The Affluent Society
John Kenneth Galbraith
It’s been a little while since I actually finished this book, so I’m not quite as fresh as I should be. I enjoyed reading it, and there are some aspects that have stuck with me. JKG’s main topic of interest here is similar to Bill McKibben’s in “Deep Economy”–capitalist economic organization was hugely successful in bringing masses of people out of poverty, but to what extent is it still appropriate for an affluent society? Several points to highlight:
-Economics generally takes individual utility functions/consumption decisions as sovereign, i.e., not to be second-guessed. This is a really fundamental assumption that underlies most of the math of economics and important results such as the first welfare theorem. However, there’s pretty ample evidence that it is not exactly a reliable guideline in an economy dominated by marketing/advertising. This is an extremely difficult critique to grapple with, because it seems hopeless to try to distinguish between marketing-induced demand and “authentic” demand, and JKG doesn’t propose any formal methods for handling it, but I respect him for raising it.
-It is interesting to read JKG’s book in light of the environmental revelations that have taken place since he wrote it (and largely even since this 40th-anniversary edition came out. JKG has a certain unease with the way that economic growth has been chosen as a politically palatable way of (ostensibly) improving the outlook for the poor. His main unease seems to be just that it has kept us from having to address some deeper issues, but now that we know about climate change, the true Faustian nature of the bargain is basically revealed. A related interesting point that JKG makes is that there is a nonlinearity in efforts to address poverty–when a nation is largely poor, up to, say, the point where the US was in the early 20th century, there is a strong focus on addressing poverty, because there is a large democratic constituency of the poor. But once a nation is fairly rich and the poor are small in number, they can no longer exercise political clout and governance turns to issues of the middle class, with only cursory attention to the poor. This dynamic is strengthened by class stratification.
-JKG’s points about “private opulence and public squalor” are an order of magnitude more relevant today than when he wrote the book. The difficulty of expressing public goods as part of a preferred consumption basket is a really thorny problem, and one that JKG portrays well.
That said, there were a few places where I felt myself disagreeing with JKG pretty strongly, particularly on the advisability of governmental price controls (he seems pretty sanguine; I think I’m still too convinced by Hayek to agree).