- Paperback: 64 pages
- Publisher: Penguin Books Ltd (6 May 2005)
- Language English
- ISBN-10: 0141023015
- ISBN-13: 978-0141023014
- Product Dimensions: 17.2 x 11 x 0.6 cm
- Average Customer Review: 3.5 out of 5 stars See all reviews (4 customer reviews)
- Amazon Bestsellers Rank: 565,638 in Books (See Top 100 in Books)
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Product Description
Amazon.co.uk Review
John Kenneth Galbraith has been immersed in economics for most of his long and remarkable life. The purpose of this extended essay is to illuminate examples of "innocent fraud" or the gulf between perception and reality in the modern American economic system--a system he had a hand in creating during his tenure in FDR's administration. Although it tackles serious subjects, the book sparkles with wit and sly understatement.
The dominant role of the corporation in modern society is one such form of innocent fraud, and he explains how managers hold the real power in our system, not consumers or shareholders as the image would suggest. Despite the "appearance of relevance for owners" capitalism has given way to corporate bureaucracy--"a bureaucracy in control of its task and its compensation. Rewards that verge on larceny." He explains how the public realm is effectively controlled by the private sector. The arms industry is but one example of this: "While the Pentagon is still billed as being of the public sector, few doubt the influence of corporate power in its decisions." Galbraith also looks at the financial world, which "sustains a large, active, well-rewarded community based on compelled but seemingly sophisticated ignorance", and in particular the Federal Reserve System, "our most prestigious form of fraud, our most elegant escape from reality." In essence, Galbraith says that the Fed, for all of its power and prestige, effectively does nothing. And he has little problem with this: "Let their ineffective role be accepted and forgiven."
Both a guide to the present and an aid to shaping the future, this slim, satisfying book is a font of wisdom, conventional and otherwise, from a respected elder statesman in the twilight of his life. --Shawn Carkonen, Amazon.com --This text refers to an out of print or unavailable edition of this title.
Product Description
In May 2005 Penguin will publish 70 unique titles to celebrate the company's 70th birthday. The titles in the Pocket Penguins series are emblematic of the renowned breadth of quality of the Penguin list and will hark back to Penguin founder Allen Lane's vision of good books for all'. A lifelong critic of unbridled corporate power and the most widely read economist of the twentieth century, the admired Harvard professor J. K. Galbraith has been published by Penguin for more than forty years. His latest book The Economics of Innocent Fraud is a vigorous polemic that reveals the private sector's control over public life in today's society, and considers our increasing tendency to blindly accept legal, legitimate, innocent' fraud.
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THIS TREATISE must, at the outset, contend with a seeming and severe contradiction: How can fraud be innocent? Read the first page
Front Cover | Copyright | Table of Contents | Excerpt | Back Cover
THIS TREATISE must, at the outset, contend with a seeming and severe contradiction: How can fraud be innocent? Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Back Cover
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2 of 2 people found the following review helpful
Format:Hardcover
This book by the great American economist John Kenneth Galbraith is a scathing critique of modern society. In it, he wittily demolishes the myths that the market and big business are benign, that minimal intervention, inequality and greed are best for the economy, and that there can be accurate economic forecasts.
He writes, "What prevails in real life is not reality but the current fashion and the pecuniary interest." But in the longer run, reality defeats conventional wisdom.
He describes "the effort to accord the owners, stockholders, shareholders, investors as variously denoted, a seeming role in the enterprise" (and now `stakeholders'). Yet, "the myths of investor authority, of the serving stockholder, the ritual meetings of directors and the annual stockholder meeting persist, but ... corporate power lies with management - a bureaucracy in control of its task and its compensation. Rewards that can verge on larceny." So stock markets and corporate sales fall, yet bonuses soar.
He denounces the folly of relying on cuts in interest rates to bring recovery. As he notes, "Business firms borrow when they can make money and not because interest rates are low." The Federal Reserve Bank's actions were irrelevant, through World War One, the depression, World War Two, and since.
He writes, "The one wholly reliable remedy for recession is a solid flow of consumer demand. Failure in such a flow is a recession. In the United States, especially with stagnation and recession, the lower-income citizen has an acute need for education, health care, a basic family income in one form or another. State and local governments, under the pressure of enhanced demand, cut social outlays. ... The overall effect has been reduced personal and family income and well-being - recession without effective curative action."
Galbraith points out that private firms, massively subsidised by the public, dominate `defence'. He observes, "As the corporate interest moves to power in what was the public sector, it serves, predictably, the corporate interest. That is its purpose. It is most important and most clearly evident in the largest such movement, that of nominally private firms into the defense establishment, the Pentagon. From this comes a primary influence on the military budget. Also, and much more than marginally, on foreign policy, military commitment and, ultimately, military action. War."
Of the attack on Vietnam, Galbraith writes, "During all this time the military establishment in Washington was in support of the war. This, indeed, was assumed. It was occupationally appropriate that both the armed services and the weapons industries should accept and endorse hostilities." So also of the attack on Iraq.
He writes, "What prevails in real life is not reality but the current fashion and the pecuniary interest." But in the longer run, reality defeats conventional wisdom.
He describes "the effort to accord the owners, stockholders, shareholders, investors as variously denoted, a seeming role in the enterprise" (and now `stakeholders'). Yet, "the myths of investor authority, of the serving stockholder, the ritual meetings of directors and the annual stockholder meeting persist, but ... corporate power lies with management - a bureaucracy in control of its task and its compensation. Rewards that can verge on larceny." So stock markets and corporate sales fall, yet bonuses soar.
He denounces the folly of relying on cuts in interest rates to bring recovery. As he notes, "Business firms borrow when they can make money and not because interest rates are low." The Federal Reserve Bank's actions were irrelevant, through World War One, the depression, World War Two, and since.
He writes, "The one wholly reliable remedy for recession is a solid flow of consumer demand. Failure in such a flow is a recession. In the United States, especially with stagnation and recession, the lower-income citizen has an acute need for education, health care, a basic family income in one form or another. State and local governments, under the pressure of enhanced demand, cut social outlays. ... The overall effect has been reduced personal and family income and well-being - recession without effective curative action."
Galbraith points out that private firms, massively subsidised by the public, dominate `defence'. He observes, "As the corporate interest moves to power in what was the public sector, it serves, predictably, the corporate interest. That is its purpose. It is most important and most clearly evident in the largest such movement, that of nominally private firms into the defense establishment, the Pentagon. From this comes a primary influence on the military budget. Also, and much more than marginally, on foreign policy, military commitment and, ultimately, military action. War."
Of the attack on Vietnam, Galbraith writes, "During all this time the military establishment in Washington was in support of the war. This, indeed, was assumed. It was occupationally appropriate that both the armed services and the weapons industries should accept and endorse hostilities." So also of the attack on Iraq.
11 of 14 people found the following review helpful
Format:Hardcover
Much of what Professor Galbraith has written has passed into the economic language of our time -- "the affluent society"; "conventional wisdom" are both phrases coined by him. It may be that "innocent fraud" will pass into the language in time -- but I doubt it. This book does not really have the sharpness and clarity of much of his earlier work -- the targets are being gummed rather than bitten. Forgivable for a man of his age but rather disappointing too. And the gnomic phrasing does not help the fluency of the read since Professor Galbraith adopts a sort of mitteleuropa stylistic device of losing verbs and or placing the verb in front of the subject that rather grates after the third repetition.
But all that having been said, his points are bang on target. And pretty pithily made too. There are lots of loquacious economists who could learn the art of succinctness from reading J K Galbraith
3 of 7 people found the following review helpful
Format:Paperback
J. K. Galbraith is a giant in the field of economics, and thus his writings are given a great deal of respect. Unfortunately, his verbose, staid style does not equate too well with a book of such brevity. Admittedly this is not a fault of the Penguin series (the book was published as-is, previously), but it does make for a surprisingly frustrating read. Perseverance will reveal a number of insights into the flaws in current economic policy; but this reader was disappointed by the sheer effort involved in trying to discern what could have been explained in much clearer language. A shame.
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