John Kenneth Galbraith: “The Great Crash” (1955)

As the market came to be considered less and less a long-run register of corporate prospects and more and more a product of manipulative artifice, the speculator was required to give it his closest, and preferably his undivided attention. Signs of incipient pool activity had to be detected at the earliest possible moment, which meant that one needed to have his eyes on the tape. However, even the person who was relying on hunches, incantations, or simple faith, as distinct from the effort to assess the intentions of the professionals, found it hard to be out of touch. (250)


One of the clear lessons of John Kenneth Galbraith’s The Great Crash—his blow-by-blow recounting of the 1929 stock market crash—is that an unstable, bubble economy is actually closely examined. The fact that so many eyes on the missed what was happening is not a surprise, not some mysterious contradiction in economics. In fact, it is because so many people looked narrowly at the workings of the stock market that no one was looking long-term. More eyes did not make for better analysis any more than more students make for a better classroom or more dishes on a menu make for a better restaurant.

This short work is not theoretically sophisticated and lacks the original insights of the three other ground-breaking texts in this Library of America volume, but it happened to be his most consistently popular text, even a favorite of Fidel Castro. I suppose it was readers love of the drama of the late 1920s stock market bubble and crash that made it so popular. What Galbraith is careful not to do is make the stock market crash a morality tale. As a good economist, he understands that there is a logic to even an irrational bubble. What is irrational in the macro makes perfect sense for the individual or the firm. As a narrative, however, it is not the easiest to summarize. Thankfully, for people who want to cut to the chase, there is a final chapter called “Cause and Consequence” about the root causes of the Great Depression, which followed the stock market crash. The same conditions that created the crash feed into the depression. This final chapter also makes Galbraith’s book so important to revisit in times like this, for most of these conditions are with us now, hanging over us ominously.

These causes were (1) inequality, (2) a poor corporate structure and illegality, (3) a weak and overleveraged banking system, (4) low foreign demand for US goods, and (5) myopia among economists. Galbraith studied all of this in other texts. An ideal corporate structure is, for instance, his major focus on The New Industrial State. Inequality and its consequences are studied at length in The Affluent Society. The tendency of economists to look at the world through the window of obsolete theories is also laid out in The Affluent Society. I only mention this because either it means that Galbraith knew what he was talking about, or that he looked at the Great Depression through his own theories.

I will leave my review of The Great Crash at that, because I am planning on some extended reviews of Galbraith’s ideas in the next two or three posts. This book is worth reading, especially for people who want to dig up dirt on corporate corruption and excesses. If the daily newspaper was not giving you enough already.


James Baldwin, “The Fire Next Time” (1963)

The First Next Time is one of James Baldwin’s most famous works and its exists right in the center of his career and at the center of the Civil Rights Movement.  I am not a big fan of situating his career alongside the Civil Rights movement because it likely limits our understanding of both, but it is hard to separate the two so I will stick to my banal observation.  The book consists of one short essay, written in the form of a letter to his nephew, called “My Dungeon Shock” and one long essay “Down at the Cross,” which among other things tries to answer the question about why the Nation of Islam was becoming such a popular movement in the 1960s.  So the essay moves from the personal to the political, and being published together we can guess Baldwin saw the two as intertwined.


“My Dungeon Shock” summarizes many of Baldwin’s observations about race.  Indeed, it sustains some old questions in African-American identity that go back to Douglass’ essay on the Fourth of July and Dubois’ double consciousness.  How is it possible to be an outsider in the land of your birth?  It is an appropriately angry document.  “I accuse my country and my countrymen, and for which neither I nor time nor history will ever forgive them, that they have destroyed and are destroying hundreds of thousands of lives and do not know it and do not want to know it.” (292)  The problem is more profound than one that anger alone can answer.  It is the means by which these lives are destroyed through the expectation of mediocrity, condescension, platitudes, and a the enforcement of an entire infrastructure of reality that his reader (his nephew) had no part in constructing.  The calls of liberals in the 1960s to wait, to be patient, to integrate (as if Harlem’s blacks were not integrated already in brutal and horrifying ways) all come tumbling down in this honest and powerful letter.  The lack of empathy by the white establishment is clearly expressed in Baldwin’s debate with William F. Buckley two years after The First Next Time.   It is clear that Buckley fails to express any real empathy.  Indeed he misses the point entirely.

In “Down at the Cross” Baldwin begins with his commitment to religion in his youth and ends with the growing popularity of Islam among blacks in the 1960s.  We can consider the general point first.  Can religion provide a path to freedom?  There is the objective and subjective part of this.  Objectively, I have my doubts that any institutional infrastructure, no matter how well-meaning, can create the conditions for personal freedom (and I do not see how you get to the freedom of a group without individual freedom first).  Subjectively, it seems the story is more complicated.  Baldwin discusses how by being saved, he found a place in the world.  For a time he played the role of a leader in the congregation as a preacher.  He probably learned many important lessons about persuasion and the use of the word that aided his career as an essayist.   Baldwin makes the point in Down at the Cross” that black Christianity failed to fully recognize the role of religion in sustaining segregation.  “The white man’s Heaven is the black man’s Hell” may be a statement of outraged Christianity but it is also a statement that internalized segregation (if not “separate but equal”).

Baldwin is particularly interested in the rise of black Islam in the United States.  He discusses his meeting with Elijah Muhammad, the founder of the Nation of Islam.  Baldwin found the theology of the Nation of Islam convincing in a historical and realistic day-to-day sense.  “We were offered, as Nation of Islam doctrine, historical and divine proof that all white people are cursed, and are devils, and are about to be brought down.” (315)  Baldwin reminds us that this was not a difficult sale to those who lived in 1950s Harlem, where white people really did act like the devil.  Whatever respect whites had in the eyes of blacks had long died off.  They did look and act like demons.  The Nation of Islam only made that truism divine truth.  To connect this to Baldwin’s close relationship to Christianity, the black God would succeed in liberating the people where the white God failed.  Baldwin wants to tell his readers that this is a powerful and convincing message for people who grew up like him.

The essay ends with a discussion of power and a vision of the future, not of shared power or a shifting of power or separatism (like that of the Nation of Islam).  Rather, Baldwin returns to the old observation that both whites and blacks are a product of United States and bound to its fate.  By this logic, there is no reason that he cannot own his political destiny. On this point, the Nation of Islam is correct.  “If this sentiment is honored when it falls from the lips of Senator Byrd, then there is no reason it should not be honored when it falls from the lips of Malcolm X.” (342)

If we bracket the potential of abolishing political power, there seems to be in Baldwin’s analysis a clear libertarian justification for nationalism.  Working within the system can get tiresome after four centuries.  Of course, separatism and nationalism and the rhetoric of racial superiority is bankrupt.  Baldwin’s analysis is a warning that white America has cultivated the Nation of Islam.  Power cultivates resistance.

Here are some of Baldwin’s comments on the Nation of Islam.