John Kenneth Galbraith Interview: Conversations with History; Institute of International Studies, UC Berkeley

Intellectual Journey: Challenging the Conventional Wisdom; Conversation with John Kenneth Galbraith, 3/27/86 by Harry Kreisler

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Political Parties and the National Agenda

What has happened to the liberal agenda? It wasn't completed. Will it return when this current phase passes?

Well, I think that if it returns, it will return not as a consequence of its own agenda, but as a consequence of some of the flaws that are evident in President Reagan's economics. This autumn, as we talk, there's going to be a substantial revolt against Mr. Reagan's congressmen and senators in the Farm Belt. And if we had, as might be possible, some considerably adverse effects from this euphoria that we are now engaged in debt creation, in stock market speculation, this would have the same prescient effect for the Democrats as President Coolidge and President Hoover. You must remember that in 1932 and 1933, when Roosevelt won and came to power, a striking feature of the Democrats was that they had no agenda. That was all created after Roosevelt came to Washington, or almost all of it.

Are there any analogies with the present period and the period of the Great Crash that you described in your book?

This is something that I've been talking about in recent times. Analogies should not be easily drawn. I would say there are two things that are parallel that we should worry about. One is now, as in the late '20s, the impression (and this is a very subtle but a very important point) that somehow or another if everything is left to the market, the laissez-faire, if the government keeps its hands off, there is a God-given tendency for things to work out. Laissez-faire, laissez-passer, this is a ruling fact and is above and beyond government, a theological commitment to doing nothing, on the assumption that the economy can not fail -- a neo-classical idea that has classical roots going back to Adam Smith and David Ricardo. That is one thing. Out of this, I would worry most about the way in which debt is being created, not so much the public debt (that probably is manageable), but the way in which we are creating a debt to other countries which, if withdrawn, could have a devastating effect some time on the dollar. The way in which we are amassing the debts of private corporations in this takeover movement which could have a very depressant effect if we had some downturn in economic activity. The same thing is now true in agriculture. And the effect of the debt structure which we already see as regards the Latin American loans. All of this could one day lead to, as I say, a loss of confidence in the dollar, a rush to withdraw funds from the United States. That is the picture which would worry me most about the policies of the present administration. And this would be the situation that would save the Democrats, not any original mental exercise that produces an alternative. That isn't going to happen. I've been a Democrat all my life and I think I can honestly say that the collegial efforts of the Democratic Party at wisdom to create great and wise courses of action is not appreciably higher than that of the Republicans.

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