consumer tastes are shaped by advertising, packaging, and frequent style changes, and that the corporate sector rather than the consumer is responsible for production priorities, including frivolous, wasteful, and ecologically unsound consumption patterns.
All the effort that goes into advertising inevitably produces a bias in favour of private consumption as opposed to collective, community services. The result, said Galbraith, is private affluence on the one hand and public squalor on the other.
To correct that, he said governments should spend more on social services and public infrastructures. In his mind, the economy had finally reached a point where less time and energy had to be spent on consumer goods; the economic system was giving too much weight to added production even when general affluence prevailed, and, when that happens, an imbalance develops between too many private goods, such as cars and washing machines, and too few public goods, such as education and parks.
Galbraith turned out a huge number of books, nearly all of them quite easy to read
and understand. Among his writings are: American Capitalism (1951), a discussion
of the balance of economic power among major U.S. companies, The Great Crash: 1929
(1955), The New Industrial State (1967), Ambassador’s Journal: A Personal Account
of the Kennedy Years (1969), and A China Passage and Economics and the Public Purpose
(both 1973), The Age of Uncertainty (which also was made into a 13-
Sources
Hazlitt, Henry. Economics in One Lesson,Three Rivers Press, 1988.
Henderson, David R, et al, Concise Encyclopedia of Economics.
McConnell, Campbell R, Brue, Stanley L. Economics, McGraw Hill
Samuelson, Paul. Economics, McGraw Hill, 1948.
Sloman, John. Essential of Economics, Prentice Hall, 1998
© Canada and the World, November 2010
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“The sociologist is often asked if he wants to kill off certain classes of troublesome and bewildered persons. No such interference follows from any sound sociological doctrine, but it is allowed to infer, as to a great many persons and classes, that it would have been better for society and would have involved no pain to them, if they had never been born.”
William Graham Sumner
Duncan Rawlinson
John Kenneth Galbraith points out in The Age of Uncertainty, that two things serve
the display of wealth by the rich -
Among Thorstein Veblen’s other writings are: The Theory of Business Enterprise (1904), The Instinct of Workmanship (1914), The Place of Science in Modern Civilization (1919), and The Engineers and the Price System (1921).
In the prologue to Capitalism, Socialism, and Democracy, Joseph Schumpeter asks: “ Can capitalism survive?” He then answers his own question: “No. I do not think it can.”
Schumpeter did not relish the destruction of capitalism. “If a doctor predicts that his patient will die presently,” he wrote, “this does not mean that he desires it.”
ECONOMICS
BEST SELLER
A Nobel Prize winner for economics, Paul Anthony Samuelson (1915-
Originally published in 1948, the book has been translated into more than 40 languages
and has sold more than four million copies. In this work Samuelson clearly and carefully
explains his middle-
Samuelson was born in Gary, Indiana, and educated at the University of Chicago and Harvard University, where he came under the influence of the theories of John Maynard Keynes.
In 1940, he joined the economics faculty of the Massachusetts Institute of Technology; in 1966 he was named institute professor, the highest professional rank at the institution.
At various times he was a columnist for Newsweek magazine, consultant to such research organizations as the Rand Corporation and to the Federal Reserve Board, and adviser to U.S. Presidents John F. Kennedy and Lyndon B. Johnson.
A popular lecturer, Samuelson was considered an outstanding economic theorist who used mathematics to explain relationships among economic phenomena. For example, he evolved formulas to relate gross national product to levels of employment and to analyze the balance between prices and supply and demand.
His published doctoral dissertation, Foundations of Economic Analysis (1947), was one of the earliest attempts to apply mathematical principles to economic problems.
Samuelson had a lucid prose style, and for his contribution to economic theory, he received the Nobel Prize in economics in 1970.
QUOTABLE GALBRAITH
“(Karl) Marx, like Adam Smith and more than any other figure in economics except perhaps Keynes, has the distinction of greatly influencing the thought of the many who have never read him.”
“There is always pleasure in the fall of the great and the greatly fraudulent. It shows that there is an inherent justice in the system...most people, living in modest circumstances as they do, have a magnified impression of the intelligence of those who live in intimate association with large sums of money. Surely, if they have so much, they must be exceptional...This is an unusually erroneous belief...They are, in fact, the instrument not of their own intelligence but of their illusions.”
“One measure of an idea, though economists have not always thought well of it, is whether it works.”
The Age of Uncertainty