IN THE Great Crash 1929, his classic account of the events that came to a head this month 80 years ago, JK Galbraith makes an entertaining digression on the importance of meetings in business and public life.
He was reflecting on the post-crash decision of President Hoover to call a series of highly-publicised gatherings of the country’s economic leaders. But more generally, Galbraith noted the ritual importance of such meetings. And apart from his exclusion of women – he was writing in 1954 – the comments still hold true today.
“Men meet together for many reasons in the course of business. They need to instruct or persuade each other. They must agree on a course of action. They find thinking in public more productive and less painful than thinking in private.
“But there are at least as many reasons for meetings to transact no business. Meetings are held because men seek companionship or, at a minimum, wish to escape the tedium of solitary duties. They yearn for the prestige which accrues to the man who presides over meetings, and this leads them to convoke assemblages over which they can preside.
“Finally, there is the meeting which is called not because there is business to be done, but because it is necessary to create the impression that business is being done. Such meetings are more than a substitute for action. They are widely regarded as action.
“The fact that no business is transacted at a no-business meeting is normally not a serious cause of embarrassment to those attending. Numerous formulas have been devised to prevent discomfort. Thus scholars, who are great devotees of the no-business meeting, rely heavily on the exchange-of-ideas justification.
“To them the exchange of ideas is an absolute good. Any meeting at which ideas are exchanged is, therefore, useful. This justification is nearly ironclad. It is very hard to have a meeting of which it can be said that no ideas were exchanged.”
By 1954, Galbraith writes, the no-business meeting had become an established institution of government. But in 1929, Mr Hoover “was a pioneer in this field”.
The fact was that the president saw no alternative to letting the slump develop and, as a Republican, he was in any case averse to large-scale intervention. Hence the author’s dry conclusion: “As the depression deepened, it was said that Mr Hoover’s meetings had been a failure. This, obviously, reflects a very narrow view.”
THE IMPORTANCE of no-business meetings aside, there are many lessons in
The Great Crashthat were still true in the run-up to the world's latest collapse: not that the foreknowledge seems to have helped anyone. The belief system that Galbraith dubbed "preventive incantation", for example, clearly made a complete recovery in our time from the collapse it must have suffered in October 1929.
Before the crash, he writes: “Preventive incantation required that as many important people as possible repeat as firmly as they could that it wouldn’t happen [. . .] Especially among businessmen the faith in the efficiency of such incantation is very great.”
Noting that the related cult of light regulation was also a major factor in the 1929 disaster, Galbraith entered a half-hearted defence for “the most inelegant and unrewarding of public endeavours, [enforced] by grinding bureaucracies which are ceaselessly buffeted by criticism”.
But the regulators had not become any more effective by 1954, clearly. And arguing that “financial capacity and political perspicacity are inversely correlated”, Galbraith was not confident this would change during future booms.
“Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present [. . .] Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound”.
Of course, Galbraith was overstating the durability of communism. But the rest of that paragraph holds up remarkably well half a century later (as does the phrase “fundamentally sound”, which remained very popular as recently as last year).
Above all, Galbraith’s book reminds us that the arc of public confidence – initially well-founded, then exaggerated, then inflated to the point where nobody knows how to deflate it safely and is afraid to even try – was much the same in the lead-up to 1929 as to 2008.
And one of the few belly laughs in his wryly witty summary of the earlier debacle concerns a small, personal lesson he was given on the need not to puncture people’s optimism.
After the book’s publication in April 1955 he was, like many authors, dismayed at how little an impression it first made. Passing through New York’s La Guardia airport one evening, he scanned the window of a bookshop for his masterpiece, which as usual, wasn’t there. So, also like many authors, he was reduced to impersonating a member of the general public and casually inquiring at the counter.
Did they have a book by an author whose name he had forgotten – “maybe Galbraith, but I think it was called The Great Crash?” – he asked. The shop assistant didn’t even have to check. “That’s certainly not a title you could sell in an airport,” she replied.