It has been said that “there is nothing new under the sun.” This old aphorism rang true for me when I recently read The Affluent Society, by John Kenneth Galbraith. Published in 1958, this classic of economic philosophy which influenced Presidents and lesser luminaries, articulated much of what I have deduced for myself about politics and political economic policy. Alas, I am not the genius of political insight that I had fancied myself to be.Although he uses different terminology from the language I have used in my blogs related to the subject, many of his basic premises are the same, albeit addressing different challenges at a different time in history. Galbraith introduces his subject with humorous irony in the opening sentence of the first chapter: “Wealth is not without its advantages and the case to the contrary, although it has often been made, has never proved widely persuasive.” He also maintains, however, that “wealth is the relentless enemy of understanding.” Galbraith goes on to note how throughout most of history, the overwhelming majority of people were focused on the most basic necessities–food, clothing, shelter. During the twentieth century, for a variety of reasons including social legislation, most people in the developed countries became secure enough to begin to desire luxuries and pleasures and to believe that they deserved them. They no longer understood what really constituted “need”, so that “wants”, then as now, came to be viewed as needs. Especially since the debut of television, advertising constantly stimulates us to desire more than we can afford, and also to equate fairness with being able to have whatever our neighbors possess.
Galbraith summarizes the history of economics up to the date of his own thinking on the subject. He points out that the basic assumptions of Adam Smith have been accepted by all of the other influential economists, ironically even Karl Marx. To oversimplify a complex subject, both schools of thought are based on a materialistic value system that subordinates all other values to the acquisition of wealth. In the case of Adam Smith, the wealth of a nation relies on the gross national product, both agricultural production and the fruits of its industry, regardless of how such wealth is distributed. In the case of Marx, cash is still king, but equality of its distribution is a desired goal. At the core of both systems of thought is the belief that management and labor are automatically competing for profit, and therefore in an adversarial relationship with each other.
At the core of both systems of thought is the belief that management and labor are automatically competing for profit, and therefore in an adversarial relationship with each other.
Galbraith encourages both conservatives and liberals, religiously devoted to the “conventional wisdom” of their political agendas, to think bigger. At what point does the acquisition of more money and the things it can buy cease to be more satisfying? As an increasing number of people have more choices, the quality of our lives may be more enhanced by things other than the great American rat race. Among other things, Galbraith suggests that an investment in people, via education, public services and infrastructure may benefit all of us in the long run more than vying for status. We can also afford to be more compassionate, to address the real needs of people who live on the fringes.
Among other things, Galbraith suggests that an investment in people, via education, public services and infrastructure may benefit all of us in the long run more than vying for status.
Galbraith also points out the error which assumes economic might is the equivalent of military might, especially in a world where nuclear extinction is an everpresent threat. In recognizing the greater willingness of people at that time to support the military with their taxes, he acknowledges that because of their greater resources, the military had been able to invest in technological and medical research which had profoundly improved civilian life as well. This is still true today.
I too embrace Galbraith’s philosophy and understanding of social balance. A mixed economy is the path to the most optimum society. The private and public sectors are interdependent, and any attempt to exaggerate their distinction is an illusion. But Galbraith lived in a time when his insights had not yet become widely accepted. His job was to present the case for generous support of the public sector. He did not yet need to address so ardently as we do the problem of how effectively public sector funds achieve the purposes for which they are intended. This is the challenge for us in the new millenium. We must be willing to require all who can best afford it to invest the necessary tax money needed to support an excellent military, school system, infrastructure and network of community servants. But we must also demand the most effective use of those funds to accomplish the goals for which they were intended.