This year was marked by the death of two great economists—and an emblematic figure of scandal
Death took two major economic thinkers within months of each other in 2006. John Kenneth Galbraith and Milton Friedman were men whose ideas about the economy, taxes, politics, and business were separated by a deep and wide ideological divide. Both lived into their 90s, and both died as celebrated figures with their reputations and legacies intact.
Another death, however, caught the world by surprise. Kenneth Lay, the most recognizable figure in the epochal collapse of Enron, died suddenly of heart disease in July while on vacation in Aspen, Colo. Lay, who was 64, had been convicted of 10 counts of fraud, conspiracy, and lying to banks in two separate cases relating to Enron, and had been awaiting sentencing.
The Classic Liberal
Galbraith, who died April 29 at age 97, was the quintessential liberal economist. Born in Canada, he gained his doctorate at the University of California. Under President Franklin D. Roosevelt, Galbraith served as the deputy administrator in the Office of Price Administration in the early 1940s, where he organized and administered the wartime system of price controls. He also served as director of the U.S. Strategic Bombing Survey in 1945, and was U.S. Ambassador to India from 1961 to 1963.
Galbraith taught at Harvard for more than 25 years and wrote dozens of books, including 1958's The Affluent Society, in which he wrote about the growing gap between the rich and the poor and the relationship between production, consumption, and advertising.
Even in his final years, Galbraith was railing against conventional wisdom. He also remained sharply critical of many current U.S. policies, including the war in Iraq and the Bush tax cuts.
The Staunch Conservative
Friedman, who died Nov. 16 at age 94, was an economic conservative, believing that government's role is to supply the economy with the money it needs and then step aside. Friedman won the Nobel Prize in economics in 1976 and taught at the University of Chicago, helping make the school a bastion of conservative economic thinking. His economic economic theories were adopted, to some extent, by three presidents—Nixon, Ford, and Reagan.
"Milton Friedman was a giant," liberal economist and longtime Friedman rival Paul Samuelson of MIT told BusinessWeek.com following Friedman's death. "No 20th-century economist had his importance in moving the American economic profession rightward from 1940 to the present" (see BusinessWeek.com, 11/17/06, "Milton Friedman: Death of a Giant").
The Corporate Criminal
But if Galbraith and Friedman exemplified two camps of economic thinking during much of the previous century, it was Lay who exemplified the end result of unethical corporate activity at the turn of the 21st century. Following the collapse of Enron in 2001, other scandals unfolded, more executives were ousted or convicted, and regulations were put in place in an attempt to make corporate governance more transparent and more ethical.
The economists will have their place in the textbooks and the classrooms. But Lay, whose conviction was vacated following his death, will leave a legacy that will have a lasting impact in the law books and in boardrooms.
Click here for a photo gallery of some of the other notable deaths in the business world in 2006.