John Kenneth Galbraith's "The Affluent Society"
Seligman, Ben
J. K. Galbraith, the well-known Harvard professor, has worked out a plan for a socialist society. I don't mean to frighten him or some of his faithful readers. (I don't think he frightens...
...Galbraith argues persuasively that this weird disparity stems from a lack of social balance...
...And income is still distributed in fairly lopsided fashion...
...But then anyone who has ever questioned the "conventional wisdom" has been controversial...
...there is a lack of parks and playgrounds...
...Our vast output makes the conventional wisdom's image of the slothful workingman useless...
...They saw a limited national income and a conflict of classes over its distribution...
...A family will go for a picnic in the country in a preposterously overpowered automobile through badly paved streets, past billboards and blighted neighborhoods, to lunch "on exquisitely packaged food from a portable icebox by a polluted stream...
...While Galbraith has approached his pleasant task in the most logical of fashions, beginning first with the theoretical framework of received economics (he uses the dry and somewhat acerb term "conventional wisdom" to describe traditionalist views) and then relentlessly pursuing their implications, we might do well to start with his conclusions...
...and the ghastly exhaust of the monsters that pass for cars pollutes the skies...
...Cost and pricing techniques are quite different for each sector...
...By now about one-third of all spending units have two or more wage earners, as compared with but one-fifth a decade earlier...
...One wishes, however, that the underlying conceptions of the public-private dichotomy were more clearly set out...
...The fact is that holdings of liquid assets are directly related to the size of income...
...Colleges and mental hospitals, says Galbraith, may have been overcrowded and underprovided in recent years, but the Gross National Product and retail sales, especially of television sets and other gadgets, have not ceased rising...
...This is the simple fact that income generated by the productive system does not always move in ways that absorb the whole product...
...Maximum net gain is made to apply to everything: turnpikes make real profits and bridges have toll fees enough to rebuild them over several times...
...Galbraith has given us a book which despite some lapses (there is a serious underestimation of world poverty and its impact on us) is one to make us think...
...Security, he says, is within reach with our kind of affluence...
...But the kind of distribution he speaks of clearly means an expansion of welfare: he would like more and better education and the use of resources to lessen hunger and discontent...
...I don't think he frightens easily...
...One may rightly ask whether this is a good price to pay for affluence...
...Why should we not cultivate the art of getting more for doing less: our economy is well able to achieve this high aim...
...It is true that consumers have $630 billion in financial assets, but their character and distribution offer no particular reason for the kind of pride we find in the pages of Nation's Business or Time...
...It might get them to wonder just a little about what he calls the imperatives of consumer demand and the vested interest in output...
...The Michigan group concluded that most of the liquid holdings were only of "moderate" size: less than half were $500 or more, while only about one-tenth reported liquid assets of $5,000 or more...
...If this keeps up, they may even put turnstiles around the Boston Common...
...1958 had some interesting things to say on these questions in its report on a University of Michigan Survey of Consumer Finance...
...The problem of production has been solved, while distribution leaves something to be desired...
...And this failing Galbraith seems curiously to underestimate...
...This, at least, seems to be the main argument of welfare economists and socialists...
...But we find that more and more the pricing devices of the private producer are enforced on public services...
...The Federal Reserve Bulletin of Sept...
...There is, however, a flaw in this sort of thinking that dissenting economists have always used to clobber the Classicists with...
...Marx too saw this as the central problem, but unlike the others he did not expect the system to survive...
...BUT I DON'T WISH to quarrel too often with Galbraith, for much of what he says is so genuinely apt that he even has Wall St...
...J. K. Galbraith, the well-known Harvard professor, has worked out a plan for a socialist society...
...Corporate stock represented 40 per cent of the total: there's ample evidence to show that virtually all of this is held by Mills' power elite...
...Similarly, says Galbraith, there must be a proper balance between investment in capital and investment in humans...
...The comments that Galbraith has to offer on the theory of consumer demand ought to be read carefully by a good many economists still enamored of the apparatus of psychic value and marginal utility...
...Thus, liquid assets— money, savings bonds, savings accounts and the like—totalled a little over $250 billion...
...Maximum net gain is the rule for autos and frozen foods, steel and apparel...
...And despite some drawbacks of detail, he has done so thoughtfully, with discernment of the complexities involved, and in a way that commands attention...
...Essentially, what we need is a balance between private goods and the supply of public services...
...Only with Sputnik I did our educational plant begin to be seriously looked at...
...It could be that Ricardo and his friends appear to have been more accurate than Marx only because there was imbedded in the classical economics a tradition of hope and harmony which gave everyone an "uncertain reassurance" that everything in the end simply had to turn out well...
...If only for this we ought to be grateful...
...He would break the connection between production and income, so that if unemployment came about he would hold effective demand high with unemployment insurance close to the full wage...
...The criticism of the older economists that Galbraith offers does not, however, take account of the optimistic strain which may be found in classical theory...
...And his description of the way in which administered prices add to the inflationary spiral demonstrates that labor economists are not all mad when they criticize the pricing practices of corporations...
...Wherever possible the cost burden of public service is shifted to the direct user without regard to his ability to carry it...
...Now, if this by some strange political accident becomes a general way of doing things in the public realm, we would then be getting closer to a socialized economy...
...The outstanding fact in our society, he says, is that we possess the unquestioned ability to produce whatever it is that we care to produce...
...This being the case, we should be able to meet all our needs, both private as well as public...
...Somehow it did, and perhaps part of the reason may be traced to the new technology and its affluent flow of goods...
...In fact, it has already accomplished this objective, for "apart from the universities" we are told, "where its practice has the standing of a scholarly rite, the art of genteel and elaborately concealed idleness," sometimes known as featherbedding, has already reached high development in the executive reaches of the corporation...
...The report tells us in its bland matter-of-fact way that "many spending units attained a higher income status because the wife or some other member worked to supplement the earnings of the head...
...The median income for consumer spending units in 1956 was reported to have been $4,250...
...Modern civilization, however, has not yet found a place for Detroit's insolent chariots...
...The main point is that production is so great that we can afford a certain amount of slackness...
...But Galbraith sees the economy stumbling only when it has already produced a surfeit of goods, so that all that happens is a bit of irritating unemployment...
...That's talking, of course, about hall the working men (or half the families...
...We live in an interdependent economy in which private commodities and public services are essentially complementary...
...These goods, privately produced and sold, create the image of an affluent society...
...Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings...
...We start worrying about brains only when we get ready to blow them out...
...Another 20 per cent is represented by government and private bonds, mortgage holdings and life insurance policies...
...What he has done is to take the notion that economic insecurity is essential for progress and efficiency and place it on the intellectual junk heap...
...The author wonders aloud whether the desire for a nontoxic supply of air would suggest a "revolutionary dalliance with Socialism...
...It is the same weakness that both Marx and Keynes saw in such silly propositions as Say's Law which exclaimed that every supply created its own demand...
...If big league baseball, with its farm club system, has learned to do this, why not the larger society...
...journalists reading his book...
...More automobiles demand not only more gasoline but some place in our crowded cities to put them...
...The real situation, and it is difficult to quarrel with him, is that our productive system has reached a point of doubtful return...
...The hint that the only ones to be hurt are factory workers is a point worth pondering: do we now have an economy in which only blue collar workers suffer from depressions...
...But the simple fact is that this witty economist has set forth a series of proposals that spell out the sort of society that socialists have been talking about for years...
...Theoretically, this is not the way to set prices for the services of bridges, health facilities or education...
...GALBRAITH TRACES the roots of this frightening disparity to the ideology of unremitting production implicit in the thinking of the early Classical economists...
...In the poorer income units, we are told also, "many incomes were probably supplemented by income in kind, such as meals and lodging provided servants, and food grown and consumed in farms...
...Here, unfortunately, he has taken up the myth of the rich, happy and powerful worker, a myth that now flourishes in the best places...
...It has become a wellstuffed cornucopia that pours out an apparently endless flow of goods, all ostensibly seeking to satisfy the craving of the contemporary American to gorge himself on a bewildering array of commodities...
...In the past, says Galbraith, it was not uncommon for cities to provide horse rails for vehicles seeking to pause...
...Adam Smith and David Ricardo and the gloomy Parson Malthus all thought that poverty and inequality would always be mankind's lot...
...But somewhere along the line the meaning of a median income of $3,100 per annum for all working men (or somewhat over $4,000 for families) has escaped Professor Galbraith...
...I don't mean to frighten him or some of his faithful readers...
...If the latter create costs which are greater than yield (where a charge is made) then the deficit should be covered from general tax income...
...But corrected for changes in the cost of living, the latter becomes approximately $4,200, so that in terms of purchasing power families appear to have lost a little ground...
...We cannot escape the patent fact that the consumption of private goods normally calls for some facilitating or protective measure by government...
...Unfortunately, nothing was said of that peculiar income-in-kind enjoyed by the upper strata—the expense account...
...The conventional wisdom insists, however, that production must be ceaseless, for wants are insatiable and there isn't anything you cannot sell to a consumer if you only make him desire it...
...in 1957 this figure was $4,350...
...If only to support this idea, Galbraith's book deserves the wide audience it has won, for without expansion of the public economy the very future of society is threatened...
...Galbraith buys this one too...
...In the words of the Wall St...
...Galbraith also contends that genuine inequality no longer exists...
...The present situation in some of our larger cities grimly testifies to what may happen to all...
...Basically, Galbraith is posing the same dichotomy that was described by John Stuart Mill...
...The counterpart of this myth is the one that says America's poor are now mainly confined to misfits, agricultural workers and economic cripples...
...If these public services are not provided, civic strangulation is the result...
...cities cannot clean their streets...
...Schools are old and overcrowded...
...Whenever riches do flow, the economic harmonies of JeanBaptiste Say and Frederic Bastiat comfort us that this is the best of all possible worlds...
...Yet, in reality, we are much less prosperous than we think...
...Journal, this makes him a controversial economist...
...When it comes to public services the amount of deprivation is almost depressing...
Vol. 6 • January 1959 • No. 1
