ECONOMICS IN PERSPECTIVE A Critical History By John Kenneth Galbraith Houghton Mifflin. 324 pp. $19.95

IN Economics in Perspective: A Critical History, John Kenneth Galbraith lives up to his reputation as the grand jester of contemporary economics. He has been such a splendid and stimulating figure for so long that it's sad one can no longer take him entirely seriously. I agree with him when he writes that economic discussion should leave room for "enjoyment for the sake of enjoyment," and there is plenty of that here. The jokes are up to form; the conventional wisdom of every age is suitably mocked. What is not provided is the strenuous enjoyment to be had from arguments well handled or from important questions thoughtfully discussed. And there is no sign whatever of new thought, though Galbraith has clearly been doing his homework on his Aristotle and Aquinas.

What we get instead is an effortless romp with those of the Great Masters who most readily serve Galbraith's familiar purpose: to undermine the central tradition of economics that takes a beneficent, self-adjusting market system as its paradign. He has a problem with Adam Smith, who can scarely be left out, but who is generally reckoned to be the founding father of that tradition. He overcomes it by stressing Smith's "joy in afflicting the comfortable, causing distress to those who professed the convenient and traditional ideas and policies of his time." Thomas Malthus passes the Galbraith test as an early critic of Say's Law of Markets. David Ricardo is presented as the ironic figure whose conservative intentions were sabotaged by his labor theory of value, which provided the "spark and tinder" for Karl Marx. Alexander Hamilton and Friedrich List get respectful attention as 19th-century critics of free trade. Thorstein Veblen and John Maynard Keynes complete Galbraith's Dissenting Academy, the first for mocking the pretensions of the rich, the second for denying that market economics automatically tend to full employment.

These figures more or less exhaust Galbraith's store of sympathy and attention. The Marginalist Revolution gets short shrift as "one of the lesser triumphs of economic theory." Leon Walras gets a mention only as the son of Auguste Walras, a far more obscure presence. The Austrian school of Mises and Hayek figures only as the butt of Galbraith's well-worn joke that postwar Austrian prosperity was greatly enhanced by their forced departure from their country. Galbraith's treatment of money remains as patchy and idiosyncratic as in his earlier book of that title. The great English Currency versus Banking school debates are ignored; instead we get a folklore perspective on money, drawn mainly from 19th-century rural America. It is agreeable to learn that the Swedish economist Knut Wicksell was imprisoned in 1908 for making "some less than devout references to the Immaculate Conception." But there is no mention of the monetary disequilibrium tradition he pioneered and which was the main alternative to Keynesian theorizing about economic disturbances. From this kind of selective history, one gets no sense at all of the intellectual strength and resilience of the "market" paradigm, of the commanding and enduring hold on economic thought of the concept of equilibrium.

The flaw in the book from which all else flows is that Galbraith is not really interested in ideas. To him economic ideas are the mere epiphenomena of "the relevant economic life." Not only can one not write interestingly about ideas if one happens to believe this; it also happens not to be true. The "relevant economic life," in the sense of scarcity, existed long before economics did. Why then was there no economics till the 18th century? Galbraith says: Because there were no market economies before then. But this begs the question. For the market economy did not arise spontaneously. It was itself an intellectual project, a solution to the problem of scarcity that emerged with the rational thought of the Enlightenment. Market economies, Karl Polanyi has reminded us, were manufactured by legislation. The origins of economics, in other words, lie as much in changes in our way of thinking about the world as in changes in the world itself. The dialectic between the two, between changes in thought and changes in society, is the interesting question for any history of ideas. Galbraith seems quite oblivious to it.

Almost as irritating is his frequent assertion that economics has mainly been the tool, not normally unwitting, of vested interests. Today's maintstream economics is seen as a conspiracy to protect the predatory power of big business by pretending that great corporations don't exist. All this seems to me quite wrong. Economists are no more or less self-serving than any other group. But economics has nearly always been intensely critical of dominant economic practice. The function of the market model has been to provide a standard against which current practice can be judged.

Even when economics has given comfort to the well-off, it has not generally done so meretriciously. Take, for example, the 19th-century view that interest is the reward for a particular kind of virtue -- abstaining from consumption. Galbraith comments: "Consumption forgone indeed! Abstinence was not the distinguishing feature of Newport, Rhode Island. But no more was it apparent in the England of the new industrial rich; this, too, was a world of exuberant and often ostentateous excess." In 19th-century England and, I suspect, in much of the United States, the saving classes were brought up to live frugally. Keynes' father was fairly typical in this respect. He regularly saved

400 a year out of an income of

1,000. His son made the shrewd comment that had his class "not saved like bees" they would have long before been expropriated.

GALBRAITH has tried to write a tract for our times. The aim is laudable, but Galbraith is no more able than most established figures to liquidate obsolete intellectual investments. His economic landscape is still dominated by giant corporations and labor unions, whose (often malign) interactions determine the working of the economy. From this he concludes that the State, representing the Public Purpose, needs to join the action, not as a tool of the corporation, but as the director of the play. These are arguable propositions, but one also needs to consider the arguments and evidence against them, which Galbraith nowhere does. He does not mention the work of Nobel laureate James Buchanan and other "public choice" theorists who have drawn attention to the prevalence of -- and reasons for -- government failure. Any serious political economy for our times would at least have to try to weigh the costs of government failure against that of market failure. Again, it is interesting that someone who has written so much about the influence of technology on the organization of production should make no mention of the actual and potential impact of the new microchip technology on the size of the firm, the power of trade unions, the location of production and many other things. Galbraith's economics of the future remains firmly rooted in Galbraith's Industrial State of the 1950s. He offers us the economics of exhaustion, not renewal.

Robert Skidelsky, professor of international studies at the University of Warwick in England, is the author of "John Maynard Keynes: Volume I -- Hopes Betrayed, 1883-1920."