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In the opening pages of The Affluent Society , John KennethGalbraith informs the reader that nearly all nations through-out all history have been very poor. The exception has beenthe last few generations in Europe and the United Stateswhere there has been great and quite unprecedented af-fluence. The ideas by which the people of this favored partof the world interpret their existence, and in measure guidetheir behaviour, were not forged in a world of wealth, butwere the products of a world in which poverty had alwaysbeen mans normal lot. 1 ... As a result we are guided, inpart, by ideas that are relevant to another world ... 2

Galbraith has managed to get off on the wrong foot by ig-noring the fact that although mens environments influencetheir thinking, ideas are the products of mens minds. Hesays that our ideas are the products of a world of povertyand that nearly all nations throughout all history have beenvery poor. If both of these claims were true, then the ideaswhich guide our economic behavior would have been univer-sally accepted since prehistoric times. But, for example, the

traditional African Way of Life has been communitariansocialism. 3 Galbraith is apparently in error with regard tothe source of our ideas.

The ideas that Galbraith considers obsolete are our variousideas regarding production. He says that our concern forproduction is traditional and irrational 4 ... In the general viewit is privately produced production that is important, and thatnearly alone ... Public services, by comparison, are an in-cubus ... Such attitudes lead to some interesting contradic-tions. For example, automobiles have an importancegreater than the roads on which they are driven. 5

It is obviously true that, if automobiles are important and

they depend upon roads, then roads are also important. Butthis hardly confirms Galbraiths yet-to-be-stated thesis thatmore taxes are needed to be spent on roads, because Gal-braith never considers the alternative of elevating the statusof roads by removing them from the public sector and

placing them in the private sector. (If such an alternativewere acted upon, then the true importance of roads, as com-pared to other forms of transportation, could be determined.)

Galbraiths next step is to argue, by using the theory of mar-ginal utility, that increases in production are unnecessary.The urgency of desire is a function of the quantity of goods

which the individual has available to satisfy that desire. Thelarger the stock the less the satisfaction from an increment.And the less, also, the willingness to pay ... With increasing

per capita real income, men are able to satisfy additionalwants. These are of a lower order of urgency. This beingso, the production that provides the goods that satisfy theseless urgent wants must also be of smaller (and declining)importance ... 6 The effect of increasing affluence is to mi-nimize the importance of economic goals. Production andproductivity become less and less important. 7

George Reisman has said that Galbraith makes an enormousequivocation between the importance of a concrete amount of wealth as the total amount of wealth increases and theimportance of acquiring wealth as its total amount increases.For while the importance of the former diminishes with theincrease in the amount of wealth, the importance of the latterdoes not. The very purpose of acquiring wealth and thesource of the importance of doing so consist precisely in thereduction of the marginal utility of wealth ... For the abilityto achieve an ever lower marginal utility of wealth is identi-cal with the ability to make an ever greater and more com-plete provision for the maintainance and enhancement of ones life and well-being. 8

Galbraith moves on to the influence of advertising. He saysthat the scholar who wishes to believe that with increasing

affluence there is no reduction in the urgency of desires andgoods is not without points for debate ... However, there is aflaw in the case. If the individuals wants are to be urgentthey must be original with himself 9 ... One cannot defendproduction as satisfying wants if that production creates thewants 10 ... The ... direct link between production and wantsis provided by the institution of modern advertising and sa-lesmanship 11 ... A man who is hungry need never be told of his need for food. Finally, the way wants depend on theprocess by which they are satisfied Galbraith calls the De-pendence Effect. 12

Human desires can be divided into two catefories: (1) physi-ological desires and (2) psychological desires. Neither pro-duction, nor advertising, can create either of these two typesof desires; both are original with the individual.

Some people desire to keep up with the Joneses, somepeople do not. Yet both of these groups are subject to theinfluence of advertising. There are two possible explana-

J . K. GALBRAITHSTH E AFFLU EN T S O CIETY:

A CRITIQUEHARRISON D RAKE

Economic Notes No. 22ISSN 0267 7164 ISBN 1 870614 57 7An occasional publication of the Libertarian Alliance,25 Chapter Chambers, Esterbrooke Street, London SW1P 4NNwww.libertarian.co.uk email: admin@libertarian.co.uk 1989: Libertarian Alliance; Harrison Drake.This review article was first published in Invictus , No. 9,August-October 1970.The views expressed in this publication are those of its author,and not necessarily those of the Libertarian Alliance, its Committee,Advisory Council or subscribers.Director: Dr Chris R. TameEditorial Director: Brian Micklethwait Webmaster: Dr Sean Gabb

FOR LIFE, LIBERTY AND PROPERTY

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tions: (1) the second group uses hypnosis to resist the deter-minism of advertising or (2) the first group s desire to keepup with the Joneses was not created by advertising.

Galbraith s only apparent criterion for deciding that wantsare urgent is that the want is physically experienced (forexample, hunger). This standard makes of little urgencypsychological wants, such as a desire for education, for se-curity, for justice, or a desire to create. An acceptance of Galbraith s thesis would have to mean a return to the StoneAge.

Next, Galbraith informs the reader about the effects of theDependence Effect. He says that the line which divides ourarea of wealth from our area of poverty is roughly thatwhich divides privately produced and marketed goods andservices from publicly rendered services ... In fact, ourwealth in privately produced goods is, to a marked degree,the cause of crisis in the supply of public services. For wehave failed to see the importance of maintaining a balancebetween the two. 13 Advertising operates exclusively, andemulation mainly, on behalf of privately produced goods and

services. Therefore, public services will have an inherenttendency to lag behind. 14

Is Galbraith correct that public services have an inherenttendency to lag behind ? Henry C. Wallich lists the press-ures that work for greater public spending. If advertisingpromotes sales to individuals, those who supply the publicauthorities are not without means of their own to promotetheir wares. If some taxpayers object to taxes that willbenefit others besides themselves, there are others who votefor expenditures expecting that they will benefit where theyhave not contributed. Politicians have not been averse tovoting funds for well supported worthy causes. Vocal mi-norities that know what they want often can outmaneuverinarticulate majorities that don t know how to stand up fortheir own interests. Finally, our tax system has a built-inbias to encourage spending, because it collects relativelysmall amounts per head from taxpayers in the lowerbrackets, while those in the upper brackets pay a good deal.If the benefits that individuals in different brackets derivefrom public services are not too disparate, taxpayers in thelower brackets obviously are getting theirs at a bargain.Since they are in a majority, they are in a position to in-crease the number of these bargains. 15

Thus far Galbraith has informed the reader that our concernfor production is irrational because the wants being satisfied

are not urgent, in fact, they are created by advertising. Hehas also said that advertising is responsible for the wealth inthe private goods and services and the poverty in publicserv- ices (he calls this social imbalance ). This is whatcomes next: ... we must find a way to remedy the povertywhich afflicts us in public services and which is in increas-ingly bizarre contrast with our affluence in private goods 16 ...The solution is a system of taxation which automaticallymakes a pro rata share of increasing income available topublic authority for public purposes. The task of publicauthority ... will be to distribute this increase in acordancewith relative need. Schools and roads will then no longer beat a disadvantage as compared with automobiles and televi-sion sets in having to prove absolute justification. 17

However, Wallich points out that the free provision of pub-lic services paid for by taxation is a very inefficient way of catering to consumer needs 18 ... In private dealings, the con-sumer purchases the exact amount of the exact product hewants, and so gets the most for his money. The taxpayer

voting for certain public services has no means of securingsuch nice adjustment. He may find himself getting less. ormore, or something other than he wanted. He has no incen-tive, moreover, to economize in the use of many of the ser-vices offered - usually they come to him free of charges. 19

Although I agree with Galbraith that the line which dividesour area of wealth from our area of poverty is roughly thatwhich divides privately produced and marketed goods andservices from publicly rendered services ,20 I do not attributethis to the Dependence Effect. I attribute it to the fact that asocialist monopoly (i.e. government) will inevitably tend tobe less efficient in the production of goods or services than acompetitive, free market business.

Galbraith says that the most important difference betweenprivate and public goods is ... the first lend themselves tobeing sold to individuals. The second do not. 21 But theonly goods that do not lend themselves to being sold toindividuals are those that exist in such superfluous abun-dance that everyone can have all that they wish for nothing.However, Galbraith goes on to say that once the decision

was taken to make education universal and compulsory, itceased to be a marketable commodity. 22

In other words, the existence and present size of the publicsector is not due to economic realities but to political deci-sions, such as the above-mentioned decision regarding edu-cation.

This fact should make it clear that the solution for socialimbalance is not, as Galbraith suggests, to enlarge the pub-lic sector even more. Rather, the solution is to abolish thepublic sector, thereby putting public goods and servicesinto the private sector to benefit from the affluence of thatarea.

BIBLIOGRAPHY:

Galbraith, John Kenneth, The Affluent Society , HoughtonMifflin Company, Boston, 1958.Nyerere, Julius K., Communitarian Socialism , in PaulGoodman ed., Seeds of Liberation , George Braziller, NewYork, 1964.Reisman, George, The Revolt Against Affluence: Galbraiths

Neo-Feudalism , Nathaniel Branden Institute, New York,1961.Wallich, Henry C., The Cost of Freedom , Collier Books,New York, 1960.

FOOTNOTES

1. John Kenneth Galbraith, The Affluent Society , p.l.

2. Galbraith, op. cit., p.3.3. Julius K. Nyrere, Communit-

arian Socialism , in PaulGoodman ed., Seeds of

Liberation , pp. 184-191.4. Galbraith op. cit., p. 132.5. Galbraith, ibid, p.133.6. Galbraith, ibid, p.145.

7. Galbraith, ibid, p.146.8. George Reisman, The Revolt

Against Affluence: Galbraiths Neo-Feudalism , p.5.

9. Galbraith, ibid, p.152.

10. Galbraith, ibid, p.153.11. Galbraith, ibid, p.155.12. Galbraith, ibid, p.155.13. Galbraith, ibid, p.251.14. Galbraith, ibid, pp. 260-261.15. Henry C. Wallich, The Cost of

Freedom , p.151.16. Galbraith, op. cit., p.308.17. Galbraith, op. cit., p.308.18. Wallich, loc. cit.19. Wallich, op. cit., p.152.20. Galbraith, op. cit., p.251.21. Galbraith, op. cit., p.309.22. Ibid.