The midwife of miserabilism

With its attacks on advertising, opulence and environmental filth, John Kenneth Galbraith’s The Affluent Society, published 50 years ago, anticipated today’s small-minded growth scepticism.

It has become so much part of conventional wisdom that affluence is a problem that it is hard to imagine that attitudes were ever different.

The media is full of stories about problems that allegedly owe much to our affluent lifestyles, including environmental degradation, social inequalities and even mental illness. Yet there was once a time when popular prosperity was seen as overwhelmingly positive.

When John Kenneth Galbraith’s The Affluent Society was first published 50 years ago, it was meant as a polemic against the spirit of the times. Back in 1958, with America in the middle of the boom that followed the Second World War, the orthodox view was that economic growth was good. That was why Galbraith, then an economics professor at Harvard, coined the term ‘conventional wisdom’ to describe the mainstream view that he intended to attack.

The abiding influence of The Affluent Society makes it worth re-examining on the fiftieth anniversary of its publication. Not only has the book gone through several editions since it was first published, but it anticipates many of the arguments made by contemporary growth sceptics (1). Regardless of whether today’s critics of popular prosperity have read Galbraith’s most famous work or not, many echo his arguments without even realising it.

To understand the impact the book made it is first necessary to appreciate the intellectual context in which it was written. Immediately after the war ended in 1945, there was intense anxiety in America about what would happen to the economy. Memories of the Great Depression of the 1930s, with its economic slump and severe social dislocation, were still fresh. But soon the economy started to boom. In the period from the late 1940s to 1973 the American economy enjoyed its greatest ever growth spurt. It was in this context that the overriding emphasis on growth in economic policy, rather than simply an attachment to stability, emerged.

This recognition of the importance of economic growth was reflected in President Harry Truman’s state of the union address in January 1949: ‘Government and business must work together constantly to achieve more and more jobs and more and more production… which will mean more and more prosperity for all the people.’ (2) The report from the president’s Council of Economic Advisers in the same year argued along similar lines, emphasising that ‘the doctrine of secular stagnation no longer finds place in any important public circle with which we are familiar’. Instead it offered ‘the firm conviction that our business system and with it our whole economy can and should continue to grow’ (3).

“Galbraith coined the term ‘conventional wisdom’; now his own views have become the conventional wisdom”

With the experience of stagnation during the Great Depression receding from memory, this newfound confidence in growth was largely a reflection of a strong economic performance. Since the economy was already rapidly expanding, it was relatively easy to promote growth as a virtue. In addition, it should be recognised that growth was viewed as a way of replacing class conflict. One reason why growth was seen as desirable was that it was viewed as making both domestic and international conflict less likely (4).

At this point it is important to recognise that the most ardent advocates of economic growth were often liberals. Truman was a Democrat president and his key economic advisers were inclined towards liberalism. This is in contrast to today where the relatively few advocates of outright economic growth tend to be associated with the right. Back in the late 1940s and 1950s what could be called ‘growth liberalism’ held sway.

It was in this environment that two leading liberal thinkers with close ties to the Democrats, Arthur Schlesinger Jr (1917-2007) and Galbraith, started raising questions about growth in the mid-1950s. Schlesinger, then a Harvard historian, wrote in 1957 that liberals should shift their focus to ‘enlarging the individual’s opportunity for moral growth and self-fulfilment’. Meanwhile, Galbraith, who was of Canadian origin, testified in 1956 to the Royal Commission on Canada’s Economic Prospects, arguing: ‘Sooner rather than later our concern with the quantity of goods produced – the rate of increase in Gross National Product – would have to give way to the larger question of the quality of life that it provided.’ (5). It was this idea that Galbraith developed in The Affluent Society.

The emphasis on production – and therefore on raising the level of affluence in society – was one of the main targets for criticism in Galbraith’s 1958 book. He argued that his book’s concern was with ‘the thraldom of a myth – the myth that the production of goods, by its overpowering importance and its ineluctable difficulty, is the central problem of our lives’ (6).

Galbraith does not argue that production was always so unimportant. On the contrary, in earlier times he concedes it was a worthy goal. But since the 1930s he said that there had been ‘a mountainous rise in wellbeing’ (7). Under such circumstances, in America and Western Europe at least, he argued that promoting prosperity should no longer be a priority.

For Galbraith, another consequence of this argument was that conventional economics was living in the past. Economic theory, developed in an era of scarcity, emphasised the need to raise productivity and output (8). Much of the early part of the book is a critique of economic thought as an expression of the conventional wisdom.

“In 1950s America, the most ardent advocates of economic growth were often liberals”

But it was not just that economic growth was a misplaced priority. For Galbraith its pursuit led to damaging consequences. By far the most quoted passage of the book contrasts private affluence with public squalor (9). It argues that the pursuit of growth can make individuals wealthy but it has damaging consequences for the rest of society: ‘The family which takes its mauve and cerise, air conditioned power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground. They pass on into a country that has long been rendered largely invisible by commercial art…. They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect on the curious unevenness of their blessings. Is this, indeed, the American genius?’ (10)

This passage alone anticipates many of the themes that have become staples of growth scepticism. The quest for growth, it is argued, damaged the environment. It leads to inequality. And it leads to an unhealthy obsession with consumer goods. All of these themes, and more, are developed in The Affluent Society. For example, Galbraith argues that advertising helps create a desire for goods which would otherwise not exist (11). And he argues against waste in a way that is echoed by contemporary critics of excess packaging and alleged overconsumption: ‘The more goods people procure, the more packages they discard and the more trash that must be carried away. If the appropriate sanitation services are not provided, the counterpart of increasing opulence will be deepening filth.’ (12)

To be sure, Galbraith’s views only represented a small minority when his book was first published half a century ago. His book did sell one million copies and remained on the New York Times bestseller list for most of the year (13). But it took time for his arguments to become mainstream. Gradually the key importance attached to economic growth among economists and policymakers was eroded.

By 1970 two leading economists, one of whom was later to win a Nobel prize, had written a key paper entitled ‘Is growth obsolete?’. Its opening paragraph argued: ‘A long decade ago economic growth was the reigning fashion of political economy. It was simultaneously the hottest subject of economic theory and research, a slogan eagerly claimed by politicians of all stripes, and a serious objective of the policies of governments. The climate of opinion has changed dramatically.

Disillusioned critics indict both economic science and economic policy for blind obeisance to aggregate material ‘progress’, and for neglect of its costly side effects. Growth, it is charged, distorts national priorities, worsens the distribution of income, and irreparably damages the environment (14).

Thus there was already considerable anxiety about the benefits of economic growth by the start of the 1970s. However, it was during the decade itself that criticism of growth became mainstream. The end of the postwar economic boom in the early 1970s further undermined the supporters of growth and called the legitimacy of capitalism into question. The defeat of the left and the demise of 1960s radicalism also played a role. Environmentalism, with its deep pessimism about material progress, came to the fore as belief in economic growth waned.

“The breakdown of traditional institutions has left individuals feeling isolated and vulnerable”

As I have argued previously on spiked, more recent developments have made growth scepticism even more pervasive (15). The breakdown of traditional institutions has left individuals feeling isolated and vulnerable. As a result, an intense risk-aversion has gripped society. In addition, the end of the Cold War has strengthened the belief that there is no alternative to the market in running society. Social pessimism is rife.

But, with the benefit of hindsight, it is possible to see the intellectual roots of today’s growth scepticism in arguments put forward 50 years ago in The Affluent Society. By the time Galbraith died in 2006 the arguments he had put forward in his 1958 work had become thoroughly mainstream (16). Often they were so taken for granted that contemporary critics of growth and prosperity did not even realise they were echoing him.

Half a century on it is time to launch a counter-attack against the ideas that have become the conventional wisdom. Economic growth will not provide all the answers to society’s problems, but it is a necessary start. Contrary to the arguments of the sceptics, it does not necessarily lead to environmental degradation or unhappiness. The resources generated by economic growth give humanity the ability to reshape the environment for its own benefit. A rich society is also one where we can potentially spend less time working for a living and more time engaging in more fulfilling tasks.

Even in the developed world, we have a long way to go before we achieve a truly affluent society.

As an ancient history buff and free marketer I think this deserves some comment so here’s my two cents.

In the late 60’s and early 70’s, wage- push inflation was the order of the day. The combination of monolithic basic industries (Detroit “big three” auto and U S Steel/Bethlehem steel) along with big labor unions was causing wage-push inflation. Monopolistic companies could graciously agree to union wage demands and simply pass the resulting higher costs on to consumers (who had no choice) in the form of price increases.

The Democratic congress loved the double digit inflation of the 70’s because by refusing to index tax schedules to inflation, people were pushed into higher and higher brackets, even though their wages in real dollar terms were stagnating. As a result of burgeoning tax revenues there was a spending boom for social programs that people would never have voted for.

Galbraith’s solution to this inflation was to advocate permanent wage - price controls. This, just at the time that the microprocessor and integrated circuit were being invented at an infant company called Intel, and Hewlett Packard was making its profits by leading the pack in minicomputers and reverse-Polish calculators instead of ink cartridges. Was Galbraith a visionary? It seems to me that by this time he was only a clueless fossil. A couple of teenagers named Jobs and Woszniak saw the future much more clearly.

Fortunately, the binge of government regulation that caused the stagnation of the 70’s got rolled back. America maintained its technological pre-eminence only by letting Silicon Valley happen and by letting old smoke stack industries decline.

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