Money Isn't Everything

...No philosophical or evaluative discussion of money, therefore, should neglect to remind us that "money isn't everything...

...This man-made invention created the possibility of modern markets, the core of the industrial Western world...

...The book might have stressed as well how the big firms invariably use productivity gains to swell profits, and virtually never pass on their savings to the consumer through lower prices...

...He maintains that "movement toward a more consciously egalitarian income distribution will become an indispensable aspect of successful economic policy...

...Nor do international issues receive much attention...

...Galbraith writes that the revival of monetary policy "as a major instrument of economic management in the late '60s and '70s served to combine massive inflation with serious recession," and he notes that "it operated with discriminating and punishing effect against, not surprisingly, those industries that depend on borrowed money, of which housing is the leading case...

...On the matter of income distribution, Galbraith lectures "conservatives" for assuming that economic policy is purely technical, devoid of consideration of "equity—of some approach to equal treatment for all...

...This was fiscal as distinct from monetary policy...

...On the old question of how causation ran, it was plain that, in depression at least, it was the state of trade that ruled...

...It could not cause them to be borrowed, bring about the resulting deposit creation...

...It is Galbraith's forthright contention that the money managers of the past century have by and large been an untalented lot and have served us poorly...

...The supply of money did not affect prices and trade nearly so much as the state of trade affected the supply of money and the level of prices...

...His sprightly chronicle of money moves gracefully through both historic and diverting moments, such as the silverback debate, the German inflation, the advent of Keynes, and all the wars petty or large where money's role has been critical...

...President Ford is ridiculed for the dismal old-hat misconception that inflation can somehow be cured by intensifying unemployment...

...The problem of instability in world currency bores Galbraith, and he asserts that it is pointless to try to alleviate currency fluctuations until "the industrial countries have succeeded in combining reasonably high employment with tolerably stable prices...

...The topic, moreover, seems to frustrate the author's natural impulses...

...At times one feels that Galbraith wrote this book as a vehicle for attacking his opponents...

...Galbraith's contempt for Nixon Administration operatives and their Republican apologists, for their bungling acts of commission or omission in fiscal and monetary adjustments, is boundless...

...He excoriates monetary policy for aggravating the depression after World War I and for failing to expand the economy during the Great Depression of the '30s: "The problem with monetary policy was now [1937] clear...

...Galbraith's invariable concern is social justice, not economic technicalities...

...It could make reserves available...

...So is his evident glee over the fact that his own suggestion of wage and price controls had eventually to be adopted by the very men who had disavowed it and ritualistically scorned him as an irresponsible Leftist...

...Reviewed by Edward T. Chase Editor and free-lance reviewer John Kenneth Galbraith's sixteenth acknowledged book (several others are omitted from the list printed here) is not wholly satisfying because its ostensible subject is somewhat tiresome...

...Possibly because he feels the topic is peripheral to his subject, he fails to elaborate on this, merely observing that government restraints must not be confined to the wages and salaries of the "subordinate social classes" but must also take in corporate executives, professionals and people whose incomes derive from property...

...As for his own views, Galbraith's arguments that oligopolistic corporations and large unions have market power (i.e., can administer prices and wages) are widely known, and certainly accurate...

...Another question that Galbraith does not quite grapple with is money's efficacy as an indicator, as the means for expressing social benefits...

...This last has special pertinence today, when over half of all employment is in service trades, where the problem of raising productivity to offset wage increases is a very difficult one bearing directly upon inflation...

...He does not, however, comment on training "un-employables" for jobs, or on the role of productivity...

...Yet to a profound degree the problems of economic growth that currently beset America and the developed nations of the West stem from the fact that market prices are faulty, inadequate guides for policy...

...Money must be not only manufactured but spent—made to operate directly on the state of trade...

...Beyond that, there is the pleasure of following a guide who is intelligent, genial and catty...

...He could also have demonstrated how the monetarists have succeeded in knocking the stock market on its ear by causing the steady escalation in interest rates with its tight money growth rate of 5-7.5 per cent annually...

...Which is not to say that he is less than his old elegant, shrewd, witty self...

...For the mistake in thinking it is exacerbates the deficiencies of an inequitable society and an increasingly debased environment...

...He dismisses the Austrians, von Hayek, von Mises, et al., with the back of his hand, while the monetarists are castigated for wrongheadedness (although Milton Friedman is credited with making scholarly contributions...

...Yet these qualities will not suffice for specialists, and Galbraith lacked either the time or the inclination to set forth and analyze the ideas of economists who hold positions different from his own...

...It does not suffice us to know the cost of a highway or utility smokestack, or the price of a new school, since money does not measure disinvestments—the destruction of a natural amenity by a profitable economic enterprise—or the indirect advantages of something like an expanded school system...

...The answer—obvious enough but rather less obvious at the time—was to make the creation and use of money not permissive, but obligatory...

...The rapid growth of cost-benefit analysis, starting in the early '60s, was a reflection of a new awareness that the market is not a comprehensive or definitive tool for social activity and economic decisionmaking...

...There is sufficient information in this volume to serve the layman nicely...