Economics Dictionary of ArgumentsHome
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| Affluent Society: The term "Affluent Society" in economics, coined by economist John Kenneth Galbraith, refers to a society characterized by high levels of wealth and consumer goods. In such societies, basic needs are generally met, and attention shifts toward luxury, convenience, and quality of life. Galbraith argued that economic policy should address social welfare and inequality despite overall prosperity. See also J. K. Galbraith._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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John Kenneth Galbraith on Affluent Society - Dictionary of Arguments
Rothbard III 973 Affluent Society/Galbraith/Rothbard: At the present time growing abundance and prosperity have greatly dimmed the poverty and unemployment theme (…) Let it not be thought, however, that criticism of capitalism has died. Two seemingly contradictory charges are now rife: (a) that capitalism is not "growing" fast enough, and (b) that the trouble With capitalism is that it makes us too "affluent." Excess wealth has suddenly replaced poverty as the tragic flaw of capitalism. (1) At first sight, these latter charges appear contradictory, for capitalism is at one and the same time accused of producing too many goods, and yet of not increasing its production of goods fast enough. The contradiction seems especially glaring when the same critic presses both lines of attack, as is true of the leading critic of the sin of affluence, Professor Galbraith.(2) VsGalbraith/Rothbard: But, as the Wall Street Journal has aptly pointed out, this is not really a contradiction at all; for the excessive affluence is all in the "private sector," the goods enjoyed by the consumers; the deficiency, or "starvation," is in the "public sector," which needs further growth.(3) RothbardVsGalbraith: Although The Affluent Society is replete with fallacies, backed by dogmatic assertions and time-honored rhetorical devices in place of reasoned argument, the book warrants some consideration here in view of its enormous popularity. Rothbard III 974 Economics/History/RothbardVsGalbraith: As in the case of most "economists" who attack economic science, Professor Galbraith is an historicist, who believes that economic theory, instead of being grounded on the eternal facts of human nature, is somehow relative to different historical epochs. GalbraithVsTradition: "Conventional" economic theory, he asserts, was true for the eras before the present, which were times of "poverty"; now, however, we have vaulted from a centuries-long state of poverty into an age of "affluence," and for such an age, a completely new economic theory is needed. Methodology/RothbardVsGalbraith: Galbraith also makes the philosophical error of believing that ideas are essentially "refuted by events"; on the contrary, in human action, as contrasted with the natural sciences, ideas can be refuted only by other ideas; events themselves are complex resultants which need to be interpreted by correct ideas. Poverty/affluence/definitions/definability/method: One of Galbraith's gravest flaws is the arbitrariness of the categories, which pervade his work, of "poverty" and "affluence." Nowhere does he define what he means by these terms, and therefore nowhere does he lay down standards by which we can know, even in theory, when we have passed the magic borderland between "poverty" and "affluence" that requires an entirely new economic theory to come into being. Wealth: (…) most (…) economic works make it evident that economic science is not dependent on some arbitrary level of wealth; the basic praxeological laws are true of all men at all times, and the catallactic laws of the exchange economy are true whenever and wherever exchanges are made. >Praxeology/Rothbard, >Catallactics/Rothbard. Rothbard III 975 Marginal utility/Galbraith: Galbraith makes much of his supposed discovery, suppressed by other economists, that the marginal utility of goods declines as one's income increases and that therefore a man's final $ 1,000 is not worth nearly as much to him as his first- the margin of subsistence. RothbardVsGalbraith: But this knowledge is familiar to most economists, and this book, for example, has included it. The marginal utility of goods certainly declines as our income rises; but the very fact that People continue to work for the final $ 1,000 and work for more money when the opportunity is available, demonstrates conclusively that the marginal utility of goods is still greater than the marginal disutility of leisure forgone. RothbardVsGalbraith: Galbraith's hidden fallacy is a quantitative assumption: from the mere fact that the marginal utility of goods falls as one's income and wealth rise, Galbraith has somehow concluded that it has already fallen to virtually, or really, zero. The fact of decline, however, tells us nothing whatever about the degree of this decline, which Galbraith arbitrarily assumes has been almost total. Leisure/labour/wealth: All economists, even the most "conventional," know that as incomes have risen in the modern world, workers have chosen to take more and more of that income in the form of leisure. And this should be proof enough that economists have long been familiar with the supposedly suppressed truth that the marginal utility of goods in general tends to decline as their supply increases. But, Galbraith retorts, economists admit that leisure is a consumers' good, but not that other goods decline in value as their supply increases. Yet this is surely an erroneous contention; what economists know is that, as civilization expands the supply of goods, the marginal utility of goods declines and the marginal utility of leisure forgone (the opportunity cost of labor) increases, so that more and more real income will be "taken" in the form of leisure. There is nothing at all startling, subversive, or revolutionary about this familiar fact. Rothbard III 976 Consumption/Galbraith/Rothbard: According to Galbraith, economists willfully ignore the spectre of the satiation of wants. Yet they do so quite properly, because when wants - or rather, wants for exchangeable goods - are truly satiated, we shall all know it soon enough; for, at that point, everyone will cease working, will cease trying to transform land resources into final consumers' goods. There will be no need to continue producing, because all needs for consumers' goods will have been supplied - or at least all those which can be produced and exchanged. At this point, everyone will stop work, the market economy - indeed, all economy - will come to an end, means will no longer be scarce in relation to ends, and everyone will bask in paradise. I think it self-evident that this time has not yet arrived and shows no signs of arriving; if it some day should arrive, it will be greeted by economists, as by most other people, not with curses, but with rejoicing. Despite their venerable reputation as practitioners of a "dismal science," economists have no vested interests, psychological or otherwise, in scarcity. Rothbard III 977 Advertising/Galbraith: An informal poll taken among the people, asking whether they would accept, or know what to do with, an extra few thousand dollars of annual (real) income, would find almost no one who would refuse the offer because of excessive affluence or satiety - or for any other reason. Few would be at a loss about what to do with their increased wealth. Rothbard: Professor Galbraith, of course, has an answer to all this. These wants, he says, are not real or genuine ones; they have been "created" in the populace by advertisers, and their wicked clients, the producing businessmen. The very fact of production, through such advertising, "creates" the supposed wants that it supplies. Galbraith's entire theory of excess affluence rests on this flimsy assertion that consumer wants are artificially created by business itself.(4) Rothbard III 978 Advertising/RothbardVsGalbraith: There are many fallacies in Galbraith's conventional attack on advertising. 1) In the first place, it is not true that advertising "creates" wants or demands on the part of the consumers. It certainly tries to persuade consumers to buy the product; but it cannot create wants or demands, because each person must himself adopt the ideas and values on which he acts - whether these ideas or values are sound or unsound. Galbraith here assumes a naive form of determinism - of advertising upon the consumers, and, like all determinists, he leaves an implicit escape clause from the determination for people like himself, who are, unaccountably, not determined by advertising. If there is determinism by advertising, how can some people be determined to rush out and buy the product, while Professor Galbraith is free to resist the advertisements with indignation and to write a book denouncing the advertising? 2) Secondly, Galbraith gives us no standard to decide which wants are so "created" and which are legitimate. By his stress on poverty, one might think that all wants above the subsistence level are false wants created by advertising. Of course, he supplies no evidence for this view. But (…) this is hardly consistent with his views on public or governmentally induced wants. 3) Thirdly, Galbraith fails to distinguish between fulfilling a given want in a better way and inducing new wants. Unless we are to take the extreme and unsupported view that all wants above the subsistence line are "created," we must note the rather Odd behavior attributed to businessmen by Galbraith's assumptions. Why should businessmen go to the expense, bother, and uncertainty of trying to create new wants, when they could far more easily look for better or cheaper ways of fulfilling wants that consumers already have?(5) >Marketing research/Rothbard. 1. John Kenneth Galbraith, The Affluent Society (Boston: Houghton Mifflin Co., 1958). 2. "Fable for Our Times," Wall Street Journal, April 21, 1960, p. 12. Thus Galbraith, ibid., deplores the government's failure to "invest more" in scientists and scientific research to promote our growth, while also attacking American affluence. It turns out, however, that Galbraith wants more of precisely that kind of research which can have no possible commercial application. 3. Galbraith's major rhetorical device may be called "the sustained sneer," which includes (a) presenting an opposing argument so sardonically as to make it seem patently absurd, with no need for reasoned refutation; (b) coining and reiterating Veblenesque names of disparagement, e.g., "the conventional wisdom"; and (c) ridiculing the opposition further by psychological ad hominem attacks, i.e., accusing opponents of having a psychological vested interest in their absurd doctrines - this mode of attack being now more fashionable than older accusations of economic venality. The "conventional wisdom" encompasses just about everything with which Galbraith disagrees. 4. In addition to wicked advertising, wants are also artificially created, according to Galbraith, by emulation of one's neighbor: "Keeping up With the Joneses." But, in the first place, what is wrong With such emulation, except an unsupported ethical judgment of Galbraith's? Galbraith pretends to ground his theory, not on his private ethical judgment, but on the alleged creation of wants by production itself. Yet simple emulation would not be a function of producers, but of consumers themselves- unless emulation, too, were inspired by advertising. But this reduces to the criticism of advertising discussed in the text. And secondly, where did the original Jones obtain his wants? Regardless of how many people have wants purely in emulation of others, some person or persons must have originally had these wants as genuine needs of their very own. Otherwise the argument is hopelessly circular. Once this is conceded, it is impossible for economics to decide to what extent each want is pervaded by emulation. 5. On the alleged powers of business advertising, it is well to note these pungent comments of Ludwig von Mises: „It is a widespread fallacy that skillful advertising can talk the consumers into buying everything that the advertiser wants them to buy.... However, nobody believes that any kind of advertising would have succeeded in making the candlemakers hold the field against the electric bulb, the horse-drivers against the motorcars, the goose quill against the steel pen and later against the fountain pen.“ (Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. p. 317)_____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Galbraith I John Kenneth Galbraith The Affluent Society London 1999 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Galbraith
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