John Kenneth Galbraith and the Sin of Affluence

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This year
marks the 60th anniversary of John Kenneth Galbraith’s celebrated
book, The
Affluent Society
, which sparked much public discussion at
the time of its publication about disparities between ever-increasing
private wealth and what Galbraith claimed was an impoverished public
sector lacking in social and physical infrastructure. Murray Rothbard
critiques Galbraith’s claims in the following article, which is
excerpted from his monumental treatise, Man,
Economy, & State
.

In
the early part of the 20th century, the main indictment of the capitalist
system by its intellectual critics was the alleged pervasiveness
of “monopoly.” In the 1930s, mass unemployment and poverty (“one
third of a nation”) came to the fore. At the present time [1962],
growing abundance and prosperity have greatly dimmed the poverty
and unemployment theme, and the only serious “monopoly” seems to
be that of labor unionism.

Let it
not be thought, however, that criticism of capitalism has
died. Two seemingly contradictory charges are now rife: (a)
that capitalism is not “growing” fast enough, and (b)
that the trouble with capitalism is that it makes us too “affluent.”
Excess wealth has suddenly replaced poverty as the tragic
flaw of capitalism.[1]

At first
sight, these latter charges appear contradictory, for capitalism
is at one and the same time accused of producing too many
goods, and yet of not increasing its production of goods fast
enough. The contradiction seems especially glaring when the
same critic presses both lines of attack, as is true of the
leading critic of the sin of affluence, Professor Galbraith.[2]

But,
as the Wall Street Journal has aptly pointed out,
this is not really a contradiction at all; for the excessive
affluence is all in the “private sector,” the goods enjoyed
by the consumers; the deficiency, or “starvation,” is in the
“public sector,” which needs further growth.[3]

Although
The Affluent Society is replete with fallacies, backed
by dogmatic assertions and time-honored rhetorical devices
in place of reasoned argument,[4]
the book warrants some consideration here in view of its enormous
popularity.

As in
the case of most “economists” who attack economic science,
Professor Galbraith is a historicist, who believes that economic
theory, instead of being grounded on the eternal facts of
human nature, is somehow relative to different historical
epochs. “Conventional” economic theory, he asserts, was true
for the eras before the present, which were times of “poverty”;
now, however, we have vaulted from a centuries-long state
of poverty into an age of “affluence,” and for such an age,
a completely new economic theory is needed. Galbraith also
makes the philosophical error of believing that ideas are
essentially “refuted by events”; on the contrary, in human
action, as contrasted with the natural sciences, ideas can
be refuted only by other ideas; events themselves
are complex resultants which need to be interpreted by correct
ideas.

One of
Galbraith’s gravest flaws is the arbitrariness of the categories,
which pervade his work, of “poverty” and “affluence.” Nowhere
does he define what he means by these terms, and therefore
nowhere does he lay down standards by which we can know, even
in theory, when we have passed the magic borderland between
“poverty” and “affluence” that requires an entirely new economic
theory to come into being. The present book and most other
economic works make it evident that economic science is not
dependent on some arbitrary level of wealth; the basic praxeological
laws are true of all men at all times, and the catallactic
laws of the exchange economy are true whenever and wherever
exchanges are made.

Galbraith
makes much of his supposed discovery, suppressed by other
economists, that the marginal utility of goods declines as
one’s income increases and that therefore a man’s final $1,000
is not worth nearly as much to him as his first – the
margin of subsistence. But this knowledge is familiar to most
economists, and this book, for example, has included it. The
marginal utility of goods certainly declines as our income
rises; but the very fact that people continue to work for
the final $1,000 and work for more money when the opportunity
is available, demonstrates conclusively that the marginal
utility of goods is still greater than the marginal disutility
of leisure forgone.

Galbraith’s
hidden fallacy is a quantitative assumption: from
the mere fact that the marginal utility of goods falls
as one’s income and wealth rise, Galbraith has somehow concluded
that it has already fallen to virtually, or really,
zero. The fact of decline, however, tells us nothing
whatever about the degree of this decline, which
Galbraith arbitrarily assumes has been almost total. All economists,
even the most “conventional,” know that as incomes have risen
in the modern world, workers have chosen to take more and
more of that income in the form of leisure. And this should
be proof enough that economists have long been familiar with
the supposedly suppressed truth that the marginal utility
of goods in general tends to decline as their supply increases.
But, Galbraith retorts, economists admit that leisure is a
consumers’ good, but not that other goods decline
in value as their supply increases. Yet this is surely an
erroneous contention; what economists know is that, as civilization
expands the supply of goods, the marginal utility of goods
declines and the marginal utility of leisure forgone
(the opportunity cost of labor) increases, so that more and
more real income will be “taken” in the form of leisure. There
is nothing at all startling, subversive, or revolutionary
about this familiar fact.

According
to Galbraith, economists willfully ignore the specter of the
satiation of wants. Yet they do so quite properly, because
when wants – or rather, wants for exchangeable goods
– are truly satiated, we shall all know it soon enough;
for, at that point, everyone will cease working, will cease
trying to transform land resources into final consumers’ goods.
There will be no need to continue producing, because all needs
for consumers’ goods will have been supplied – or at
least all those which can be produced and exchanged. At this
point, everyone will stop work, the market economy –
indeed, all economy – will come to an end, means
will no longer be scarce in relation to ends, and everyone
will bask in paradise. I think it self-evident that this time
has not yet arrived and shows no signs of arriving; if it
some day should arrive, it will be greeted by economists,
as by most other people, not with curses, but with rejoicing.
Despite their venerable reputation as practitioners of a “dismal
science,” economists have no vested interests, psychological
or otherwise, in scarcity.

But,
in the meanwhile, this is still a world of scarcity; scarce
means have to be applied to alternate ends; labor is still
necessary. People still work for their final $1,000 of income
and would be happy to accept another $1,000 should it be offered.
We would venture another prediction: An informal poll taken
among the people, asking whether they would accept, or know
what to do with, an extra few thousand dollars of annual (real)
income, would find almost no one who would refuse the offer
because of excessive affluence or satiety – or for any
other reason. Few would be at a loss about what to do with
their increased wealth.

Professor
Galbraith, of course, has an answer to all this. These wants,
he says, are not real or genuine ones; they have been “created”
in the populace by advertisers, and their wicked clients,
the producing businessmen. The very fact of production, through
such advertising, “creates” the supposed wants that it supplies.

Galbraith’s
entire theory of excess affluence rests on this flimsy assertion
that consumer wants are artificially created by business itself.
It is an allegation backed only by repetitious assertion and
by no evidence whatever – except perhaps for Galbraith’s
obvious personal dislike for detergents and tailfins.

What
is more, the attack on wicked advertising as creating wants
and degrading the consumer is surely the most conventional
of the conventional wisdom in the anticapitalist’s arsenal.[5]

There are many
fallacies in Galbraith’s conventional attack on advertising. In
the first place, it is not true that advertising “creates” wants
or demands on the part of the consumers. It certainly tries to persuade
consumers to buy the product; but it cannot create wants
or demands, because each person must himself adopt the
ideas and values on which he acts – whether these ideas or
values are sound or unsound. Galbraith here assumes a nave form
of determinism – of advertising upon the consumers, and, like
all determinists, he leaves an implicit escape clause from the determination
for people like himself, who are, unaccountably, not determined
by advertising. If there is determinism by advertising, how can
some people be determined to rush out and buy the product, while
Professor Galbraith is free to resist the advertisements with indignation
and to write a book denouncing the advertising?[6]

Secondly,
Galbraith gives us no standard to decide which wants are so
“created” and which are legitimate. By his stress on poverty,
one might think that all wants above the subsistence level
are false wants created by advertising. Of course, he supplies
no evidence for this view. But, as we shall see further below,
this is hardly consistent with his views on public- or governmentally
induced wants.

Thirdly,
Galbraith fails to distinguish between fulfilling a given
want in a better way and inducing new wants. Unless we are
to take the extreme and unsupported view that all
wants above the subsistence line are “created,” we must note
the rather odd behavior attributed to businessmen by Galbraith’s
assumptions. Why should businessmen go to the expense,
bother, and uncertainty of trying to create new wants,
when they could far more easily look for better or cheaper
ways of fulfilling wants that consumers already have?
If consumers, for example, already have a discernible and
discoverable want for a “no-rub cleanser,” it is surely easier
and less costly to produce and then advertise a no-rub cleanser
than it would be to create some completely new want –
say for blue cleansers in particular – and then
work very hard and spend a great deal of money on advertising
campaigns to try to convince people that they need
blue cleansers because blue “is the color of the sky” or for
some other artificial reason.[7]

In short,
the Galbraithian view of the business and marketing system
makes little or no sense. Rather than go to the expensive,
uncertain, and, at bottom, needless, task of trying to find
a new want for consumers, business will tend to satisfy those
wants that consumers already have, or that they are pretty
sure consumers would have if the product were available.

Advertising
is then used as a means of (a) conveying information
to the consumers that the product is now available and telling
them what the product will do; and (b) specifically,
trying to convince the consumers that this product will
satisfy their given want – e.g., will be a no-rub
cleanser.

Indeed,
our view is the only one that makes sense of the increasingly
large quantities of money spent by business on marketing research.
Why bother investigating in detail what consumers
really want, if all one need do is to create the
wants for them by advertising?

If, in
fact, production really created its own demand through
advertising, as Galbraith maintains, business would never
again have to worry about losses or bankruptcy or a failure
to sell automatically any good that it may arbitrarily choose
to produce. Certainly there would be no need for marketing
research or for any wondering about what consumers will buy.

This
image of the world is precisely the reverse of what is occurring.
Indeed, precisely because people’s standards of living are
moving ever further past the subsistence line, businessmen
are worrying ever more intensely about what consumers want
and what they will buy. It is because the range of goods available
to the consumers is expanding so much beyond simple staples
needed for subsistence – in quantity, quality, and breadth
of product substitutes – that businessmen must compete
as never before in paying court to the consumer, in trying
to obtain his attention: in short, in advertising. Increasing
advertising is a function of the increasingly effective range
of competition for the consumer’s favor.[8]

Not only
will businessmen tend to produce for and satisfy what they
believe are the given wants of consumers, but the consumers,
in contrast to voters, have a direct market test for every
piece of advertising that they confront. If they buy the cleanser
and find that much rubbing is still required, the product
will soon fade into oblivion. Thus, any advertising claims
for market products can be and are quickly and readily
tested by the consumers. Confronted with these facts, Galbraith
could only maintain that the aversion against rubbing was
itself generated, in some mysterious and sinister
fashion, by business advertising.[9]

Advertising
is one of the areas in which Galbraith, curiously and in glaring
self-contradiction, treats private business differently from
governmental activities. Thus, while business is supposed
to be “creating” consumer wants through advertising, thereby
generating an artificial affluence, at the same time the neglected
“public sector” is increasingly starved and poverty stricken.

Apparently,
Galbraith has never heard of, or refuses to acknowledge the
existence of, governmental propaganda. He makes no
mention whatever of the hordes of press agents, publicists,
and propagandists working for government agencies, bombarding
the taxpayers with propaganda which the latter have been forced
to support. Since a considerable part of the propaganda is
for ever-greater increases in the particular government bureau’s
activities, this means that G, the government officials, expropriate
T, the bulk of the taxpayers, in order to hire more propagandists
for G, to persuade the taxpayers to permit still more funds
to be taken from them. And so forth.

It is
strange that, while waxing indignant over detergent and automobile
commercials over television, Professor Galbraith has never
had to endure the tedium of “public service commercials” beamed
at him from the government. We may pass over the Washington
conferences for influential private organizations that serve
as “transmission belts” for government propaganda to the grassroots,
the “inside briefings” that perform the same function, the
vast quantities of printed matter subsidized by the taxpayer
and issued by the government, etc.

Indeed,
not only does Galbraith not consider government propaganda
as artificially want-creating (and this is a realm, let us
remember, where consumers have no market test of
the product), but one of his major proposals is for a vast
program of what he calls “investment in men,” which turns
out to be large-scale governmental “education” to uplift the
wants and tastes of the citizenry. In short, Galbraith wants
society’s objective to be the deliberate expansion of the
“New Class” (roughly, intellectuals, who are blithely assumed
to be the only ones who really enjoy their work), “with its
emphasis on education and its ultimate effect on intellectual,
literary, cultural and artistic demands….”[10]

It seems
evident that, while the free market and business are accused
of artificially creating consumer wants, the shoe is precisely
on Galbraith’s own foot. It is Galbraith who is eager
to curtail and suppress the consumers’ freely chosen wants,
and who is advocating a massive and coercive attempt by the
government to create artificial wants, to “invest in men”
by “educating” them to redirect their wants into those refined
and artistic channels of which Professor Galbraith is so fond.
Everyone will have to give up his tailfins so that all may
be compelled to … read books (like The Affluent Society,
for example?).

There
are other grave and fundamental fallacies in Galbraith’s approach
to government. In particular, after making much ado over the
fact that, with poverty conquered, the marginal utility of
further goods is lower, he finds that everything somehow works
in reverse for “governmental needs.” Governmental needs, in
some mystical way, are exempt from this law of diminishing
marginal wants; instead, mirabile dictu, governmental
needs increase in urgency as society becomes more
affluent. From this flagrant and unresolved contradiction,
Galbraith leaps to the conclusion that government must compel
the massive shifting of resources from superfluous private,
to starved public, needs.

But on
the basis of diminishing marginal utility alone, there is
no case for such a shift, since all wants at a higher
real income are of lower utility than the wants of the poverty
stricken. And when we realize that if we talk about “created”
wants at all, governmental propaganda is vastly more likely
to “create” wants than is business, a case, even in Galbraith’s
own terms, can be made for just the reverse: for a shift from
the governmental to the private sector.

And,
finally, Galbraith, in his lament for the starved and underprivileged
public sector, somehow neglects to inform his readers that,
whatever statistics are used, it is clear that, in the past
half-century, government activity has increased far more than
private. Government is absorbing and confiscating a far greater
share of the national product than in earlier days. How much
lower its “utility,” and how much greater the case, in Galbraith’s
terms, for a shift from government to private
activity!

Galbraith
also airily assumes, in common with many other writers, that
many governmental services are “collective goods” and therefore
simply cannot be supplied by private enterprise.
Without going further into the question of the desirability
of private enterprise in these fields, one must note that
Galbraith is quite wrong. Not only is his thesis simply a
bald assertion, unsupported by facts, but, on the contrary,
every single service generally assumed to be suppliable by
government alone has been historically supplied by
private enterprise. This includes such services as education,
road building and maintenance, coinage, postal delivery, fire
protection, police protection, judicial decisions, and military
defense – all of which are often held to be self-evidently
and necessarily within the exclusive province of government.[11]

There
are many other important fallacies in Galbraith’s book, but
the central thesis of The Affluent Society has now
been discussed. Thus, one of the reasons why Galbraith sees
great danger in the present high consumption is that much
is financed by consumer credit, which Galbraith considers,
in the conventional manner, to be “inflationary” and to lead
to instability and depression. Yet consumer credit that does
not add to the money supply is not inflationary;
it simply permits consumers to redirect the pattern
of their spending so as to buy more of what they want and
ascend higher in their value scales. In short, they may redirect
spending from nondurable to durable goods. This is a transfer
of spending power, not an inflationary rise. The device of
consumer credit was a highly productive invention.

Predictably,
Galbraith pours much of his scorn on the supply-and-demand
explanation of inflation, and especially on the proper monetary
explanation, which he terms “mystical.” His view of depression
is purely Keynesian and assumes that a depression is caused
by a deficiency of aggregate demand. “Inflation” is an increase
in prices, which he would combat either by reducing
aggregate demand through high taxes or by selective
price controls and the fixing, by compulsory arbitration,
of important wages and prices. If the former route is chosen,
Galbraith, as a Keynesian, believes that unemployment would
ensue. But Galbraith is not really worried, for he would take
the revolutionary step of separating income from production;
production, it seems, is important only because it provides
income.

He proposes
a sliding scale of unemployment insurance provided by the
government, to be greater in depression than in boom, the
payment in depression rising almost to the general
prevailing wage (for some reason, Galbraith would not go precisely
as high, because of a lingering fear of some disincentive
effect on the unemployeds’ finding jobs). He does not seem
to realize that this is merely a way of aggravating and prolonging
unemployment during a depression and indirectly subsidizing
union wage scales above the market. There is no need to stress
the author’s other vagaries, such as his adoption of the conventional
conservationist concern about using up precious resources
– a position, of course, consistent with Galbraith’s
general attack on the private consumer.[12]

There
is a problem of the “public sector”: scarcities and
conflicts keep appearing in government services, and in these
fields alone, e.g., juvenile delinquency, traffic jams, overcrowded
schools, lack of parking space, etc. The single remedy that
proponents of government activity can offer is for more funds
to be channeled from private to public activity.[13]

However,
such scarcity and inefficiency are inherent in government operation
of any activity. Instead of taking warning from the inefficiencies
of government output, writers like Galbraith turn the blame from
government onto the taxpayers and consumers, just as government
water officials characteristically blame the consumers
for water shortages. At no time does Galbraith so much as consider
the possibility of mending an ailing public sector by making
that sector private.

How would
Galbraith know when his desired “social balance”
was achieved? What criteria has he set to guide us in knowing
how much shift there should be from private to public
activity?

The answer
is, none; Galbraith cheerfully concedes that there
is no way of finding the point of optimum balance: “No test
can be applied, for none exists.”

But,
after all, precise definitions, “precise equilibrium,” are
not important; for to Galbraith it is crystal “clear” that
we must move now from private to public activity, and to a
“considerable” extent. We shall know when we arrive, for the
public sector will then bask in opulence. And to think that
Galbraith accuses the perfectly sound and logical monetary
theory of inflation of being “mystical” and “unrevealed magic”![14]

Before
leaving the question of affluence and the recent attack on
consumption – the very goal of the entire economic system,
let us note two stimulating contributions in recent years
on hidden but important functions of luxury consumption, particularly
by the “rich.”

F.A.
Hayek has pointed out the important function of the luxury
consumption of the rich, at any given time, in pioneering
new ways of consumption, and thereby paving the way for later
diffusion of such “consumption innovations” to the mass of
the consumers.[15]

And Bertrand
de Jouvenel, stressing the fact that refined esthetic and
cultural tastes are concentrated precisely in the more affluent
members of society, also points out that these citizens are
the ones who could freely and voluntarily give many gratuitous
services to others, services which, because they are free,
are not counted in the national income statistics.[16]

Murray
N. Rothbard
(1926–1995) was dean of the Austrian School.
See his archive.
Comment on the blog.

This article
is excerpted from Rothbard’s monumental treatise, Man,
Economy, & State
.

Notes

[1]
This performance leads one to believe that Schumpeter was
right when he declared:

… capitalism
stands its trial before judges who have the sentence of
death in their pockets. They are going to pass it, whatever
the defense they may hear; the only success victorious defense
may produce is a change in the indictment. (Schumpeter,
Capitalism, Socialism and Democracy, p. 144)

[2]
John Kenneth Galbraith, The Affluent Society (Boston:
Houghton Mifflin Co., 1958).

[3]
“Fable for Our Times,” Wall Street Journal, April
21, 1960, p. 12. Thus Galbraith, ibid., deplores
the government’s failure to “invest more” in scientists and
scientific research to promote our growth, while also attacking
American affluence. It turns out, however, that Galbraith
wants more of precisely that kind of research which can have
no possible commercial application.

[4]
Galbraith’s major rhetorical device may be called “the sustained
sneer,” which includes (a) presenting an opposing
argument so sardonically as to make it seem patently absurd,
with no need for reasoned refutation; (b) coining
and reiterating Veblenesque names of disparagement, e.g.,
“the conventional wisdom”; and (c) ridiculing the
opposition further by psychological ad hominem attacks,
i.e., accusing opponents of having a psychological vested
interest in their absurd doctrines – this mode of attack
being now more fashionable than older accusations of economic
venality. The “conventional wisdom” encompasses just about
everything with which Galbraith disagrees.

[5]
In addition to wicked advertising, wants are also artificially
created, according to Galbraith, by emulation of one’s neighbor:
“Keeping up with the Joneses.” But, in the first place, what
is wrong with such emulation, except an unsupported
ethical judgment of Galbraith’s? Galbraith pretends to ground
his theory, not on his private ethical judgment, but on the
alleged creation of wants by production itself. Yet simple
emulation would not be a function of producers, but of consumers
themselves – unless emulation, too, were inspired by
advertising. But this reduces to the criticism of advertising
discussed in the text. And secondly, where did the original
Jones obtain his wants? Regardless of how many people
have wants purely in emulation of others, some person
or persons must have originally had these wants as genuine
needs of their very own. Otherwise the argument is hopelessly
circular. Once this is conceded, it is impossible for economics
to decide to what extent each want is pervaded by emulation.

[6]
For more on determinism and the sciences of human action, see
Rothbard, “Mantle of Science,” and Mises, Theory
and History
.

[7]
Professor Abbott, in his important book on competition, quality
of products, and the business system, put it this way:

The
producers will generally find it easier and less costly
to gain sales by adapting the product as closely as possible
to existing tastes and by directing advertising to those
whose wants it is already well equipped to satisfy than
by attempting to alter human beings to fit the product.
(Abbott, Quality and Competition, p. 74)

[8]
Recent writings by marketing experts on “the marketing revolution”
now under way stress precisely this increasing competition
for, and courting of, the favor and custom of the consumer.
Thus, see Robert J. Keith, “The Marketing Revolution,”
Journal of Marketing, January, 1960, pp. 35–38; Goldman,
“Product Differentiation and Advertising: Some Lessons From
Soviet Experience,” and Goldman, “Marketing – a Lesson
for Marx,” Harvard Business Review, January–February,
1960, pp. 79–86.

[9]
On the alleged powers of business advertising, it is well
to note these pungent comments of Ludwig von Mises:

It is a widespread
fallacy that skillful advertising can talk the consumers into
buying everything that the advertiser wants them to buy…. However,
nobody believes that any kind of advertising would have succeeded
in making the candlemakers hold the field against the electric
bulb, the horse-drivers against the motorcars, the goose quill
against the steel pen and later against the fountain pen. (Mises,
Human
Action
, p. 317)

For a
critique of the notion of the “hidden persuaders,” see
Raymond A. Bauer, “Limits of Persuasion,” Harvard Business
Review, September – October, 1958, pp. 105–10.

[10]
Galbraith, Affluent Society, p. 345. In proposing
this large-scale creation of an intellectual class, Galbraith
virtually ignores the artificiality of educating people beyond
their interests, capacities, or job opportunities available.

[11]
Since this would take us far afield indeed, we can mention
here only one reference: to the successful development of
the road and canal networks of 18th-century England by private
road, canal, and navigation improvement companies. See
T.S. Ashton, An Economic History of England: The 18th
Century (New York: Barnes and Noble, n.d.), pp. 72–81.
On the fallacy of “collective goods,” only suppliable by the
government, see Appendix B below.

[12]
Amidst the tangle of Galbraith’s remaining fallacies and errors,
we might mention one: his curious implication that Professor
von Mises is a businessman. For first Galbraith talks of the
age-old hostility between businessmen and intellectuals, backs
this statement by quoting Mises as critical of many intellectuals,
and then concedes that “most businessmen” would regard Mises
as “rather extreme.” But since Mises is certainly not a businessman,
it is odd to see his statements used as evidence for businessman-intellectual
enmity. Galbraith, Affluent Society, pp. 184–85.
This peculiar error is shared by Galbraith’s Harvard colleagues,
whose work he cites favorably, and who persist in quoting
such nonbusinessmen as Henry Hazlitt and Dr. F.A. Harper as
spokesmen for the “classical business creed.” See
Francis X. Sutton, Seymour E. Harris, Carl Kaysen, and James
Tobin, The American Business Creed (Cambridge: Harvard
University Press, 1956).

The Affluent Society is a work that particularly lends
itself to satire, and this has been cleverly supplied in “The
Sumptuary Manifesto,” The Journal of Law and Economics,
October, 1959, pp. 120–23.

[13]
See pp. 944ff., of this chapter.

[14]
A brief, and therefore bald, version of Galbraith’s thesis
may be found in John Kenneth Galbraith, “Use of Income That
Economic Growth Makes Possible … ” in Problems of United
States Economic Development (New York: Committee for
Economic Development, January, 1958), pp. 201–06. In the same
collection of essays there is in some ways a more extreme
statement of the same position by Professor Moses Abramovitz,
who presses even further to denounce leisure as threatening
to deprive us of that “modicum of purposive, disciplined activity
which … gives savor to our lives.” Moses Abramovitz, “Economic
Goals and Social Welfare in the Next Generation,” ibid.,
p. 195. It is perhaps apropos to note a strong resemblance
between coerced deprivation of leisure and slavery, as well
as to remark that the only society that can genuinely “invest
in men” is a society where slavery abounds. In fact, Galbraith
writes almost wistfully of a slave system for this reason.
Affluent Society, pp. 274–75.

In addition
to Galbraith and Abramovitz, other “Galbraithian” papers in
the CED Symposium are those of Professor David Riesman and
especially Sir Roy Harrod, who is angry at “touts,” the British
brand of advertiser. Like Galbraith, Harrod would also launch
a massive government education program to “teach” people how
to use their leisure in the properly refined and esthetic
manner. This contrasts to Abramovitz, who would substitute
a bracing discipline of work for expanding leisure. But then
again, one suspects that the bulk of the people would find
a coerced Harrodian esthetic just as disciplinary. Galbraith,
Problems of United States Economic Development, I,
207–13, 223–34.

[15]
Hayek, Constitution of Liberty, pp. 42ff. As Hayek
puts it:

A large
part of the expenditure of the rich, though not intended
for that end, thus serves to defray the cost of the experimentation
with the new things that, as a result, can later be made
available to the poor.

The
important point is not merely that we gradually learn to
make cheaply on a large scale what we already know how to
make expensively in small quantities but that only from
an advanced position does the next range of desires and
possibilities become visible, so that the selection of new
goals and the effort toward their achievement will begin
long before the majority can strive for them. (Ibid.,
pp. 43–44)

Also
see the similar point made by Mises 30 years before. Ludwig von
Mises, “The Nationalization of Credit” in Sommer, Essays in
European Economic Thought, pp. 111f. And see Bertrand
de Jouvenel, The
Ethics of Redistribution
(Cambridge: Cambridge University
Press, 1952), pp. 38f.

[16]
De Jouvenel, Ethics of Redistribution, especially
pp. 67ff. If all housewives suddenly stopped doing their own
housework and, instead, hired themselves out to their next-door
neighbors, the supposed increase in national product, as measured
by statistics, would be very great, even though the actual
increase would be nil. For more on this point, see
de Jouvenel, “The Political Economy of Gratuity,” The
Virginia Quarterly Review, Autumn, 1959, pp. 515ff.

Murray
N. Rothbard
(1926–1995) was the author of Man,
Economy, and State
, Conceived
in Liberty
, What
Has Government Done to Our Money
, For
a New Liberty
, The
Case Against the Fed
, and many
other books and articles
. He was
also the editor – with Lew Rockwell – of The
Rothbard-Rockwell Report
, and academic vice president of
the Ludwig von Mises Institute.

Murray
Rothbard Archives

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