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Business Ethics MGT610

LESSON 42

This is a pretty good measure of how far we have come in America in our understanding of

freedom from that of the founders: Bill Clinton awarded the "Medal of Freedom" to John

Kenneth Galbraith on August 9, 2000, despite the fact that Galbraith has been a stalwart

champion of the very opposite idea of freedom from that laid out by those founders.

Galbraith, a professor emeritus at the department of economics at Harvard University, although

a fine writer and charming human being-- so much so that William F. Buckley, Jr., has been his

long time friend despite their political differences--has been a socialist for nearly all of his

career. He has been a relentless critic of capitalism and the market system, based on his

essentially elitist and paternalistic idea of what governments must do for the people they serve.

This was to make them all abide by tenets of "fairness" or, at least, his socialist version of that

ideal.

Galbraith, though an avowed statist--not of the Marxist-Leninist but more of the democratic

socialist variety--has been one of the most fervent bashers of the "rich" in contemporary

American culture. While not an explicit Marxist, he accepted the Marxian idea that capitalists

create nothing and take a great deal that they should not be allowed to have. In his most popular

book, The Affluent Society, he laid out a case for a powerful welfare state. He has written in

some of the most prestigious publications of our society, including The New York Review of

Books, The New York Times, American Prospect, Dissent, The Nation and so on.

One of his most well known and widely studied legacies was created from a section of his book

dealing with advertising. Galbraith asserted that advertising is a device by which business

creates desires in consumers which must be acted on and thus produce what he called "the

dependency effect." In other words, consumers become dependent on corporations because the

latter create desires in them for the goods and services they offer for sale. By this means,

corporations become wealthy, make huge profits, while resources are taken away from far more

important projects, you guessed it, those the government wants to provide for us. The public

sector is diminished and the private sector unfairly benefits.

This famous section of The Affluent Society is reprinted in nearly all business ethics readers

serving as text books for business school students across the world. Far fewer of these volumes

offer the decisive rebuttal to Galbraith's position, penned by the great economists, the late F. A.

Hayek. Hayek noted that Galbraith's claim is true but not just for business and advertisers but

also of all human creative endeavors.

The difference is that unlike Galbraith, Hayek did not believe that the desires that people might

cultivate for what is presented to them must be acted on. Instead, we have the freedom to

choose whether to try to fulfill our desires, however they might be created. Advertising appeals

to us but cannot make us do anything. It is a promotional project by which producers call out to

us hoping we would consider what they have to offer and to purchase it. But there is no

guarantee at all that we will act as the advertisers wishes we would.

In what sense does Galbraith deserve a medal of freedom? Only in the sense that a certain

conception of freedom does underlie his thinking. This is what is called "positive" freedom. It

means a condition whereby people are provided by government, and at the expense of other

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Business Ethics MGT610

people, with what they could use to advance their lot. Such provisions would "free" them to

move forward.

The freedom of the American founders is quite different, mainly backed by a different idea of

human nature. It is that people in communities require first and foremost not to be thwarted in

their efforts to make headway in life.

Others may not be conscripted into involuntary servitude to provide them with what they might

need because if they are not thwarted by them, they will be able to do this on their own. Not

equally rapidly, not to the same extent, perhaps, but if they only apply themselves, they will

flourish without coercing others.

Galbraith has never championed this kind of "negative" freedom. So his views are alien to the

American political tradition. It is not surprising, then, that he receives the medal of freedom

from President Bill Clinton, someone who has done nothing at all to further freedom in this

truly American sense.

To Galbraith's minor credit, however, he did, a few years ago, finally admit that capitalism is a

far better economic system than socialism. He did this only in the wake of the collapse of the

Soviet Empire. And even then with great reservations and regret.

He was asked, in an interview published in Alitalia's October 1996 "in flight" magazine: "You

spoke of the failure of socialism. Do you see this as a total failure, a counterproductive

alternative?" He replies this way: "I'd make a distinction here. What failed was the

entrepreneurial state, but it had some beneficial effect. I do not believe that there are any radical

alternatives, but there are correctives. The only alternative socialism, that is the alternative to

the market economy, has failed. The market system is here to stay."

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