I agree with Kyle...I didn't see this book coming, even though I really enjoyed it. In The Affluent Society, Galbraith's remarks spurred questions in my mind about whether or not I am really a "good liberal" as he points out on page 69 stating "The test of the good liberal is still that he is never fooled, that he never yields on issues favoring the wealthy" (69). That being said, I am definitely not a "good liberal" by Galbraith's definition. I think it is interesting, though, that it is so easy to go back and forth on liberal and conservative economic viewpoints depending on ones own place in society. Many young college students take a liberal standpoint as their future still remains unknown (especially in terms of their wealth). But as Galbraith argues, many young ones will be liberal now but will become more conservative as they get older...STOP TAXING US! WE EARNED THIS FOR OURSELVES!
I found Galbraith's chapter on inequality particularly interesting as he talks about how inequality has faded as an issue. He states that inequality has faded as an issue because "it has not been showing the expected tendency to promote violent reaction" and "The drastically altered political and social position of the rich in recent times." Overall, according to Galbraith when he wrote this, stated "we need only notice that, as an economic and social concern, inequality has been declining in urgency, and this has had its reflection in the conventional wisdom" (79). This is not necessarily true nowadays, which I think Galbraith would acknowledge. When Galbraith wrote The Affluent Society in 1958, this may have been the case, but since that time, inequality has been the reason for many social and economic movements. Think about the civil rights movement. That was strongly based on equality. Even today, Obama very passionately speaks of inequality and the injustice it does to our nation almost every time he gives a speech. I think inequality is something that conservatives see as a fact of life and liberals want to combat and because of this divide, it is still an issue today. I particularly liked this youtube video that, in my opinion, shows that inequality is an issue today http://www.youtube.com/watch?v=-YhZLtLGTIg. Galbraith and friends...let's keep making it an issue.
But what does inequality even mean in the United States and what facets of inequality should concern us? Is it inequality of wealth? Inequality of opportunity? Inequality of rights? Corey Brettschneider, in Democratic Rights, states that one of the core values of a democracy is equality of interests supporting the idea that democratic citizens (i.e. Americans) are free, equal and reasonable rulers. All people in a democratic society are equal in that they have substantive rights (i.e. life, liberty, happiness), but beyond that, Brettschneider makes no case for a society to be equal on material gains. The equality aspect is that everyone has the opportunity to advance in a democratic society, and thus, as a Social Darwinist may say, it is a case of survival of the fittest after that as to who gets more and who gets less. Thus, overall, inequality in terms of wealth and material gains is still an issue. In terms of democratic rights, as Brettschneider concerns himself with, we are all equal, therefore inequality would not be an issue in this regard. How to combat the issue of economic and social inequality is a question liberals want to concern themselves with while conservatives would rather sit back and watch it work itself out. Which way is better in a Democracy? Now that, is, as it always has been, up for discussion
Thursday, October 2, 2008
Election commentary?
While Galbraith's consistent thread of the evolved needs set of economically advanced people is quite interesting providing modern individuals with many more needs and desires than they know what to do with or than they actually need (except for the fact that as modern consumers we are always driven to the pursuit of new consumption), my interest was most piqued in the discussion of "conventional wisdom" as it particularly applies to the current presidential election. After watching last weeks fairly botched debate, where neither candidate seemed to say anything at all, Galbraith seems to pinpoint the reasoning behind the very vague nature of modern politics. Both candidates, with Obama (while I may support him dearly) doing so the most, have espoused themselves to be candidates of change with new ideas and new solutions to our country's woes. However, when posed direct questions about what they will do in office that isn't the typical, "go line by line and cut unnecessary spending," they skillfully or not so skillfully dodge the question. Perhaps they understand what Galbraith means when he says the conventional wisdom is that people like the proclamation of a push for new ideas and change but, "The politician who unwisely takes this proclaimed need seriously and urges something new will often find himself in serious trouble." While I wish this fact were not true, a look at the political realities of our time seem to lead me towards the understanding that such is the world we live in.
Basically a Communist
I definitely did not see this book coming. I had never heard about it before, and given the other stuff we had been reading, I was expecting more real economics stuff. Not that this is not real economics stuff, but it is definitely a little out there.
Galbraith's ideas would completely change the way everyone thinks about life. While he may try to play off his ideas as nonchalantly rational and straightforward, they are insanely radical.
His basic idea, that society should move away from the desire to produce more, is just as crazy as the Communist idea that we should move away from the concept of private property. It takes a bit of thought to really understand what the society Galbraith imagines would even be like as it is so different from our own.
To me, The Affluent Society, was more of a thought experiment than anything else. Galbraith is undoubtedly correct when he makes perhaps the most important point of the book, "production only fills a void that it has itself created" (125). I think someone may have even said this in class last week. It is strange to think about how when Apple announces the release of an iPhone, I want one so badly, but just days before I did not have any desire to have one at all; the product did not even exist. The product literally creates the demand... and this is undeniably true--not just with a few freak goods--but with probably the majority of goods consumed in the world today.
Moving on from this realization, Galbraith enters his thought experiment. We are caught in a society where there is an urgency to produce more and more to fulfill wants that grow and grow, but the two only fuel each other. What if we were to break out of this cycle?
Well, Galbraith tries to paint us a picture of what that world might look like. This would be a world where productivity and possession of material goods were not major concerns. Rather people would just be concerned with doing as they pleased.
If that means being unemployed, Galbraith is not worried about it, pay them benefits. If that means working half days, well then so be it.
I think Galbraith is correct to think that even in a society where the hard working are not compensated with more material goods, they would continue to work hard. I have often thought this of myself. That I would want to work hard to be a doctor or to help people whether I was rich as a result or not. And I think there are certainly a lot of people like that, especially if you preserve the prestige factor of high incomes and high society positions.
What I think is funny about this, is that the reason I have contemplated this question before is in consideration if Communism could ever function. Over the years, I have come to believe that Communism only works for the select few in society that are willing to work hard for the common good. In other words, to build a successful Communist society, you need to kill those that don't have this ability and brainwash children from an early age to believe that they should work for the common good. This was the basic theory behind Che Guevara's "Nuevo Hombre" concept. That a "new man" would rise that was not motivated by material gain but by serving the common good.
This new man sounds suspiciously like Galbraith's New Class to me. Really it is the same. In the New Class, people work not for material gain, but for their own pleasure. If this pleasure comes from leisure or from helping people or from achieving prestige it does not really matter. The only thing that defines the New Class really is that they have released themselves from the productivity trap. In a very big way, Galbraith's plans are the same as communism, the only difference is that the New Class has a little more flexibility in what they are allowed to be driven by than Guevara's New Man.
On a side note, it seems to me that Galbraith's society would be decidedly existentialist. Rather than the meaning in our lives being defined by the capitalist grind, each of us is really defining our own meaning for ourselves.
In any case, my overall conclusion on all this is that it is an interesting thought experiment and nothing more. It is like Communism. Yes, Communism would work if everyone could just work for the common good instead of material gain. But that isn't the case, and I am not even sure the extreme measures I suggested earlier of killing all those incapable and brain washing children would work to achieve this.
Similarly, for Galbraith's plans, you need a society in which everyone stops working for material gain. Most people are not capable of making that transition, even when it is logically explained to them. And really that's that. We can think about how cool it might be if it happened. If there was no longer a drive to produce, and subsequently no longer a desire to consume and everyone was just profoundly content in some hippy crazy world. But that is never going to happen. But cool to think about anyway...
Galbraith's ideas would completely change the way everyone thinks about life. While he may try to play off his ideas as nonchalantly rational and straightforward, they are insanely radical.
His basic idea, that society should move away from the desire to produce more, is just as crazy as the Communist idea that we should move away from the concept of private property. It takes a bit of thought to really understand what the society Galbraith imagines would even be like as it is so different from our own.
To me, The Affluent Society, was more of a thought experiment than anything else. Galbraith is undoubtedly correct when he makes perhaps the most important point of the book, "production only fills a void that it has itself created" (125). I think someone may have even said this in class last week. It is strange to think about how when Apple announces the release of an iPhone, I want one so badly, but just days before I did not have any desire to have one at all; the product did not even exist. The product literally creates the demand... and this is undeniably true--not just with a few freak goods--but with probably the majority of goods consumed in the world today.
Moving on from this realization, Galbraith enters his thought experiment. We are caught in a society where there is an urgency to produce more and more to fulfill wants that grow and grow, but the two only fuel each other. What if we were to break out of this cycle?
Well, Galbraith tries to paint us a picture of what that world might look like. This would be a world where productivity and possession of material goods were not major concerns. Rather people would just be concerned with doing as they pleased.
If that means being unemployed, Galbraith is not worried about it, pay them benefits. If that means working half days, well then so be it.
I think Galbraith is correct to think that even in a society where the hard working are not compensated with more material goods, they would continue to work hard. I have often thought this of myself. That I would want to work hard to be a doctor or to help people whether I was rich as a result or not. And I think there are certainly a lot of people like that, especially if you preserve the prestige factor of high incomes and high society positions.
What I think is funny about this, is that the reason I have contemplated this question before is in consideration if Communism could ever function. Over the years, I have come to believe that Communism only works for the select few in society that are willing to work hard for the common good. In other words, to build a successful Communist society, you need to kill those that don't have this ability and brainwash children from an early age to believe that they should work for the common good. This was the basic theory behind Che Guevara's "Nuevo Hombre" concept. That a "new man" would rise that was not motivated by material gain but by serving the common good.
This new man sounds suspiciously like Galbraith's New Class to me. Really it is the same. In the New Class, people work not for material gain, but for their own pleasure. If this pleasure comes from leisure or from helping people or from achieving prestige it does not really matter. The only thing that defines the New Class really is that they have released themselves from the productivity trap. In a very big way, Galbraith's plans are the same as communism, the only difference is that the New Class has a little more flexibility in what they are allowed to be driven by than Guevara's New Man.
On a side note, it seems to me that Galbraith's society would be decidedly existentialist. Rather than the meaning in our lives being defined by the capitalist grind, each of us is really defining our own meaning for ourselves.
In any case, my overall conclusion on all this is that it is an interesting thought experiment and nothing more. It is like Communism. Yes, Communism would work if everyone could just work for the common good instead of material gain. But that isn't the case, and I am not even sure the extreme measures I suggested earlier of killing all those incapable and brain washing children would work to achieve this.
Similarly, for Galbraith's plans, you need a society in which everyone stops working for material gain. Most people are not capable of making that transition, even when it is logically explained to them. And really that's that. We can think about how cool it might be if it happened. If there was no longer a drive to produce, and subsequently no longer a desire to consume and everyone was just profoundly content in some hippy crazy world. But that is never going to happen. But cool to think about anyway...
Mccain should have taken Galbraith over Palin... But honestly, he should have picked Romney...
Galbraith has some tremendous points throughout his book. His sections on inflation and the monetary illusion are interesting to look at given our current economic situation. An interesting point he makes is that inflation is essentially necessary for economic growth to occur. While this may be common knowledge, I had never heard it put the way Galbraith did. Galbraith states, “We are impelled for reasons of economic security, to operate the economy at a level of output where it is not stable—where persistent advances in prices are not only probable but normal”(156). I guess to some degree this is the premise of every boom and every recession. Perhaps, this is actually the reason why we have pattern like booms followed by recessions. The United States generally has prosperous periods of 5-10 years followed by economic problems for about half the time. The economy booms as we are spending at unstable amounts, but then it is followed by a temporary crash, so the economy can stabilize and do it all over again. Galbraith is right; the way our economy is forced to work, is perhaps the only way the country could continue to have great economic strength and the unfortunate downturns are simply inevitabilities of our system.
Currently the stock market in the US seems to be more volatile than Howard Dean after the Iowa primaries. In the last week the DJI has seen the largest drop in points in the history of the DJI and has seen one of the largest upswings as well. These issues seem to be the result of the cumulative damage laid out by Galbraith in his critique about or financial system. For the United States to keep growing we need to keep spending money as we are a consumer driven economy. Just as Galbraith was alluding to, we need to, in most cases, spend more money than we produce in order to keep growing. This inevitably leads us to the credit based economy we have become. At first look, there is nothing wrong with a consumer society based on credit. Galbraith in addition to every Macro economics book that was ever made mentions how an increased amount of credit spending leads to inflation due to the excess cash flow in the economy, naturally overvaluing goods and bidding up the prices. Just as Mankiw told us last year (and I will say it again as finishing a Mankiw book is harder than finishing the Iditarod), if we want to slow down or stop inflation, interest rates need to be raised to discourage lending and encourage saving, in order to slow down spending and bid down or stabilize prices. However, while inflation seems scary and raising the interest rate might feel like a good idea to protect the value of the dollar, it pretty much halts all growth as our consumer based economy is no longer consuming at the rapid rates that Galbraith was talking about.
People act shocked that our economy is in shambles. People blame the subprime lending, but in reality it was going to be one thing or another that tanked our economy at some point. With our system being so delicate with finding a balance between production and inflation combined with leaders of businesses trying to find brilliant ways to turn profits so they can feel like Gordon Gekko… problems are abound to occur, at least every once in a while. Major companies will do something highly unethical and get caught. Major companies will do something highly risky and it will not go according to plan. The bottom line is with an economy that is prone losing major producers and major consumers, while simultaneously spending more money than we are producing, economic fallouts are bound to occur.
Currently the stock market in the US seems to be more volatile than Howard Dean after the Iowa primaries. In the last week the DJI has seen the largest drop in points in the history of the DJI and has seen one of the largest upswings as well. These issues seem to be the result of the cumulative damage laid out by Galbraith in his critique about or financial system. For the United States to keep growing we need to keep spending money as we are a consumer driven economy. Just as Galbraith was alluding to, we need to, in most cases, spend more money than we produce in order to keep growing. This inevitably leads us to the credit based economy we have become. At first look, there is nothing wrong with a consumer society based on credit. Galbraith in addition to every Macro economics book that was ever made mentions how an increased amount of credit spending leads to inflation due to the excess cash flow in the economy, naturally overvaluing goods and bidding up the prices. Just as Mankiw told us last year (and I will say it again as finishing a Mankiw book is harder than finishing the Iditarod), if we want to slow down or stop inflation, interest rates need to be raised to discourage lending and encourage saving, in order to slow down spending and bid down or stabilize prices. However, while inflation seems scary and raising the interest rate might feel like a good idea to protect the value of the dollar, it pretty much halts all growth as our consumer based economy is no longer consuming at the rapid rates that Galbraith was talking about.
People act shocked that our economy is in shambles. People blame the subprime lending, but in reality it was going to be one thing or another that tanked our economy at some point. With our system being so delicate with finding a balance between production and inflation combined with leaders of businesses trying to find brilliant ways to turn profits so they can feel like Gordon Gekko… problems are abound to occur, at least every once in a while. Major companies will do something highly unethical and get caught. Major companies will do something highly risky and it will not go according to plan. The bottom line is with an economy that is prone losing major producers and major consumers, while simultaneously spending more money than we are producing, economic fallouts are bound to occur.
Productivity, research, and education
In his book, the Affluent Society, Galbraith attacks conventional wisdom and its rigidity to adaptation. He further muses on the transcendental influence this wisdom has had on research and education.
As Galbraith states, most people have come to view human development as valuable for with it a society reaps the rewards of research- innovation. However, as he continues, given our society’s preoccupation with productivity, research has had a tendency to focus only on “discovering changes that can be advertised”(205). Thus, within our society, innovation is reduced to nothing more than the creation and discovery of “selling points”. Just as inadequate resources are allocated to education, so too are resources scarcely devoted to the discovery of real improvements in consumer goods. He concedes that improvements in products have not been completely absent from the U.S., however, he attributes significant innovations to government sponsored research.
Productivity has transcended as a purpose of education as well, however, education may have the propensity to hurt the current markets which run off manufactured consumer desire. While education is valuable in so far as it yields innovations that bring the crowds into rushing into Wal-Mart, it is simultaneous a threat to manufactured demand-it’s the “simple minds… [that] are the easiest to manage”(208). Education creates diversity in interest and tastes, making it difficult to herd the masses. Galbraith argues that education removes the veil from peoples eyes, allowing them “to see how they are managed in the interest of the mechanism that is assumed to serve them” (208).
While I agree that most true innovation within the product sector can be traced to some military discovery, I am not entirely convinced that education has the awesome power to free society from the influence of advertising execs or of materialistic want. If anything, the enhanced earning potential of a college graduate just gives her a greater more disposable income to buy the latest cell phone, camera, or ipod. The tastes in this case might not be as simple as: “automobiles; the uncomplicated forms of alcohol, food and sexual enjoyment…” but they are just as easily tied to synthesis and emulation.
As Galbraith states, most people have come to view human development as valuable for with it a society reaps the rewards of research- innovation. However, as he continues, given our society’s preoccupation with productivity, research has had a tendency to focus only on “discovering changes that can be advertised”(205). Thus, within our society, innovation is reduced to nothing more than the creation and discovery of “selling points”. Just as inadequate resources are allocated to education, so too are resources scarcely devoted to the discovery of real improvements in consumer goods. He concedes that improvements in products have not been completely absent from the U.S., however, he attributes significant innovations to government sponsored research.
Productivity has transcended as a purpose of education as well, however, education may have the propensity to hurt the current markets which run off manufactured consumer desire. While education is valuable in so far as it yields innovations that bring the crowds into rushing into Wal-Mart, it is simultaneous a threat to manufactured demand-it’s the “simple minds… [that] are the easiest to manage”(208). Education creates diversity in interest and tastes, making it difficult to herd the masses. Galbraith argues that education removes the veil from peoples eyes, allowing them “to see how they are managed in the interest of the mechanism that is assumed to serve them” (208).
While I agree that most true innovation within the product sector can be traced to some military discovery, I am not entirely convinced that education has the awesome power to free society from the influence of advertising execs or of materialistic want. If anything, the enhanced earning potential of a college graduate just gives her a greater more disposable income to buy the latest cell phone, camera, or ipod. The tastes in this case might not be as simple as: “automobiles; the uncomplicated forms of alcohol, food and sexual enjoyment…” but they are just as easily tied to synthesis and emulation.
Thomas Kuhn, and our problem with social balance
Galbraith’s primary argument in The Affluent Society is that while economic growth has vastly changed human life in wealthy countries, it has not spawned any corresponding change to the way we view our society and economy. Instead we seem ruled by antiquated ideas, and are always held back by a lagging conservatism. We are essentially in a conservative economic (and social) paradigm.
Thomas Kuhn wrote about the nature of paradigms in The Structure of Scientific Revolutions. Kuhn argued that scientific knowledge is not linear, but proceeds according to the assumptions of dominant paradigms. These assumptions necessarily limit the scope of inquiry, and central assumptions can only be really changed when they are proven irredeemably wrong. Galbraith believes a similar thing has happened with modern society. We have moved forward in wealth and economy, but our assumptions are outdated.
Our current economic/social paradigm provides incentives for private spending, but not public spending, and as such are deficient in public goods, such as schools and infrastructure. Galbraith thinks that what we need is a new set of assumptions, a new paradigm, that is concurrent with the levels of economic growth we are currently experiencing.
The Affluent Society: One Big Book of Criticisms
Let's be honest: The Affluent Society was dense. Interesting, but dense.
Galbraith's book is interesting for at least one reason: he challenges conventional thought. More specifically, he challenges the very ideas that our economic system is built around.
Galbraith argues that throughout our (mankind's) history, we have been poor. True, there have been wealthy civilizations, but none compare to our modern, Western society. He goes on, arguing that our historical poverty has shaped our ideas (and institutions) that set up our economic system. To this extent, I believe that Galbraith is correct and worthy of praise. Galbraith seems to yearn for a new kind of economic system... perhaps one that allows inequality (he comments that without wealth, no one would be able to pay for the arts), yet eradicates abject poverty. Most people would probably agree with his criticisms.
But criticisms alone do not advance thought. Galbraith wants there to be a new, groundbreaking way we understand modern economics - yet he fails to conceive of one himself. His attempts to "break new ground" with economics are peripheral at best.
One can hope that Galbraith's criticisms will resonate with a genius amongst us (Nathan?) and that genius will allow us to understand economics in a modern world.
Wednesday, October 1, 2008
An Uncouth Note
"Those who esteem this world will not enjoy this essay. Perhaps they should return it to the shelf unread. For there are negative thoughts here, and they cannot but strike an uncouth note in a world of positive thinking." (4)
This book may not espouse what I would label as "positive thinking," given that it critiques the very foundation of our economy, but there is no doubt that Galbraith's Affluent Society breaks with traditional thinking. In fact, Galbraith finds himself defending Marx's materialistic view of history in Chapter 6, a view which he insists is not a "massive eruption to the left," but instead a part of the "central tradition" (55). Moreover, he insists that many Americans actually abide by Marxian principles. "Marx profoundly affected those who did not accept his system," he writes on p.59. However the supporting evidence he uses includes the fact that a) classes and something that looked like class conflict existed; b) people were being too hard on Marx - they weren't so hard on Adam Smith! c) if Marx was wrong, he wouldn't have been so influential, and (my favorite) d) those who don't believe in Marxian principles perhaps are just not smart enough to understand them... Afer all, "Marx is not easy to understand" (p62). Trying to look past Galbraith's often patronizing writing-style, it is clear that Marx's basic tenets can be found both in radical and nonradical thought today. Take a look at the blog entitled "Socialists/Marxists/Communists for Obama" on Obama's official campaign site:
This group is for self-proclaimed Marxists/Communists/Socialists for the election of Barack Obama to the Presidency. By no means is he a true Marxist, but under Karl Marx's writings we are to support the party with the best interests of the mobilization of the proletariat. Though the Democratic Socialists of America or the Communist Party of America may have more Socialististic values, it is pointless to vote for these candidates due to the fact that there is virutally no chance they will be elected on a National level. The members of this group are not Leninists, Stalinists, etc. and do not support or condone the actions of North Korea, China, Cuba or any other self-procalimed "Marxist States." They do not in anyway represent the Marxist philosophy nor do they represent Socialism/ Communsim. We support Barack Obama because he knows what is best for the people!
Clearly Communism (Marxism to a lesser extent) has a much smaller presence in the US than in, say, India. But Galbraith asserts that much of left-wing thinking in the US has Marxist underpinnings.
Moving beyond Galbraith's emphasis on production and the means of production, I found his arguement for relative needs rather interesting and reminiscent of our discussion of Rousseau's "Discourse on the Origin on Inequality." Rousseau explains how society can be the source of both productivity and scarcity. Specialization creates dependency and increases social complexity. Thus, society turns wants and luxuries into needs, which creates more needs and thereby creates scarcity. So even if you "win" the game, you essentially loose becasue you only win at being the best according to comarpative relative advantage. Anyone remember Hurley's brilliant example? Britney Spears! Something about how she won at being famous but "she is still one of the most pathetic people of our society." Perhaps the Britney Spearses of the world should pick up a copy of Galbraith....
This book may not espouse what I would label as "positive thinking," given that it critiques the very foundation of our economy, but there is no doubt that Galbraith's Affluent Society breaks with traditional thinking. In fact, Galbraith finds himself defending Marx's materialistic view of history in Chapter 6, a view which he insists is not a "massive eruption to the left," but instead a part of the "central tradition" (55). Moreover, he insists that many Americans actually abide by Marxian principles. "Marx profoundly affected those who did not accept his system," he writes on p.59. However the supporting evidence he uses includes the fact that a) classes and something that looked like class conflict existed; b) people were being too hard on Marx - they weren't so hard on Adam Smith! c) if Marx was wrong, he wouldn't have been so influential, and (my favorite) d) those who don't believe in Marxian principles perhaps are just not smart enough to understand them... Afer all, "Marx is not easy to understand" (p62). Trying to look past Galbraith's often patronizing writing-style, it is clear that Marx's basic tenets can be found both in radical and nonradical thought today. Take a look at the blog entitled "Socialists/Marxists/Communists for Obama" on Obama's official campaign site:
This group is for self-proclaimed Marxists/Communists/Socialists for the election of Barack Obama to the Presidency. By no means is he a true Marxist, but under Karl Marx's writings we are to support the party with the best interests of the mobilization of the proletariat. Though the Democratic Socialists of America or the Communist Party of America may have more Socialististic values, it is pointless to vote for these candidates due to the fact that there is virutally no chance they will be elected on a National level. The members of this group are not Leninists, Stalinists, etc. and do not support or condone the actions of North Korea, China, Cuba or any other self-procalimed "Marxist States." They do not in anyway represent the Marxist philosophy nor do they represent Socialism/ Communsim. We support Barack Obama because he knows what is best for the people!
Clearly Communism (Marxism to a lesser extent) has a much smaller presence in the US than in, say, India. But Galbraith asserts that much of left-wing thinking in the US has Marxist underpinnings.
Moving beyond Galbraith's emphasis on production and the means of production, I found his arguement for relative needs rather interesting and reminiscent of our discussion of Rousseau's "Discourse on the Origin on Inequality." Rousseau explains how society can be the source of both productivity and scarcity. Specialization creates dependency and increases social complexity. Thus, society turns wants and luxuries into needs, which creates more needs and thereby creates scarcity. So even if you "win" the game, you essentially loose becasue you only win at being the best according to comarpative relative advantage. Anyone remember Hurley's brilliant example? Britney Spears! Something about how she won at being famous but "she is still one of the most pathetic people of our society." Perhaps the Britney Spearses of the world should pick up a copy of Galbraith....
Ad Whore
As Galbraith asserts, our ideas about economics are a product of our continual existence in poverty (until late). Continued economic growth has placed us among the affluent societies. Suffering and social conflict, these are machinations of poverty. In this world of utopian possibilities, physical misery diminishes but new complaints and contradictions arise. Our wants multiply (no thanks to advertising) and our quest for growth unleashes new anxieties and economic conflicts that disturb the fragile social order of The Affluent Society.
To those of you appalled by Galbraith’s espousal of government spending: Not all government spending is bad. Galbraith asserts that government spending has (as of 1954) been stigmatized as a necessary evil. For him it’s all about more government spending and less private production. Friedman’s argument for private production instead of public sphere intervention is certainly more compelling here.
Not all advertising is bad. Sure, sometimes that latest Louis Vuitton ad makes me crave another unnecessary expenditure but we’re not robots. Companies can’t condition consumers to buy things they don’t want or need. Do you really feel like all spending is artificial, unfulfilling? (Nathan, don’t answer that.) Our unlimited material desires can’t be driven by advertising alone. Omnicom would be so lucky. Although our environment can shape our thinking, ultimately our ideas and the economic behavior that results is a product of more than just our environment.
What it comes down to is the distribution of income: who gets what, and why? Desert is a consideration but by and large incomes just don’t seem to rise as quickly as our desires. The rich keep getting richer and it’s hard to see where Joe Next Door fits into the picture. In Galbraith’s affluent society giant corporations provide safe jobs and benevolently control the market while the government regulates the business cycle. Globalization and the growth of technology aren’t part of the Galbraith’s picture (even though they definitely didn’t have Photoshop back then).
To those of you appalled by Galbraith’s espousal of government spending: Not all government spending is bad. Galbraith asserts that government spending has (as of 1954) been stigmatized as a necessary evil. For him it’s all about more government spending and less private production. Friedman’s argument for private production instead of public sphere intervention is certainly more compelling here.
Not all advertising is bad. Sure, sometimes that latest Louis Vuitton ad makes me crave another unnecessary expenditure but we’re not robots. Companies can’t condition consumers to buy things they don’t want or need. Do you really feel like all spending is artificial, unfulfilling? (Nathan, don’t answer that.) Our unlimited material desires can’t be driven by advertising alone. Omnicom would be so lucky. Although our environment can shape our thinking, ultimately our ideas and the economic behavior that results is a product of more than just our environment.
What it comes down to is the distribution of income: who gets what, and why? Desert is a consideration but by and large incomes just don’t seem to rise as quickly as our desires. The rich keep getting richer and it’s hard to see where Joe Next Door fits into the picture. In Galbraith’s affluent society giant corporations provide safe jobs and benevolently control the market while the government regulates the business cycle. Globalization and the growth of technology aren’t part of the Galbraith’s picture (even though they definitely didn’t have Photoshop back then).
Risky Business
In the eighth chapter of John Kenneth Galbraith's The Affluent Society he begins to discuss the issue of economic security and risk management. In the wake of the past couple weeks I found it interesting that the discussion in the book is markedly different from the trends in business nowadays, perhaps having to do with a significant change in the conventional wisdom from 1958 until now?
Risk minimization as well as companies not being tied to the success or failure of any individual was more prominant when he initially wrote this. In the middle of page 84 he claims, "no individual is powerful enough to do much damage...the organization is independent of any individual." This I would tend to disagree with. Part of the rationalization of giving these executives these massive salaries and the power to make all the major decisions in the companies is the belief that they can make a difference. Their presence is proof that the company and the market value their talents and that differing talents produce different results. If it didn't depend on their talent then there would be no reason to pay them exorbitant amounts in order to keep them from leaving the company and gaining a more lucrative position in another big company.
After his outdated discussion on individuals he begins to talk more about the risk aversion that companies have been moving towards. He talks about how the companies don't need to seem as though they are minimizing risk because they want to portray the image of security as inherent. This behavior is ironic because of the recent failures in the banking industry of potentially harmful decisions that the big wigs have made to be less risk averse. These decisions have lead to the problem of whether or not it is appropriate for the government to offer them a helping hand since they wanted to seem secure without overt government aid like the companies Galbraith is discussing. The myth of the large business corporations "living dangerously" has come true. When Galbraith's was writing "almost no large industrial corporation in the United States, which is also large in its industry, has failed or been seriously in danger of insolvency in many years. Where there has been danger, the government has come to the rescue (85)." Now we see that this is a collapse where the government has to make a decision whether or not to be that aid that he speaks of. His claim is that since everyone has become more risk averse that the companies have followed suit and did so because it was setting a good example.
My question is would he still support a bailout of this magnitude? In talking about the changing of the conventional wisdom he claims that the changes only occur when there is a significant course of events that forces us to reconsider the conventional wisdom because it is becoming more and more divorced from the reality of events in our society (11). Is this "march of actions", meaning the failing banks and faltering financial industry, a significant enough divorce from the conventional wisdom that we should alter our beliefs and possibly look to other sources instead of the government for our solution or have we reverted back to this belief now that our conventional wisdom is more mature? Sometimes you just gotta say, What the Heck, make your move. It's your move, Congress.
Risk minimization as well as companies not being tied to the success or failure of any individual was more prominant when he initially wrote this. In the middle of page 84 he claims, "no individual is powerful enough to do much damage...the organization is independent of any individual." This I would tend to disagree with. Part of the rationalization of giving these executives these massive salaries and the power to make all the major decisions in the companies is the belief that they can make a difference. Their presence is proof that the company and the market value their talents and that differing talents produce different results. If it didn't depend on their talent then there would be no reason to pay them exorbitant amounts in order to keep them from leaving the company and gaining a more lucrative position in another big company.
After his outdated discussion on individuals he begins to talk more about the risk aversion that companies have been moving towards. He talks about how the companies don't need to seem as though they are minimizing risk because they want to portray the image of security as inherent. This behavior is ironic because of the recent failures in the banking industry of potentially harmful decisions that the big wigs have made to be less risk averse. These decisions have lead to the problem of whether or not it is appropriate for the government to offer them a helping hand since they wanted to seem secure without overt government aid like the companies Galbraith is discussing. The myth of the large business corporations "living dangerously" has come true. When Galbraith's was writing "almost no large industrial corporation in the United States, which is also large in its industry, has failed or been seriously in danger of insolvency in many years. Where there has been danger, the government has come to the rescue (85)." Now we see that this is a collapse where the government has to make a decision whether or not to be that aid that he speaks of. His claim is that since everyone has become more risk averse that the companies have followed suit and did so because it was setting a good example.
My question is would he still support a bailout of this magnitude? In talking about the changing of the conventional wisdom he claims that the changes only occur when there is a significant course of events that forces us to reconsider the conventional wisdom because it is becoming more and more divorced from the reality of events in our society (11). Is this "march of actions", meaning the failing banks and faltering financial industry, a significant enough divorce from the conventional wisdom that we should alter our beliefs and possibly look to other sources instead of the government for our solution or have we reverted back to this belief now that our conventional wisdom is more mature? Sometimes you just gotta say, What the Heck, make your move. It's your move, Congress.
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