Every chapter of Galbraith’s The Affluent Society provides insight on contemporary political challenges. His chapter on the economic role of personal insecurity for instance speaks directly to the design of the welfare state. Insecurity Galbraith thought was deemed useful:
‘because it drove men to render their best and most efficient service, since severe punishment was visited impersonally on those who did not… Along with the carrot of pecuniary reward must go the stick of personal economic disaster.’
But three insights in particular stood out as as providing possible ways to approach contemporary challenges.
1. Taxation is more important than redistribution
Galbraith lamented the lack of government spending.
‘Government spending is likely at any time to be near the minimum which the community regards as tolerable. Complaint about waste and inefficiency in performing these services, which is endemic in our political comment should not be allowed to confuse the issue’
He thought the route cause of that was a suspicion of government which led to social imbalance. For Galbraith that imbalance was specific, he thought that as more private goods were produced more public goods were needed:
‘The family which takes its mauve and cerise, air conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground.
One reason why that imbalance couldn’t be resolved was what Galbraith called the truce on inequality:
‘Where liberals argue in support of taxation and conservatives against it meaning that no matter what the money is used for it is often not appropriated.’
His proposed answer to that was radical. Unlike almost any progressive today he suggested capitulating — to some degree — on inequality in search of social balance.
The rational liberal, in the future, will resist tax reduction, even that which ostensibly favours the poor, if it is at the price of social balance… he will not hesitate to accept increases that are neutral in regards to the distribution of income.’
That led him to support increased sales tax, despite its potentially regressive impact. But in the search of better public services, ‘predistribution’ even, the bargaining chip may well have to be an end on the insistence, by progressives, of ever more progressive taxation. A side effect of that is that, in time, funding public services would become less reliant on the wages of the wealthy, and so maintaining those wages would become less of a political objective.
2. Abandoning a preoccupation with growth might help progressives answer the challenges of regional imbalance and help some respond to the effects of globalisation
A second idea of Galbraith’s, abandoning a preoccupation with production, also provides possible answers to contemporary challenges. When thinking about economic balance, regional discrepancies in wealth for instance, or the impact of globalisation on local economies.
Currently devolution — or investment in poor parts of the country in general — is hampered by arguments of efficiency. However right they are. If a new airport in London provides more for the country than a new rail connection between Manchester and Leeds, that is money well spent.
‘Anything which inhibits or reduces output is, pro tanto, wrong. In the choice between two taxes, there is a nearly overriding case for the one that least damages efficiency… the test of effect on productive efficiency is all but universal.’
A similar change of attitude towards production would help some, particularly those with traditionally progressive views, to respond to the effects of globalisation.
‘If efficiency is no longer the prime criterion, tariff policy will have to be resolved on the basis of how far we should go in making trade the handmaiden of larger national policy or what part compassion should play in easing the problems of distressed industries or areas.’
3. The politics of poverty does not win elections
A final insight provided by Galbraith is on the peripheral position of poverty in politics in the affluent society. Affluence, goes Galbraith’s argument, for all its faults, and problems of distribution, has gone a long way to eliminating poverty.
‘As a general affliction, it was ended by increased output which, however imperfectly it may have been distributed, nevertheless accrued in substantial amount to those who worked for a living.
The impact of that he thought, was that for politicians, targeting poverty would become less appealing.
‘The result was to reduce the problem of poverty from the problem of a majority to that of a minority. It ceased to be a general case and became a special case….In consequence, a notable feature of efforts to help the very poor is their absence of any great political appeal.’
For those who see targeting poverty as a priority, the peripheral nature of the experience of poverty is a challenge. Claiming to represent the self-interest of the poor, while relying on the altruism of the well-off for their support is difficult to remedy.
Many of Galbraith’s arguments, even now, feel not only relevant but novel. The Affluent Society does not have answers for today’s policy challenges, but it does go some way to highlighting the creative thinking needed to answer those questions.
