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John Kenneth Galbraith

Print publication date: 2017

Print ISBN-13: 9780691171661

Published to Princeton Scholarship Online: May 2018

DOI: 10.23943/princeton/9780691171661.001.0001

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The New Economics at High Noon

The New Economics at High Noon

(p.310) Chapter 19 The New Economics at High Noon

John Kenneth Galbraith

James K. Galbraith

Princeton University Press

This chapter examines the New Economics that emerged in the years following World War II. In 1947, Seymour Harris of Harvard University, an avowed Keynesian evangelist, edited a series of essays on Keynesian ideas and entitled his volume The New Economics. Under the New Economics, employment increased more rapidly than the labor force. As a result, unemployment declined steadily and prices were held stable. The chapter considers four serious flaws of the New Economics. The first was the reliance on prediction and foresight—on taking action before need. The three other flaws all limited, even negated, the ability of the government to deal effectively with inflation. The first of these flaws was in the machinery for dealing with the now familiar problem of market power. The next flaw was the fatal inelasticity of the Keynesian system. The final flaw was the revival of faith in monetary policy.

Keywords:   employment, New Economics, unemployment, prices, inflation, market power, monetary policy

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