The Affluent Society

Customer Reviews

Galbraith starts the book off by reviewing how many early economic ideas were created in periods of scarcity, and that the notion of scarcity may not appropriate for today's age of mass affluence. Those with vested interests in production (i.e. large businesses) still cling to the "conventional wisdom" that increased production equals progress, even though goods are now abundant and our basic material needs have been satisfied. To stimulate further demand, corporations must resort to salesmanship and advertising. If advertising stopped, demand would fall, production would drop, and unemployment would rise; thus, business continue to focus on increasing production to ensure their own survival.

There are other threats to production. Economic cycles may result in a depression. Poorly managed firms may have to lay off workers. As a result, people -- and especially politicians --focus on economic growth to avoid these insecurities. Growth is something that both the rich and poor will vote for, since they both want to keep their jobs and acquire more goods. Growing out of a recession also seems promising. The net result is that society as a whole focuses on increasing production by private industry.

Next, Galbraith shifts his view from private industry to the public sector. He does this by introducing the idea of social balance, which asserts that as private spending increases, public spending should increase to match. For example, if factories build more cars, more money needs to be invested in public roads. Unfortunately, private goods are sold via advertising by companies that can react quickly to changes in demand. In contrast, public investment by governments reacts much more slowly, and typically lags private spending and investment, due to regulations, bureaucracy, and voter's general aversion to new taxes. The result is a world rich in private goods but poor in public ones: beautiful cars driving on poor roads, well-dressed kids in the crumbling public school, neighborhoods with beautiful homes but polluted parks.

So what to do? Galbraith's proposed solution is that we should invest in our economic infrastructure: our parks, our roads, our educational system, long-term scientific research, police, and the like. To fund this, he emphasizes sales taxes, which reduce consumption, and make those who consume a lot pay for it. To alleviate poverty and inequality, Galbraith also proposes to expand unemployment insurance so that one could choose not to work, yet still be able to get by. In his view, this would allow more people to reduce their work week, or not work at all, or to be able to focus on work they really enjoy.

Although this is certainly a liberal view & may not be feasible, his views certainly were eye-opening and thought provoking. For that reason, I recommend the book.

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