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The Affluent Society was John Kenneth Galbraith’s most famous book. It was written in the middle of the long boom following World War II. The author was then and for a time after, America’s best-known economist in the broader public sphere, a position he never fully lost until his death almost fifty years later. The book has never been out of print and has been widely read by people who grew up during the long boom and just after. Most were not economists but intelligent readers who wished to be informed about the serious matters that economists and governments grappled with. Though the period during which it was written has long past and economics as a discipline has moved far from the terrain laid out by Galbraith, The Affluent Society still resonates, still raises important questions of how economics is to be practiced and how economic policy is to be conducted. It is the aim of this book to say how and why this is so. Its very title has entered into the common language, along with phrases like ‘the conventional wisdom’, so commonplace that many people are unaware as to their origin.
As an Australian who grew up during the 1960s, I am reminded of another book written by a fellow countryman, the writer and critic Donald Horne. The Lucky Country, published not long after Galbraith’s book, sought to establish that Australia as a small nation sitting on a huge land mass of natural resources, with a well educated though insular community had huge potential to grow and prosper. The main difference was that Horne’s title was meant to be ironic – Australia, he argued, was wasting its future, complacently resting on its colonial past, overly reliant on its imperial masters, Britain and the United States, living a derivative existence and expressing what came to be called ‘a cultural cringe’. Australians, Horne claimed, simply didn’t have the balls to grab the future and run. He was infuriated that his message was taken over and reversed by business, cultural and political elites who proclaimed that, yes we are the lucky country, so can keep on doing exactly what we have always done. Nothing needs to change.
The Affluent Society (ironically) has suffered a reverse fate. When written it was intended to identify real and emerging economic and social trends in America and other advanced economies. Instead, as we will see, ‘affluence’ now has a deeply ironic flavor. Especially since the global financial crisis of 2008 and its lingering aftermath, the most developed economies in the world are struggling to maintain, still less improve the material conditions of its hard-pressed citizens. As I write, more than half of Spaniards under 30 are unemployed, financial institutions in a raft of countries are barely afloat, the weaker ones already having gone under or been taken on board by their governments, many of whom face the unpalatable choice between imposing harsh austerities on their already burdened publics or defaulting on their burgeoning debts, putting at risk their citizens’ future livelihoods. A further irony – the ‘advanced’ economies are increasingly dependent for their prosperity on the continuing rapid growth of the ‘emerging economies’, Brazil, Russia, India and China.
I argue in the opening chapter that The Affluent Society is well worth a revisit, that the themes raised and some of the insights there offered can cast light on our current volatile present and uncertain future. Just as importantly, the gaps, silences and (with hindsight) errors there, provoke contemporary efforts to grasp what is happening and why*. The approach, in keeping with the original, is challenging but non-technical and aimed at the general reader who may appreciate a guide to decoding the often opaque and simplistic accounts of the current predicament served up by economic commentators and policymakers.
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A number of people helped during the writing of this book, some of whom are unaware of the fact. I wish to acknowledge the stimulating discussions over an extended period with my colleagues and students at RMIT University; in particular, Esther Charlesworth, Val Colic-Peisker, Tony Dalton, Benno Engels, John Fien, Robin Goodwin, Guy Johnson, Julie Lawson, Martin Mowbray, Anitra Nelson, Manfred Steger, Rob Watts and Gavin Wood. I have also gained immensely from discussions over the years with Perle Besseman, Lois Bryson, Terry Burke, Gordon Clark, Deni Greene, Michael Harloe, Kath Hulse, Vivienne Milligan, Chris Ryan, Susan Smith, Christine Whitehead, Peter Williams, Ian Winter and Judith Yates. Thanks also to two anonymous referees.
Some of the original work on the book was carried out during a stimulating period as visiting fellow at The Rockefeller Foundation Centre, Bellagio. I thank both the Foundation for its support and the amazing collection of creative people I mingled with while there.
Finally, thanks to my family for their loving support during difficult times. This book is dedicated to my wife, Deirdre.
* Galbraith was well aware of the dangers of social prophecy and readily accepted that time would tell on the arguments he advanced. At the end of the preface to the 1962 Pelican edition of The Affluent Society he commented: “…there may be instances where time in its unkind way has exposed error, and certainly if this edition remains in print for long there will be more. I haven’t attempted to either correct or to anticipate such exposure. Nor do I think one should. The author should give his best in the first round. Then, if time shows he has been wrong, he should count on the reader to see the mistake and make the necessary correction. I imagine that most readers rather welcome the opportunity. They know that authors are fallible, but, within limits, to rediscover this elementary truth is pleasant and reassuring.”