Monday, September 15, 2008

The Affluent Society Fifty Years Later

John Kenneth Galbraith's best-selling book The Affluent Society was published fifty years ago, in 1958.

Looking back at that book today, it is striking how prosperous Americans considered themselves at the time: we believed that we had to encourage more consumption just to keep up with our vast and growing productive capacity. And it is even more striking that Americans today have lost much of that general feeling of affluence, though the average American is about twice as wealthy now as in 1958.

Here are a few quotations from the book, which give a sense of the spirit of that time:

"... the experience of nations with well-being is exceedingly brief. Nearly all throughout all history have been very poor. The exception, almost insignificant in the whole span of human existence, has been the last few generations in the comparatively small corner of the world populated by Europeans. Here, and especially in the United States, there has been great and quite unprecedented affluence."

"So great has been the change that many of the desires of the individual are no longer even evident to him. They become so only after they are elaborated, and nurtured by advertising and salesmanship, and these, in turn, have become among our most important and talented professions. Few people at the beginning of the nineteenth century needed an adman to tell them what they wanted."

"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 counterpart 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. In technical terms, it can no longer be assumed that welfare is greater at an all-round higher level of production than at a lower one. It may be the same. The higher level of production has, merely, a higher level of want creation ...."

"Production induces more wants and the need for more production. So far, in a major tour de force, the implications have been ignored. But this obviously is a perilous solution. It cannot long survive discussion. Among the many models of the good society, no one has urged the squirrel wheel."

Here is an example of the spirit of that time: in the 1950s, it was widely believed that we had to produce oversized cars with useless tail-fins and we had to convince consumers to buy them, purely to absorb consumers' excess purchasing power, to keep the economy growing. Now that we are twice as wealthy, why have we lost this sense that our economy is so abundant that we have to make an effort to consume enough to keep up with its productive capacity?

In part, I think, it is because luxuries of fifty years ago have become necessities today.

In 1958, most Americans could remember living in neighborhoods where you walked to the store, and it seemed like an unprecedented luxury to live in a suburb where you drive every time you go shopping and where you cruise back and forth on the strip instead of walking up and down Main Street. Less than one family in five had two cars, and to be a two-car family was considered a sign of remarkable affluence.

Today, most Americans have never lived in a neighborhood where you can walk, and many can hardly even imagine that it is possible to get anywhere or do anything without a car. It is not a luxury to have two family cars: we have more cars than registered drivers, because in most American neighborhoods, it is almost a necessity for each adult to have a car. And it is an expensive necessity.

In part, also, I think it is because we are now faced with environmental problems that no one imagined in 1958.

Fifty years ago, no one had heard of global warming. We did not face the rising energy prices that we face today, as growing world demand presses against the limits of supply. In 1958, everyone assumed that the future would be even more affluent than the present, but now it seems possible that our children and grandchildren will have a less livable world and harder lives than we had.

As we have seen, Galbraith wrote that we may not be better off at a higher level of production, because we may be consuming to fill wants that are created by economic growth, and not actually improving our well-being:

"In technical terms, it can no longer be assumed that welfare is greater at an all-round higher level of production than at a lower one. It may be the same. The higher level of production has, merely, a higher level of want creation ...."

But Galbraith was not thinking about environmental costs when he wrote this. If we factor in environmental costs, it seems plausible that, after we are economically comfortable, we actually become worse off at a higher level of production.


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