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Date Posted: 19:25:03 06/11/04 Fri
Author: Weird_Enigma
Author Host/IP: 172.130.168.66
Subject: The idea that shareholders control corporations is a myth

Galbraith tackles business assumptions

Still feisty enough to give social, economic policy a kick in pants

BILL DAY

New York Times New Service


THE ECONOMICS OF INNOCENT FRAUD: Truth for Our Time


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By John Kenneth Galbraith. Houghton Mifflin. 64 pages. $15.

Intellectual icon John Kenneth Galbraith describes his latest book, the 64-page "The Economics of Innocent Fraud," as an "extended essay." But it could also be considered an appendix to his 1967 classic "The New Industrial State."

He takes up where that treatise left off, explaining how corporations have become increasingly more powerful without many people noticing.

Long a critic of corporate hegemony, Galbraith's goal is to bust the myths that businesses are less bureaucratic than government and that free markets are self-regulating.

He does so in the blunt, plain language of an economist, prolific thinker and former ambassador who at 95 years old has the luxury of being able to say exactly what he wants. He dismisses the idea of separate public and private sectors as "rhetoric, not reality."

The idea that shareholders control corporations is "an accepted fraud." In fact, the "fraud" in the book's title has little to do with companies such as Enron or WorldCom, though they are mentioned. Instead, Galbraith is talking about the "innocent fraud" that people accept as givens: gross domestic product growth is always good; corporations are in business to make the world a better place.

Not only does Galbraith challenge the reader to accept that "belief in the market economy in which the consumer is sovereign is one of our most pervasive forms of fraud," but he declares that the Federal Reserve's interest-rate cutting has done little to nothing to improve the economy.

He also saves a couple of swipes for President Bush when he declares Iraq to be a greater "military misadventure" than Vietnam and says that tax cuts "as recently urged and adopted" have done more harm than good.

Ironically, the closest thing to Galbraith's take-no-prisoners style in mainstream thought today is MIT economist Paul Krugman's op-ed columns in the New York Times -- ironic, because Krugman has criticized Galbraith in print for not being enough of a mathematical economist.

Galbraith's brief volume is a signal to the world that one of the American Left's foremost thinkers is still feisty enough to give misguided economic and social policy a well-aimed kick in the pants.


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Bill Day writes for the San Antonio Express-News.

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