The Economics of Innocent Fraud: Truth for Our Time
Author: John Kenneth Galbraith
John Kenneth Galbraith has long been at the center of American economics, in key positions of responsibility during the New Deal, World War II, and since, guiding policy and debate. His trenchant new book distills this lifetime of experience in the public and private sectors; it is a scathing critique of matters as they stand today.
Sounding the alarm about the increasing gap between reality and "conventional wisdom" -- a phrase he coined -- Galbraith tells, along with much else, how we have reached a point where the private sector has unprecedented control over the public sector. We have given ourselves over to self-serving belief and "contrived nonsense" or, more simply, fraud. This has come at the expense of the economy, effective government, and the business world.
Particularly noted is the central power of the corporation and the shift in authority from shareholders and board members to management. In an intense exercise of fraud, the pretense of shareholder power is still maintained, even with the immediate participants. In fact, because of the scale and complexity of the modern corporation, decisive power must go to management. From management and its own inevitable self-interest, power extends deeply into government -- the so-called public sector. This is particularly and dangerously the case in such matters as military policy, the environment, and, needless to say, taxation. Nevertheless, there remains the firm reference to the public sector.
How can fraud be innocent? In his inimitable style, Galbraith offers the answer. His taut, wry, and severe comment is essential reading for everyone who cares about America's future. This book is especially relevant in anelection year, but it deeply concerns the much longer future.
Publishers Weekly
In this thin volume, Galbraith, the noted economist and presidential adviser, serves up a pessimistic view of today's U.S. economy. Drawing on the omnipresent headlines of corporate scandal and greed, Galbraith explains that as the economy suffers, the overall state of American society declines as well. He points to a number of cases of "innocent fraud," or the gap between reality and conventional wisdom. The author bemoans the emphasis on gross domestic production, or GDP, rather than cultural or artistic advances. Companies, not the public, decide what products to make. Galbraith believes that decisions in various corporate arenas are made based on profits, rather than sound business strategies. Furthermore, he says that shareholder meetings, with a few rare exceptions, are pointless because "Shareholders-owners-and their alleged directors in any sizeable enterprise are fully subordinate to the management.... An accepted fraud." He also calls the rapid Internet growth and subsequent bubble another example of fraud as millions of analysts predicted rapid growth for so many companies, but ultimately many employees were laid off. Even more dismaying to Galbraith is the power of the Federal Reserve, which is credited with prompting economic resurgence when, in his view, the institution has limited real power. This brief treatise is a well-written, logical argument about the state of the economy. However, readers may be disappointed because the short concluding chapter offers few realistic solutions. (Apr.) Forecast: Given Galbraith's reputation and the ongoing criminal trials of CEOs, this book should get review attention and early sales could be strong. Copyright 2004 Reed Business Information.
Table of Contents:
| Introduction and a personal note | ||
| I | The nature of innocent fraud | 1 |
| II | The renaming of the system | 3 |
| III | The economics of accommodation | 11 |
| IV | The specious world of work | 17 |
| V | The corporation as bureaucracy | 23 |
| VI | The corporate power | 29 |
| VII | The myth of the two sectors | 33 |
| VIII | The world of finance | 39 |
| IX | The elegant escape from reality | 43 |
| X | The end to corporate innocence | 49 |
| XI | Foreign and military policy | 53 |
| XII | The last word | 57 |
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Abe Lincoln
Author: Sterling North
Born in a log cabin on the Kentucky frontier, Abraham Lincoln faced a life
of extreme poverty and hardship. Without losing his gentle nature and sense of
humor, he surmounted these and many other obstacles to attain the highest
office in the land and the enduring love of the American people.