Risk Latte - The American Affluent Society – Is there a need for more Vacuum Cleaners or Street Cleaners?

The American Affluent Society – Is there a need for more Vacuum Cleaners or Street Cleaners?

Rahul Bhattacharya
January 17, 2009

In two days President Barack Obama would be inaugurated in the White House.

The American economy lies crippled and, as job losses mount and cause more pain and trauma to ordinary Americans, as the great financial and economic waste lies heaped on the garbage dumps on Wall Street, as the big three automobile and other iconic American companies face bankruptcies, as the industrial machinery across the nation sputters and comes to a grinding halt, as the teaming middle class of America, with their dream shattered, homes taken and savings decimated, lie perched on the brink of poverty, and as the small minority of super rich and ultra-rich lie ensconced in their penthouses and mansions, humbled by their destiny, all eyes are on President Obama and his inauguration.

Whither the American affluent society?

In 1958, John Kenneth Galbraith the celebrated American economist, essayist and President Kennedy’s ambassador to India, wrote an influential book title "The Affluent Society." The book was intended to be "a searching enquiry into the U.S. economy" at that timei. The book would capture the mood of the times adequately. A decade after the United States emerged victorious from the Second World War the American society was enjoying a surge in industrial production and a general uplift in the living standards of the masses. More and more people were living the American dream – a nice house, a nice car, telephone, television, secure jobs and having enough money to spend on not so essential items. As wealth was being created in great proportion, the country’s industrial elite were pursuing the goal of production of goods as its singular objective and its growing middle class was living by the mantra of consumption of these goods. The American society had become materialist like never before. It was all about producing goods – essential, not so essential and inessential – and selling them to the consumers using advertising as a tool.

However, both producers and consumers, in their desire to maximize economic efficiency, were producing social inefficiencies, which needed urgently needed to be redressed. This was Galbraith’s concern. He saw an America rich in private goods and quite poor in public services. He pointed out that in such despite the American society becoming affluent in general the essential social services, such as health care, education, public sanitation were getting neglected and the onus was on the Government, the public sector to address and mitigate these problems. He was worried that if such social inefficiencies persisted, if all that the Americans cared for was producing and consuming more and more of goods, there would great social imbalance.

The Affluent Society of the fifties had "plenty of vacuum cleaners but very few street cleaners."ii It was founded on the “myth that production was the central problem of our lives.”
Galbraith’s book struck a chord with a lot of young people at that time. It not only generated dinner table discussions across America but also spawned debates in the Universities and the corridors of power. However, his thesis would eventually get buried.

Over the next five decades, the American industrial state would relentlessly move forward creating vast wealth for American companies, conglomerates and the people at large. It would greatly enrich its citizens and empower its private sector. Galbraith’s worries would be buried under the weight of financial might of corporate America. The problem of poverty in America, wherever it existed and in whatever form it existed, would only be a peripheral issue in the whole scheme of things. The desire for vacuum cleaners in American homes would far outstrip the need to have street cleaners for America’s streets. The desire to own automobiles would far outstrip the need to have adequate parking lots in the country. For fifty years, the American consumer’s universe would be dominated by televisions, automobiles, stereo players, walkmans, i-pods, i-phones, personal computers, notebooks, consumer durables, fashion wear, fast food, financial products, mortgages, stocks, bonds, air miles and everything else that satisfied his fundamental and hedonistic desires. For fifty years the myth of American productivity and industrial production, the myth of its financial might and technological acumen would be kept alive in the hearts of ordinary Americans, and indeed the rest of the world would also come to believe in this myth.

Until, on the 50th anniversary of the publication of Galbraith’s The Affluent Society, that myth would come unraveled. With the bursting of the sub-prime bubble and the bankruptcy of Lehman Brothers, the American dream built over a half a century will ultimately begin to shatter. What just happened? What happened to the might of that Industrial state built over five decades? Were Galbraith’s ideas doomed to be relegated to public libraries by the mainstream economists who saw the solution to all social ills in relentless growth, predicated on industrial production and consumption of private goods, of the economy? Or was there something wrong with the basic economic model of growth?

One in compelled to ask the question, fifty years after Galbraith’s thesis, whether all that production of private goods really needed as far as the basic and fundamental needs and wants of the American consumers were concerned? This may appear to be a silly question, especially to the economists. After all, no notion is more sacrosanct and undisputed in the field of economics than the one which holds growth of an economy and production of goods and services for consumption as the only real goal of mankind. All progress, technological, economic and social, is predicated on this notion. This question is also unanswerable. Nobody can tell what our basic wants and desires are. Once we keep increasing our income, wants and desires automatically form. After one is properly clothed, fed and sheltered, he develops higher needs, such as owning a car, a TV, so on and so forth. The process never stops. Once again, the economics is not concerned with this process. What matters to an economist is the aggregate demand, not how the masses develop their tastes and preferences at the individual level or how human beings look at demand at the individual level.

Therefore it is futile to ask the question that whether this humongous production of private sector goods – and services – in America by the industrial machinery was warranted or not for there can be no answer to this. However, one thing is obvious. The production of goods and services by the private sector, coupled with the belief by the economists and the corporate sector in America that production of goods is the main objective of economic life, led to an orgy of consumption by the American consumers. Teenagers, young men and women, baby boomers craved for more fancy goods and services. There was a mad rush to consume anything and everything that came out of the factories and the imaginations of the service providers, and consume at any cost. Consumption became the only objective of our economic life. Consumption became the symbol of affluence. And of course, this consumption was fuelled by debt. Consumers borrowed more and consumed more. Everything else was secondary or even peripheral – education, healthcare, public sanitation, poverty alleviation programmes, etc. All these public services were left for the Government or the public sector to sort out. American consumers couldn’t care less about them and to the economists these issues were, at best, superfluous.

We ask again: whither the American Affluent Society? Are Galbraith’s ideas relevant today? Is there a need for more vacuum cleaners or street cleaners in America today?

iTIME magazine, June 2, 1958
iiIbid, TIME magazine, June 2, 1958

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