Economics for Fun and Profit

By R.Z. Sheppard

THE AGE OF UNCERTAINTY

by JOHN KENNETH GALBRAITH 365 pages. Houghton Mifflin. $15.95.

Complete this sentence: There is nothing so powerful as . . . ? Yes, class, an idea whose time has come. The cliche does not go far enough. The right idea in the right time and place can also be powerfully profitable. John Kenneth Galbraith's The Age of Uncertainty is part of this happy confluence. The book will receive not only a wide readership (it is already a selection of the Book-of-the-Month Club) but also a wide viewership. The BBC has filmed The Age of Uncertainty as a 13-part TV series.

Galbraith's project attempts to do for the history of economics what Jacob Bronowski's The Ascent of Man did for science and what Kenneth Clark's Civilisation did for art. Of the three, the professor emeritus from Harvard has the most difficult job. Economics is hard on the head and soft on visuals. Portraits of Thomas Malthus, David Ricardo, Karl Marx and John Maynard Keynes are simply not as rousing as thermonuclear explosions or The Naked Maja. But the obscure theories that economists set adrift have far-reaching consequences. Said Keynes: "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."

Keynes is the book's sentimental favorite. Galbraith himself was under the influence of the British economist's theories during the Roosevelt years. Keynesianism became Americanized and contributed to our prosperity by successfully arguing that the Government spend to create jobs. But even Keynes now appears obsolete. Federal priming of the economy may put more people to work, but it cannot curb the inflation to which full employment is a major contributor.

The author is, of course, one of the leading members of the liberal Establishment. He is also a kind of patrician socialist who argues in his new book for public ownership of urban land, public auditors instead of boards of directors for corporations, and the gift of food, housing, health care, education and money to the poor. He has a pessimistic view of human nature, but it principally applies to the rich and powerful. "People of privilege," he writes, "will always risk their complete destruction rather than surrender any material part of their advantage." Even F.D.R., the Squire of Hyde Park, would recognize this statement as an exaggeration. In addition, The Age of Uncertainty chronicles the revolutionary struggles of impoverished millions who risked destruction. The fact is that most of those who achieved power instantly became more cautious.

Galbraith rarely lets ideologies obscure his view of the world. It is an ironic view in which the need for international trade makes all nations defacto capitalists, and some of the staunchest supporters of laissez-faire have not been too embarrassed to ask the government to bail them out of trouble. The book's title cannot be pushed too far. All ages have their unknowns and inconsistencies. If they did not, the author would find little on which to hone his wit--an effective weapon for getting at realities beneath the appearances. He notes, for example, that Adam Smith, the legendary theoretician of capitalism and unrestricted trade, ended his days as the commissioner of customs in Edinburgh. Galbraith also draws a marvelous parallel between Gogol's Dead Souls and the Equity Funding scandal. In 19th century Russia it was the names of dead serfs that were bought to be palmed off as collateral for loans. In the 1960s Los Angeles executives of Equity Funding Corp. wrote life insurance policies on nonexistent people that were then sold to other insurance companies.

The author animates dreary economics lessons with did-you-know facts. For example it was Herbert Spencer, not Charles Darwin, who coined the phrase "survival of the fittest." The assembly line was not invented by Henry Ford but by an anonymous Frenchman who increased pin production tenfold by instituting the division of labor at his factory. Paper money is of pure Yankee lineage. When Massachusetts soldiers returned from action in the French and Indian War in 1690 they were paid not in coin but in promissory notes that could be traded for goods. The perverse alchemy by which governments turned gold into paper reached its extreme in Germany. Before their calamitous inflation of the early '20s ended, 1 trillion old marks were needed to purchase one new one--a monetary prelude to the Third Reich.

Nearing 70, Galbraith has seen many previously radical ideas become not only respectable but even stodgy. He confronts the world and its problems as a supremely rational man--and something of an entertainer. Recalling the biblical warning to the wealthy, he writes. "There is that terrible needle through which the affluent must be threaded before they can emerge in paradise. Accordingly, if you are either rich or a camel, you should, as a purely practical calculation, enjoy life now." Behind this elegant raillery, Galbraith maintains a cool, doctor-patient relationship with the world. The combination of wit and seriousness makes him a distinguished popularizer and advocate who can waltz through wars, revolutions, famines, depressions and global follies without ever losing the crease of his Savile Row prose. R.Z. Sheppard

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