In his book, The Affluent Society, Galbraith discusses the changing nature of society and the mindsets of its habitants in those areas of the world, particularly the United States, which he describes as having reached a level of unprecedented prosperity and affluence. In my view, his most important insight is that he recognizes a need for social balance which, as he employs the term, means a more comparable provision of private and public goods in society. Where we differ, however, and where I must offer a critique of his work is in the solution which he offers for the lacking of these so-called public goods. Put more simply, I agree with Galbraith that there is an acute deficiency in the amount and quality of those goods which are considered public, but where he sees the state as the way to redress this social imbalance, I see the market.
Galbraith opens his discussion on social balance with a description of the ever-falling quality and quantity of public goods which is only matched by the ever-increasing quality and quantity of private goods. He boldly asserts, “The line which divides our area of wealth from our area of poverty is roughly that which divides privately produced and marketed goods and services from publicly rendered services” (pg. 186). With this quote I must say that I am in complete agreement with Galbraith. The market sector of private production and consumption is continuously marked by constant advancement, innovation, and the creation of higher quality goods for cheaper prices. This is nearly the exact opposite of the realm of the goods which are publicly produced and distributed, which is characterized by stagnation, unresponsiveness to changing mindsets and ideas, and poor-quality. What is more is that public goods such as schools, roads, the environment, etc. are the goods which many would consider to be some of the most important. And yet, these public goods are not adequately funded and distributed and, as the quote points out above, one can draw a line between the wealth and poverty, or in other words, what works and what does not work in society, if you draw a line between publicly and privately procured goods and services.
“By failing to exploit the opportunity to expand public production, we are missing opportunities for enjoyment which otherwise we might have” (pg.193). The balance between public goods and private goods is off and, like Galbraith, I see the reason for this largely being the different ways and mindsets with which they are funded. The production and distribution of public goods is administered by the political system and actors and, in Galbraith’s words, in the US “the decision is arrived at by democratic process.” Among other things, this democratic process worries him because of the dependence effect. Simply put, the dependence effect is created by the process of consumer wants being manufactured by the same process through which they are satisfied. Companies create “artificial demand” and bombard the consumer with constant advertising to the point where they cannot, in fact, make a conscious decision between public and private goods and are skewed in the direction of private. He also describes that the fate of public goods is largely contingent on which political party is holding the reins of power; if they can agree on modes of funding, if they can agree on if or how inequality should be addressed, and the scope of politicians’ range of possible action to deal with public goods in terms of what their constituents want or think is appropriate. In other words, the production of adequate public goods is hampered by the political process and those who take part in that process. People who would make the decision to fund more public goods are hindered by those other voters who are entranced by mass advertising, and the politicians are busy arguing about which tax structure and which view on inequality are most in line with their ideology. This slows down or inhibits the production and consumption of public goods and makes people who would rationally want to redress this balance miss out on the opportunity to do so.
The critique I offer is of his solution which can be summed up by the following quote, “fortunately in peacetime the market system, combined with considerable planning, serves to maintain this balance” (pg.188). This along with phrases throughout his work referencing a “well-run and well-regulated community” shows to me a lack of understanding of the great transformation that had taken place throughout the last hundred years or so of industrial and capitalist development. Another quote of his, “it is the increase in output in recent decades, not the redistribution of income, which has brought the great material increase in the well-being of the average person” (pg.79), points out that he clearly understands what private production and consumption have done for society. This understanding along with his frequent acknowledgement of the superiority of privately funded goods make his solution to social imbalance contradictory and opposed to all evidence. The funding of what he calls public goods is the definition of redistribution—the thing he just said was not responsible for these recent great changes in society. He views “public goods” as something intrinsically different from private goods and thinks their deficiency will be solved merely by increasing the funding.
The problem how I see it, however, is that there is this separation between public and private goods at all. There are no such thing as public goods. Every service or product is offered by individuals who are paid by someone to do or make whatever their profession entails. The distinction of public or private is brought about only to described how those services or products are funded. There is no difference between any so-called private good and schools or roads or anything else. Just as the market and free exchange provide the funding necessary for the auto-worker, architect, and textile-worker to make cars and skyscrapers and clothes, so would free exchange facilitate and pay the road-worker and teacher. Every step of the way Galbraith points out the superiority of private goods but where he goes wrong is that he thinks the problem with public goods is only a funding issue, when actually it is the intrinsic competitive nature of the private sector to foster advancement through innovation, invention, and investing, while it is the nature of the public sector, devoid of all price systems, devoid of consumer demand, and run by popular politicians instead of tested and trained businessmen and women, to be stagnant and outdated. Galbraith makes no attempt to offer evidence to how the market and private enterprise can produce this wildly advanced world of affluence, in which poverty has dropped from encompassing nearly all of society to what is by comparison a marginal amount, and yet would not be able to tackle those goods which nearly everyone universally thinks are necessary and worth paying for. To leave it to the free market makes the classic argument of “what good are cars with no roads to drive on?” become “what good are these pot-hole ridden government roads when I can use these smooth ones that are excellently maintained by way of private businesses because those same businesses do not want their customers blowing a tire on the way to their store?” My critique in a nutshell then, is that Galbraith sees the great progress that private consumption has driven in every area where it is allowed to do so, but then, for a reason devoid of any discernable evidence, does not wish to extend that progress to the goods that we need and want the most.
My first instinct is that my solution of doing away with publicly funded goods will most likely be met with overwhelming hostility. The arguments that some, Galbraith probably included, would make could range from lack of practicality for private funding of certain things like roads, to the externalities, good or bad, that could arise from society as a whole benefiting from or being hurt by things that were privately funded, to the possibility of gross inequality arising from services like schools being privately funded. For the purposes of this essay, I have to say that the argument of a sped up and vastly increased inequality arising from solving the problem of social imbalance with privatization is the most compelling. After all, we see a great difference in the quality of cars and other private goods between the rich and the poor and would we really want that difference extended to something as important as schools and roads and parks and the environment? It is perfectly reasonable to think that some things are too important to be left up to millions of individuals individually, especially with the advent of modern advertising and its apparent power of persuasion. People may believe that we need a certain base of things to be provided equally to everyone to insure that the playing field is somewhat level.
To counter this point that increased privatization would lead to increase inequality and further imbalance, I invoke a quote from Milton Friedman. “He [the liberal] may welcome the fact that a free society in fact tends toward greater material equality than any yet tried. But he will regard this as a desirable by-product of a free society, not its major justification” (pg.195). He argues, and his argument is consistent with evidence and history, that free market and private enterprise have done a considerably better job at fostering equality and equity—better even than a society with conscious planning. Privatization offers diversity, low prices, and something for everyone. If you are in a poor demographic and cannot afford fancy, expensive schools, then you are no doubt not alone and so there is a market and an incentive for an entrepreneur to make a school that you, and the thousands other like you, can afford. Unless you are in a tiny, tiny demographic, there is money to made of your limited means, and someone will want to cater to you. And even those catering to people of lower income do not have an incentive to create a product of poor quality. Galbraith himself recognizes the fact that in this age of affluence the rich are less distinct, and power is more spread out. These are both signs of greater equality—greater equality that was brought about by the free enterprise that developed over the course of the last 200 years.
Galbraith’s insight was useful insofar as it pointed out the clear deficiency in those goods and services in our society that have been deemed public. There is an obvious imbalance in the availability, quality, and prestige of public goods when compared to private goods and his insight was that he saw this and saw that it needed to be remedied. That is where, however, the successfulness of his insight ends. His solution to facilitate social balance was merely to increase the funding of public goods at the expense of private goods. His flaw is that he recognizes what free enterprise can do and the superiority of private goods, but does not wish to extend that superiority by means of privatization. Galbraith, like most people today, are hampered by this notion of public vs. private goods when, in reality, goods and services are all just goods and services. The solution is to take these goods out of the realm of politics so each individual can suit his or her life based on their own preferences, unimpeded by the wills of politicians or voters. This is how the problem of social balance will be solved.