The Economics of Innocent Fraud : Truth For Our Time

Rating:
Summary: Disparity Between Accepted Wisdom and Truth
Review: A very short read, but insightful and extremely compact. Galbraith lays out in overview a critique of the concepts taught in finance and economics, which are in reality, false, and that many of the high-minded ideas bandied about regarding management, financial, corporate and governmental, are simply self-serving beliefs with little merit. A few:

- Shareholder control of corporations
- Executive pay
- Separation of public and private

Rating:
Summary: Denial
Review: As a student of economics I highly agree with nearly all of your rambling. I couldn't help but laugh when you say, "anyone can BS in front of 18 year olds". Two problems exist with your simple statement; a professor emeritus at Harvard wouldn't be teaching introductory courses, and if professors of economics, or any subject for that matter, didn't exist, who would educate the leaders of tomorrow? Your comment makes you seem like one who has had trouble with higher education in the past, which can be seen in your other reviews. One doesn't "have an IQ", rather one achieves a score on an IQ test, which is why one will "have" a different IQ according to different tests and test standards. Your writing is also bad, very bad, which leads me to believe you haven't had much experience in the education system. If you have, I can now understand why we have such problems in the education system. Also, your Amazon name leads me to believe you're a fan of Darwin; if you haven't, do some research and see who really came up with the theory of Survival of the Fittest. Spencer, a philosopher often put in the same class as many classical economists.

I can be reached at [e-mail] for further comment.

Rating:
Summary: For a Country in Denial About Massive Corporate Fraud
Review: Coming here to review this book I just knew there'd be some obtuse blabbermouth calling Galbraith a "commie" or a "socialist" and the like, and I wasn't disappointed. In reality, this book is sane and sensible, and if a majority of the electorate understood what Galbraith is saying in this short, easy-to-read book about the abuses of corporate power, we'd be in much better shape as a country.

Instead, come November we're going to elect either one of two multi-millionaires to be President of the United States, both of whom are thoroughly in the pockets of Big Business. Yet rather than coming to terms with that central fact, people prefer getting caught up in the predicatable bickerings of partisan politics, at a time when the REAL differences between Left and Right are so negligible as to be laughable. "Narcissism of the tiny difference" is I think what Freud called it.

Perhaps the essence of what Galbraith is saying in "The Economics of Innocent Fraud" is this [p. 51]: "The corporation, to repeat, is an essential feature of modern economic life. We must have it. It must conform, however, to accepted standards and requisite public restraints."

Now please tell me: What is so Maoist or Marxist about that?

My only problem with this book is that Galbraith piggybacks an anti-Iraq-war message on to the back of his otherwise less obviously partisan arguments. Surely he's aware of at least one other notable academic economist who's blown much of his credibility by becoming, well, a predictable party shill?

Rating:
Summary: Brilliant as usual!
Review: 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!

Rating:
Summary: Those CAN do will do. Those cannot do will TEACH!
Review: John Galbraith is a living dinosour. The whole world has now abandoned communism-socialism-statism and had embraced free trade, free commerce, exchange, the free flow of goods, services, free flow of ideas.

Yet, this dinosour is clinging to the ideas that the USSR is the model of efficiency and wealth. The USSR, Communist China were static Third World nations until communism collapsed.

Where do dinsours live. They live at the universities of America. Fat-cats living off the riches of the free enterprise system. Tenure, of course, jobs for life. The old saying:

THOSE PEOPLE CAN DO WILL DO. THOSE CANNOT WILL TEACH...

Professor Galbraith, communism, the USSR, Marx, Lenin, Stalin, Mao are all dead, relics of the 20th. century. Socialism is dead.

BTW, please get a real job, economics professors are not real jobs.

Anyone can BS in front of 18 years old.
All this nonesense can only come from someone who has never had a real job, who worked for a living.

Rating:
Summary: Myths and misunderstandings about the economy
Review: 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.

Rating:
Summary: Some of this is not so innocent
Review: 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 large, vital and expanding part of what is called the public sector is for all practical effect in the private sector." (p. 34) He specifically identifies the "defense" industry as being largely controlled by defense contractors in the private sector. Elsewhere in the essay, Galbraith refers to "the control of consumer choice and sovereignty" indicating that he understands that the control extends to the electorate. (p. 13)

Fraud number four is the way we hypocritically value "work." For some it is toil and for others it is a pleasure and indeed largely the reason for living, and yet how differently we are compensated, with those who need it least often getting the most in financial reward.

Fraud five refers to the corporate bureaucracy. While corporate people sneer at government agencies as being bureaucratic, large corporations have become just as blotted or even more so. (Chapter V: "The Corporation as Bureaucracy.")

Fraud #6 is the phony celebration of small businesses and family farms in the political rhetoric. Galbraith comments, "For the small retailer, Wal-Mart awaits. For the family farm, there are the massive grain and fruit enterprise and the modern large-scale meat producer." (p. 25)

Fraud #9 (I've mentioned numbers 7 and 8 above) is the fraud of economic predictions. Galbraith observes: "The financial world sustains a large, active, well-rewarded community based on compelled but seemingly sophisticated ignorance" (i.e., stockbrokers, stock analysts and other financial prognosticators). He adds, "...those...who tell of the future financial performance of an industry or firm, given the unpredictable but controlling influence of the larger economy, do not know and normally do not know that they do not know." (p. 40)

Finally there is the quaint fraud of the actions of the Federal Reserve Board, which Galbraith claims have no real effect on the economy.

For an interesting book on the corporation as a psychopathic entity (yes, psychopathic) see, The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan. In fact Galbraith should read this book. It would further part of his thesis.

In part this modest book is a succinct warning about how corporations are becoming more and more powerful as they gain greater and greater control over our lives. Perhaps what Galbraith is saying in his laconic way is that there is a very real danger that bit by bit we are on the way to a nation controlled not by a democratic electorate or even by republican checks and balances, but by an oligarchy of corporate power.