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Sunday, February 5, 2012

The Affluent Society by John Kenneth Galbraith

The Affluent Society by John Kenneth Galbraith
Reviewed by: Karen B. Moreno

The Affluent Society, written by John Kenneth Galbraith in the year 1958, composing of 25 chapters, sought to clearly outline the manner in which post-World War II America was becoming wealthy in the private sector but remained poor in the public sector.

            In this book, the terms “affluent society” and “conventional wisdom” were given birth. Galbraith actually did not really directly gave meaning to affluent society, on the other hand, he asserts that “conventional wisdom” is based primarily on tradition and does not accommodate changes in society and so must be viewed with skepticism. He observes that the early economic theorists of the previous centuries based their theories in a world economy characterized by poverty. Galbraith argues that production has become the foremost concern in economic thought. He elaborates upon the extent to which conventional wisdom in the United States regards production as the essential measure of economic vitality. He stresses, also that the conventional wisdom is selective in evaluating various types of production so that private sector is deemed good for the economy while social services provided by the government are considered bad for the economy.

Galbraith’s central concerns in reassessing the post-World War American economy includes the relationship between production, consumption, and advertising; the abiding issue of poverty and economic inequality; and changing factors in such economic concerns as employment, inflation, and consumer debt. He ultimately advocates a greater emphasis on sales tax over property tax; greater government expenditure on such public services as education and health care; and a national goal of expanding the New Class of citizens able to pursue work they find inherently enjoyable.

Indeed, this book is a master-piece on economics. There are lots and bulks of thoughts in this book, that due to my innocence and lack of intelligence of the said topic, I felt helpless at the prospect to fully understand this work. However, I still find sufficient words to at least make list of Galbraith’s thought which I agreed on and find relevant to share this. So, the following are the thought in this book, which I find essential:

z  Dependence Effect. American demand for goods and services is not organic. That is, the demands are not internally created by a consumer. The new demands are created by advertisers and the machinery for consumer-demand creation that benefit from increased consumer spending. As Galbraith writes:

              “As a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied. This may operate passively. Increases in consumption, the counter-part of increases in production, act by suggestion or emulation to create wants or producers may proceed actively to create wants through advertising and salesmanship. Wants thus come to depend on output.”

This exuberance in private production and consumption pushes out public spending and investment. Individual wants, moreover, are for food, clothing, and shelter, but are themselves artificially created, via advertisement, salesmanship, and installment-buying, in order to keep the machinery of production going full-blast.

z Security and Equality. The emphasis on productivity has received additional force from the awareness that an economy fully employed in maximizing production incidentally solves two other troublesome problems: security and equality. The worker is secure in his job, the corporation in its profit, while the general increase in wealth leads to both a narrowing of inequalities and a relative loss of interest in those that do remain. In the conventional wisdom of conservatives, the modern search for security is regularly billed as the greatest single threat to economic progress. As Galbraith writes:

“Conservatives struggling, however unconsciously, to reconcile this drive for security with the inherent and seemingly indispensable insecurity of the competitive society were profound alarmed. For perhaps the first time in history they worried not about the turbulent ambitions of the masses but about their yearning for peace and contentment. Liberals, observing the political magic in this desire for security, accepted it and rationalized it. Modern Industrial life, they concluded, was a thing of exceptional hazard; the worker lived in constant danger of being torn to pieces by the increasingly complex social machine he served.”

z New Class. Galbraith believes America must have a transition from a private production economy to a public investment economy. In lieu of this, he advocated three (3) large proposals; the elimination of poverty, government investment in public schools, and the growth of the “New Class”.

Galbraith presented us two types of poverty to better understand the causes and potential remedies. Case poverty is commonly and properly related to some characteristics of the individuals. On the other hand, insular poverty is an island/place wherein nearly everyone is poor. The poverty of the community insures that educational opportunities will be limited, that health services will be poor, and that subsequent generations will be ill prepared either for mastering the environment into which may are born or for migration to areas for higher income inside. He also believes that expanded usage of consumption taxes rather than property tax will fund the social programs for the benefit of eradication of poverty in the United States. 

               Another thought which I totally agree on Galbraith, is the call for growth of the New Class, which consists of school teachers, professors, surgeons and electrical engineers. This may be brought by the philosophy in education of social transformation, which I deeply believed in, that through education we can transform the society for the welfare of all. As Galbraith write with appeal to the importance and need for the investment in educating people:

            “Whether the problem be that of a burgeoning population and space in which to live with peace and grace, or whether it be the depletion of the materials which nature has stocked in the earth’s crust and which have been drawn upon more heavily in this century than in all previous time together, or whether it be that of occupying minds no longer committed to the stockpiling of consumer goods, the basic demand on America will be on its resources of intelligence and education.”

               Having been educated formally or informally, through experiences we had as we faced our daily lives, will be the most affluence we should have. I must admit that I’m not in the position to review this book and that there are flaws and uncertainties. However, I can say that after reading this book, I truly gain something not just on the philosophical qualms of this book, but moreover, on the moral and ethics it invisibly tried to teach us: be contented. Aside from this I can also say that this book, is more suitable in our generation today, than in the years he wrote this book in 1958. This was greatly influenced by the fast-pacing evolution and revolution in technology and modernity in our lives, that with just one click, we can the world right where we are seated. Certainly, that through education we can light up the road to the real and essential tool we need for an affluent life and society we deserve.  

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