Julia R. Cartwright is a senior research fellow in law and economics at the American Institute for Economic Research.
In the 1940s, economist John Kenneth Galbraith sat in the Office of Price Administration, helping administer wartime price controls across much of the American economy. Rather than calculating a “correct” price for each good, the Emergency Price Control Act of 1942 let the government lock sellers into the highest price they had charged that March, leaving the agency to issue thousands of industry-by-industry rules to fix the distortions the freeze left behind.
It was, his admirers say, the boldest experiment in economic management the country ever attempted. His critics, on the other hand, saw bureaucratic overreach. Over 80 years later, his son James has written a book arguing that his father’s approach to economic management deserves a revival. What has happened in those 80 years — deregulation, globalization, the fall of the Soviet Union, the rise of China — is, in James’s telling, one long catastrophe created by economists.
So runs the thesis of “The Power to Destroy: How Bad Economics Drove America’s Decline,” the newest addition to the growing shelf of books declaring that free markets have failed the United States. James K. Galbraith, an economist at the University of Texas at Austin’s Lyndon B. Johnson School of Public Affairs, opens with a confession: His discipline is “a fraud,” less a science than a religious sect.
The charge is that economics worships equilibrium, a preindustrial myth of balance and harmony that treats every crisis as an external shock and every recovery as a return to normal. When this mindset is applied to pandemics, inflation, sanctions and supply chains, “it slowly, even with the best of intentions, wields the power to destroy.” Unless the pattern is broken, it may “doom the human species to a slow extinction.”
Galbraith organizes the book as a tour of failures: the global dollar order, inflation, deficits, industrial policy, supply chains and sanctions — each a case of equilibrium-thinking blundering at a national scale. He names the four horsemen of the economic apocalypse to be austerity, precarity, inequality and demography: They “do not ride in from the outside,” but are bred by neoliberal policy itself.
His account of the sanctions imposed on Russia after its 2022 invasion is harsher still: Confident Western analysts subtracted labor, capital and innovation from their models and predicted a collapse that never came. Instead, the sanctions functioned as “a policy of trade protection, combined with a robust industrial policy,” a tariff wall that handed Russian firms captive markets.
He is probably too optimistic about Russia’s economy, but the larger point stands: Sanctions are a case study in unintended consequences. The irony is hard to miss. Galbraith treats the failure to anticipate Russia’s adaptation as evidence against conventional economic policymaking without asking whether the same problem applies to the domestic planning he favors.
The book loses its footing when Galbraith moves from criticism to construction. He equates textbook economics with neoliberalism and neoliberalism with the case for markets, then torches the whole lot as one orthodoxy. “The name of our party line,” he writes, “is, of course, economics.”
But the real case for markets rests on a problem he never confronts: local knowledge. Galbraith writes that when profit becomes “the accepted criterion of success,” the result is “pathological.” But prices — and profits — coordinate information about scarcities, technologies and wants, information that no central authority could assemble.
His alternative to markets is a strategic administrative state because “systems need managers.” How the managers are to know what to do raises the classic knowledge and calculation problems associated with economists Ludwig von Mises and Friedrich A. Hayek.
Hayek argued that the information needed to coordinate an economy is dispersed among many people and communicated through prices. His name appears nowhere in this book. Neither does the question of whether or not it is possible to incentivize the managers to achieve Galbraith’s stated economic goals. For a man who opens by declaring his profession a fraud, Galbraith is curiously silent about one of the most important bodies of literature challenging the sort of planning he proposes.
Galbraith documents, devastatingly, that the American state has lost the capacity for decisive effort. Congress gutted its expertise, lobbies steer its decisions, and Chips Act allocation was handed to Wall Street financiers. He declares America “an ideocracy and an oligarchy,” where federal democracy is mostly ceremony.
Suppose Galbraith is right on every count. His remedy is to entrust this same captured, incapable state with credit allocation, price controls and public ownership of key capital assets. He proves the state cannot be trusted with the power it has, then recommends giving it far more.
Too often, the book substitutes assertion for evidence. Deregulation is treated as tantamount to rapacity, no citation offered. The Trump administration is cast as full of free-market absolutists — the same administration Galbraith credits with tariff walls unseen since the 1930s. Mao Zedong is remembered for literacy and public health campaigns; the tens of millions who starved under his planning apparatus go unmentioned. China’s covid lockdowns are praised as the work of a population “highly unified, largely cooperative, and disciplined.”
Galbraith has much of the right diagnosis but the wrong prescription. The lesson of his own evidence — the fatal conceit of the sanctioning spreadsheet — is to disperse power, not concentrate it. His father fixed prices in wartime and defended the experiment ever after. James Galbraith would hand the levers back to Washington, confident that this time the managers will be wise and benevolent.
The power to destroy is not confined to bad economics. It belongs to any doctrine convinced it knows enough to run a whole society. Galbraith spends the book condemning that certainty in his profession; he might have paused to notice how much of it animates his own program.
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