Prof. James K. Galbraith: “Austerity is a theology, not a solution”

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James Galbraith2

Prof. James K. Galbraith. DR.

Mohsen Abdelmoumen:You have been an adviser for Yanis Varoufakis, the former Greek finance minister, and you have related this experience in your book “Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe”. In your opinion, what are the real reasons of the resignation of Varoufakis?

Prof. James K. Galbraith: No mystery there. Yanis could not sign the capitulation to the terms specified by the creditors. So when the outcome of the referendum failed to persuade the government to stand its ground, he had no choice but to resign.  

How do you explain that the Syriza party has applied the European Union program instead of applying its own?

A combination of blackmail by the creditors – especially the European Central Bank and the Eurogroup – and defeatism inside the Greek government at the time.

What does it mean to be of Left in the United States today?

That’s a good question. As a person of the Left, I do not for the moment feel part of any particular political movement in the United States — I am working closely with the Democracy in Europe Movement — and although I have some hopes for the emergence of a left program inside the Democratic Party, I have no great confidence that reform of the party along progressive programmatic lines will succeed in the near future.

How do you rate the beginning of President Trump’s mandate, whose slogan is « America First »?

Half tragedy, half farce. There is a tragic unraveling of certain vital parts of the government, especially in the areas of environmental protection, protection of federal lands and natural resources, occupational safety and health, civil rights enforcement and equal justice. Much of the rest, particularly the legislative agenda, is mostly farce so far. However, with the tax bill, things may shortly take a dramatic turn for the worse.

You evoke a predatory class in the USA that monopolizes wealth and holds power. Can we consider this predatory class as a plutocracy?


You describe a very advanced stage of decomposition and chaos in which capitalism lies. Can we say that we are witnessing an acceleration of the decline of the capitalist model?

The “capitalist model” collapsed already in 1930. What was built up in the intervening eight decades was a mixed model, with a large stabilizing and regulatory element, which permitted the system to function effectively and to outlast the “socialist model.” The illusion that a capitalist model could be restored came to the fore as socialism declined, and that is responsible for the present decline of the system.

You say that wars are ruinous for empires. Don’t you think that the military-industrial complex is doing well because of the wars that the United States is waging on several continents?

Not especially, no. The wars in question are not high-intensity wars; their weight in the US economy is fairly small, and their major effect apart from the havoc on the ground is to demonstrate the limits of military force as an implement for the projection of power in the modern world.

According to you, don’t the neoliberals and their ideologists proposing austerity mistaken?Is austerity a solution?

Austerity is a theology, not a solution. It masks, in every case, an ulterior agenda which is not to “fix” the functioning of the economy but to strengthen the predator classes at the expense of the working and retired populations.

In your very interesting book “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too”, you are critical of the establishment.Do you consider the free market as obsolete and to be exceeded?

The “free market” is a fiction that has never existed, but it was a reasonable mythological entity in the 18th century. In the 20th and 21st centuries it is not possible to run any major part of any modern economy without a regulatory framework that will keep the elements of that economy from self-destruction.

In “La Grande Crise: Comment en sortir autrement”, you show the limits of some governments to want to overcome the crisis and you propose solutions that are contrary to what most economists in the establishment advocate. You defend the public sector, you propose to raise the minimum wage, strengthen social security, etc. Do you think policymakers are aware that they are just perpetuating the crisis?

That is hard for me to judge. I suspect that some policymakers are in the grip of simple-minded theories that fail to give them appropriate guidance, but to which they are attracted because they are conventionally reputable. And that others don’t rise to that level of cognition, but merely follow instructions from their donors – as is plainly the case with the present tax bill.

Do you not think that economic science has reached its limits, especially when we see economists who propose purely technical solutions to political problems?

Economics is not a scientific discipline in any modern sense of the term science. There are some economists who imagine that they have “purely technical solutions” but this is often, if not usually, a sign of an inflated self-assurance. Meanwhile there are other economists who largely act as the agents of their allies and sponsors, and it is often not easy to distinguish between the two. To be effective in the policy realm, experts need to be embedded in the policy process, and it is long past time when experts in substantive areas of physical science, engineering and legal process gained equal weight with economists in policy discussion.

In “Inequality and Instability: A Study of the World Economy Just Before the Great Crisis”,you point to the responsibility for finance and the stock market, which are the main vectors of inequality and economic instability.Are not these actors a part of the capitalist matrix? Do not you think that to eradicate this scourge, we must eradicate the system itself?

No. I am not in favor of eradication as a principle. The function of social decision-making should be divided across a range of actors with differing economic perspectives and motivations; the problem is not the presence of financial actors as part of a matrix but their overwhelming position of power within it.

In your book “The End of Normal: The Great Crisis and the Future of Growth”, you do the history of the crisis in which lies the capitalist system and which does not date from today.You say that it is impossible to regain growth and a policy of full employment, while some argue the opposite by evoking the start-up boom and the new jobs linked to the digital revolution.Do you think that these new professions are a concrete answer to the catastrophic economic realities that many countries are experiencing?

The digital revolution works primarily to reduce employment of people, in the same manner that the internal combustion engine a century ago reduced the employment of horses. The number of new jobs created in the creation of digital technologies is exceedingly small. So it is clear that new jobs must be created largely in spheres of activity that cannot be replaced by digital devices. There are many such spheres; the challenge is to design institutions that can create and sustain jobs in those spheres.

You are president of Economists for Peace and Security. What is the mission of this association?

I was chair of the Board of EPS from 1996 to 2016. EPS is an organization of professional economists concerned with reducing conflict and military expenditure, and with calling attention to the costs and consequences of wars.

Professor Stiglitz, Nobel Prize in Economics, considers you a reference from which the left should be inspired.Are your vision and work shared by those who want to reform the American left?

That is very kind of Professor Stiglitz. As to what extent my views have any influence, I do not know. I do believe that I work in an honorable tradition, of pragmatic, institutional economists with a commitment to the concepts of social progress, security and peace.

Interview realized by Mohsen Abdelmoumen


Who is Prof. James K. Galbraith?

Prof. James Kenneth Galbraith is an American economist world-renowned. He holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and a professorship of government at the LBJ School of Public Affairs, University of Texas at Austin.He holds degrees from Harvard University and Yale University. From 1981 to 1982, Prof. Galbraith served on the staff of the Congress of the United States, eventually as Executive Director of the Joint Economic Committee. In 1985, he was a guest scholar at the Brookings Institution. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School. He is member of Economists for Peace and Security.

Prof Galbraith wrote several books, including : Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe,(2016), Yale University Press; The End of Normal: The Great Crisis and the Future of Growth, Simon & Schuster (2014);  Inequality and Instability: A Study of the World Economy Just Before the Great Crisis (2012),Oxford University Press; The Affluent Society and Other Writings 1952–1967 (2010),New York: The Library of America; The Predator State (2008); Inequality and Industrial Change: A Global View(2001), Cambridge University Press; Created Unequal: The Crisis in American Pay(1998); etc.

In French: La Grande Crise : Comment en sortir autrement (2015), Seuil ; Modeste proposition pour résoudre la crise de la zone euro (2014), with Yánis Varoufákis et Stuart Holland, Les Petits matins ; L’État prédateur : Comment la droite a renoncé au marché libre et pourquoi la gauche devrait en faire autant (2009), Seuil.

Published in American Herald Tribune, January 02, 2018:

In Palestine Solidarité: