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The Economics of Innocent Fraud: Truth for Our Time

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The Economics of Innocent Fraud: Truth for Our Time (Hardcover)

by John Kenneth Galbraith (Author)

3.5 out of 5 stars See all reviews (4 customer reviews)

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Product details

Hardcover: 80 pages
Publisher: Houghton Mifflin (April 2004)
Language English
ISBN-10: 0618013245
ISBN-13: 978-0618013241
Product Dimensions: 21.8 x 14.9 x 1.2 cm

Average Customer Review: 3.5 out of 5 stars See all reviews (4 customer reviews)

Amazon.co.uk Sales Rank: 1,108,780 in Books (See Bestsellers 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

Synopsis

The primary aspect of the "fraud" of the American economy that Galbraith (emeritus, economics, Harvard U.) criticizes is the false pretense of shareholder control over corporations, when in fact all real power has shifted to corporate managers. Contradicting conventional wisdom, or "approved belief" in his words, he denies the distinction between t

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Customer Reviews

4 Reviews

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3.5 out of 5 stars (4 customer reviews)

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10 of 13 people found the following review helpful:

4.0 out of 5 stars Grates rather than great -- but on target for all that, 26 Jul 2004

By	Barton Keyes "barton keyes" (England) - See all my reviews (TOP 500 REVIEWER)

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

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3 of 7 people found the following review helpful:

3.0 out of 5 stars Agreeable but frustrating, 19 Jun 2005

By	Schmindie Kid (Manchester, UK) - See all my reviews

This review is from: The Economics of Innocent Fraud (Pocket Penguins) (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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5.0 out of 5 stars Scathing attack on modern capitalist society, 15 May 2009

By	William Podmore (London United Kingdom) - See all my reviews (TOP 100 REVIEWER) (REAL NAME)

This review is from: The Economics of Innocent Fraud: Truth for Our Time (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.

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2.0 out of 5 stars Economical with the truth
The late Professor Galbraith argues against received wisdom on a number of aspects of contemporary capitalism. Read more

Published on 5 Oct 2006 by russ_w

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