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Living in an
affluent society: it is so ‘more-ish’
Shaun Hargreaves Heap (University
of East Anglia, UK)
© Copyright 2004 Shaun Hargreaves Heap
Introduction
Who do you know with recent publications in top rated journals, who
teaches at a one of the best economics departments and who has just written a
best seller on the peculiar difficulties of living in an affluent society?
I suspect the answer is nobody; and I doubt that the reply would
have been different had I enquired in a similar way during any of the last 40
years. However, had I asked the question in the late 1950s, there was
someone: John K. Galbraith.
Of course, there have been other well known economists who have
written for a popular audience, but none can match Galbraith’s style or his
canvass. He is probably the only economist during the post-war period who
comes close to Keynes in these respects. I was reminded of this the other day
when I came across a Readers Union copy of The Affluent Society while I was
browsing in a second-hand bookshop. I bought and re-read it; and it is a gem.
Here is why.
The Affluent Society: the
main argument
‘Among the many models of the good society no one has urged the
squirrel wheel’.
So Galbraith remarks, yet living in affluent societies closely
resembles a life on the squirrel wheel. This is the first aspect of the
problem confronting those who live in a comparatively rich society. It arises
because our aspirations get focussed on increasing income just as we have
more of it than our parents or grandparents could ever have dreamt of. No
sooner do we have more, than we want more….and so the wheel turns one more
time, we re-adjust our beady eyes and begin to ascend the ladder again….with
predictable effect.
This thought hardly needs introducing as it has achieved a certain
acceptability in the mainstream now. The growing weight of the evidence, that
we seem little, if any, happier than our parents or grandparents despite
being much richer, has spawned a whole literature on how to account for the
apparent absence of a relationship over time between the level of income and
happiness. Galbraith deserves recognition for being one of the first to see
this aspect of the peculiar problem of affluence and to have anticipated some
of the contemporary explanations of this seeming paradox. For instance, his
analysis of this problem centres on two, now well understood mechanisms that
promote the expansion of ‘wants’ as income grows. One is the logic of
relative comparison whereby one’s happiness is based in part on how we are
doing relative to others. So when everyone’s income rises, no one feels
better off. The other relates to the growth of industries, like advertising,
which are concerned precisely to populate our dreams with hitherto
unimaginable, yet now plainly desirable, objects.
The second aspect of the problem experienced by affluent societies
is what Galbraith calls ‘social imbalance’. This is his early version of what
he referred to later in a more revealing way as ‘private affluence and public
squalor’. Our public services lag inexorably behind our private consumption.
This is primarily, on his account, because there is no mechanism akin to the market that signals and generates
the response of, for instance, more roads when we buy another car. The extra
steel for this car gets produced, as does the material for the seats and the
upholstery, because the increase in demand makes it profitable for these
manufacturers to expand their output. But there is nothing like this with
respect to roads or clean air. Yet just as surely, we will need more of these
public goods as well as the steel and other privately produced materials when
we buy and drive our new cars. This is a political failure and, although
Galbraith’s analysis and conclusions are different, he is recognising the
failure that later distinguished the Public Choice School. So, again credit
is due to Galbraith for anticipating something that is now well recognised.
His primary solution to both dimensions of the problem of affluence
is to mandate growth in expenditure on public services financed by a sales
tax. In particular, there has to be much bigger expenditure on education. In
part this is because the obsession with income growth is encouraging both
parents to work, so that the need for child care is growing particularly
fast. It is also necessary because the educational system supplies the one counterveiling influence to the contemporary obsession
with money. In other words, if we are to really enjoy being rich, then we
have to build up our public services in ways that help sustain a more varied
set of aspirations than just getting richer.
Although, this is a commendably Smithian
view of the role of education in an affluent society, I suspect that
Galbraith’s particular remedies do not stand close inspection. This is
largely because we have come to worry with the Public Choice School over what
goes on in the public sector and our only remedy has the effect of recreating
the mentality that only money matters within the public sector itself. I will
say more on this below. I want to turn first to some of the supporting or
subsidiary arguments in the book.
Some supporting arguments
There is a wonderful set of elaborations to the arguments that I
have just sketched, but there are also a further group that Galbraith deploys
in his analysis of our obsession with output and income. They are worth
setting out because they signal something more about his contribution. It is
perhaps most easy to bring out how these arguments come together and why they
are interesting if I list the points made and comment on their contemporary
resonance.
1) The
ideas that we use to interpret events almost always relate to a different
historical epoch.
On the one hand, this looks back because it is a version of Keynes’s
famous observation about politicians at the end of The General Theory, but it
also looks forward because the same arresting conclusion, albeit drawn for
different reasons, is one of the hallmarks of evolutionary psychology. It is
important in Galbraith’s argument as most of human history has known only the
problem of getting enough to meet the strict necessaries of life. Indeed in
most affluent countries, it is only during the 20th century that
real wages started to rise much above subsistence. As a result, our ideas
regarding the economy have and continue to be dominated by concerns with
raising output. What insulates this obsession from the reality of affluence
is a combination of 2) and 3).
2) ‘Conventional
wisdom’ reigns.
‘Because economic and social phenomena
are so forbidding, or at least so seem, and because they yield few hard tests
of what exists and what does not, they afford the individual a luxury not
given by physical phenomena. Within a considerable range he is permitted to
believe what he pleases. He may hold whatever view of this world he finds
most agreeable or otherwise to his taste.
As a consequence, in the interpretation of all social life there is a
persistent and never ending competition between what is relevant and what is
merely acceptable. In this competition, while a strategic advantage lies with
what exists, all tactical advantage is with the acceptable. Audiences of all
kinds most applaud what they like best. And in social comment the test of
audience approval, far more than the test of truth, comes to influence
comment.’ (p.5).
…..Ideas are inherently conservative.
They yield not to the attack of other ideas but to the massive onslaught of
circumstance with which they cannot contend. (p.15)
Galbraith sets out in this way a view of what Kuhn later called
‘normal science’: in particular, its dependence on convention in the
scientific community and its insulation from awkward facts. Sociologists of
science have since made this idea commonplace, and it helps explain how we
still fixate on output growth despite the experience of affluence, once it is
also understood why output growth proves so agreeable to us as ‘audience’---cue
the third element in this group of arguments.
3) Output
growth eases the tensions that come from inequality and makes for security.
This is why we applaud output growth. Inequality is always a
potential source of tension in society, but this is mitigated by the growth
in incomes because the numbers of people in absolute poverty falls. Likewise,
the growth of output is fuelled by maintaining full employment and the most
significant source of insecurity in society is the prospect of unemployment.
Thus Galbraith is one of the early commentators to make the connections
between growth and social harmony which have been central to social
democratic politics in the postwar period; and when
combined with the earlier two points we have a further explanation of how our
expectations have become so narrowed on stuff, stuff and more stuff, please!
Does the analysis still
apply?
Few cannot be puzzled by the appetite of the affluent. The absence
of any measurable effect of income growth on happiness is only one part of
what is strange here. The failure to take measures that will address the
global warming that has been and continues to be generated by output growth
increasingly appears like some form of death wish. There are also more local
pathologies. The highest earners in the UK and the US actually work longer
hours than their counterparts 20 years ago. So the pursuit of more stuff is
seemingly ornamental because the getting of it is now cutting into the time
that we have left to play with it. To put the issue bluntly, if we could for
one moment step outside the squirrel wheel, surely we would conclude that we
are interested in output growth to an extent which casts doubt on whether we
actually know where our interests lie anymore. For these reasons, the subject
of Galbraith’s book is even more timely now than it was in the late 1950s.
How relevant, though, is Galbraith’s analysis of the dynamics of the
squirrel wheel for the contemporary world?
I have two criticisms here.
The first is perhaps best summarised as a failure to anticipate the
problem of identity. I believe that this holds the key to understanding why
consumption is so central to our lives. There are two parts to this
observation. One is that while one kind of insecurity does disappear with
full employment, the collapse of traditional bonds of one kind or another in
the modern world has made personal identity more fluid and with this fluidity
comes another kind of insecurity. It is no coincidence that people talk now
of identity politics. The term reflects the way in which identity has become
problematic. So Galbraith was wrong to assume that full employment pushes
insecurity into the background.
At the same time, consumer goods have more clearly come to form a
language system. This is the important insight that anthropology gives
economics. We use consumer goods to say things about ourselves and as our
identity has become less well fixed through traditional bonds of one kind or
another, we have had increasing recourse to the world of goods to do it for
us. (Incidentally, this means that advertising is not so much a conspiracy,
as Galbraith seems to hint: it actually works with the grain of human nature.
And while making parenthetic remarks, it is perhaps worth adding that it is
not just the advertising industry which plays such a crucial role, it is the
whole set of mass media industries.)
The other part of the observation about identity relates to the
intrinsic nature of relative comparison in general. Too often in economics,
this has been treated pejoratively as a desire for status, something
invidious, when it is actually more deeply rooted in a general sense in human
nature. This is in part a lesson that Wittgenstein teaches us and it would be
well for economists to take the point more seriously.
These are shorthand comments which sum to the thought that the
impetus towards consumption is in some respects perfectly natural, if not
ineluctable. We need to fix our identities and consumption has been a key
arena in which this is done. Since our concern with identity is not going to
disappear, this means that if we are not happy with the part played by
consumption in this, then we have to think about how identity can come to be
more closely associated with non-consumption activities. This directly feeds
into my next critical comment because Galbraith, following Smith, was surely
right to see that the education system is a potential source of some other
value system. It is not the only source, however, and nor is it an easy
solution. This is the source of my second critical reflection.
There is a fundamental difficulty that has arisen with the public
service solution to the problems of a market society. We apparently no longer
trust public servants to do the job, and so require that they are
accountable, and often minutely so, for their actions. But in making them
accountable through performance indicators and all the other penumbra of the
audit economy, we have re-encountered the old problems of control found in
Soviet style economies. It is actually worse than this. It is not just that
close observation fails to produce the desired results because it can never
be quite close enough, it is that the professional value systems that used to
thrive in the discretion given to public servants no longer have any space.
This is unfortunate because these
professional value systems involve the subordination of strict individual
self interest to some other standard that typically trades in concepts like
‘honour’, ‘trust’, ‘just’, ‘the good’, etc. These are the natural vocabulary
of all alternative value systems and so their dwindling currency among all
parts of the public sector is a source of some regret in this context.
Of course, this is not to be taken as an argument against
accountability. Rather it is a complaint that our ideas regarding
accountability are often terribly impoverished. What we need are mechanisms
of accountability that work with the grain of professional judgement rather
than the reverse, which is what we increasingly have now. The point is in a
sense trivial, but one cannot sensibly expect public institutions to act as
fount for critical reflection if the organisation of those institutions
increasingly works with the very value system that one would like to see
appraised.
I suppose that my two criticisms of Galbraith can be bought together
in a single thought. It is that economics needs a better understanding of
individual agency if the problem of the squirrel wheel is ever to be
seriously addressed. This is, of course, happening in odd nooks and crannies
and the point of writing this piece is not to dwell on these criticisms, it
is to say that re-reading Galbraith is a marvellous encouragement to the
enterprise.
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SUGGESTED CITATION:
Shaun
Hargreaves Heap, “Living in an affluent society: it
is so ‘more-ish’”, post-autistic
economics review, issue no. 26, 2 August 2004,
article 1, http://www.paecon.net/PAEReview/issue26/Heap26.htm
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