'Predator' urges change in definition of 'free market'

James Galbraith used to work inside Congress, as executive director of the Joint Economic Committee. Then he settled in as a professor at the University of Texas.

Like his renowned father, economist John Kenneth Galbraith, James is an iconoclast. In previous books, polemics for national magazines and research studies for academic journals, he questions the central tenets of economic policy and the underpinnings of waging imperialistic wars on behalf of capitalism and democracy.

In a book published two years ago, Galbraith showed what he considered the intellectual dishonesty of Republican Party — and supposedly, "conservative" — economic policy. That book, Unbearable Cost: Bush, Greenspan and the Economics of Empire, sought to demonstrate the devotion of President Bush, Vice President Cheney and then-Federal Reserve Board chairman Alan Greenspan to helping the wealthy (including themselves) at the expense of equity (or at least a semblance of fairness) in American society.

Galbraith's new book, The Predator State, takes plenty of well-aimed, well-deserved shots at Republicans and conservatives, Democrats and liberals. Mostly, though, as the subtitle suggests, it is a denuding of an idea — the idea of how vital "free markets" are to a capitalistic, democratic nation.

Galbraith says the Republicans in power have come to realize that free market economic philosophy, as put forth by President Reagan nearly 30 years ago, is outmoded. His aim "is to try to free up the liberal mind," so that they give up being guided by the false economic idols of monetary control, balanced budgets and decreased government regulation of industries. Until liberals understand the phoniness of those principles, Galbraith says, "They will not be able to think or talk about the world in terms that relate effectively to its actual condition. Nor will they be able to advance a policy program that might actually work."

It should be obvious by now, Galbraith says, the Bush Republicans have no plan for a healthy economy, an economy that would benefit the middle class and the poor in addition to the wealthy. They lack reasonable alternatives to the national oil addiction, to global warming, to resuscitating the city of New Orleans, to providing medical insurance for those who suffer, to reviving the importance of the dollar in the world economy.

Neither enlightened Republicans nor Democrats can improve much on the current stalemates, though, until they redefine the terms of the debate, he says, because the generally accepted terms are bankrupt: "Monetarism led to financial crisis. Supply-side tax cuts have no detectable effect on work effort or savings or investment. Financial deregulation, from the savings and loan debacle to the subprime mortgage fiasco, leads to criminal misdirection."

If readers are ready to accept Galbraith's statement that all policymakers — except a few hidebound academics — have accepted (at least in private) the failure of Reagan-era economics, then those readers will enjoy the alternatives proposed by the author. His most basic example examines the myth perpetrated by Republicans that Social Security is a failure. The myth allows them to propose privatization of the Social Security system.

Citizens who vote for change can influence policymakers who will raise wages for American workers, create domestic jobs while erasing incentives that lead corporations to move American jobs overseas, and reinstitute government regulation that might achieve cleaner air, less polluted water, safer food and airlines that run on time, he suggests.

"Politics may stand in the way, but economics does not," Galbraith says, "and there is nothing really to lose, except 'free market' illusions."

Steve Weinberg is author of Taking on the Trust: The Epic Battle of Ida Tarbell and John D. Rockefeller.