Today’s book has two themes: The Conventional Wisdom, and what to do about it. The CW before Milton Friedman was based on the economics of scarcity, supported by pervasive racism and misogyny. Malthus had predicted permanent immiseration of the poor, based on inevitable population increase with increasing production. David Ricardo had
summarized that prospect in, perhaps, the most quoted passage in economic literature:
Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and perpetuate their race, without either increase or diminution.
This was the iron law of wages.
Ricardo brought his analysis to a close with the unbending observation that
These then are the laws by which wages are regulated, and by which the happiness [a word to be duly noted] of far the greatest part of every community is governed. Like all other contracts, wages should be left to the fair and free competition of the market, and should never be controlled by the interference of the legislature.
That is, nothing could in the long run either raise or lower that level, and nothing could or should be done about it.
Beyond doubt, wealth is the relentless enemy of understanding. The poor man has always a precise view of his problem and its remedy: he hasn't enough and he needs more.
But now we live in an Affluent Society—we produce enough for everybody in the US, even if some are determined that certain others should not get their share. The question is no longer how to produce enough, but what comes next.
IN ONE SENSE, the main task of this essay has been accomplished. Its concern has been with the thralldom of a myth—the myth that the production of goods, by its overpowering importance and its ineluctable difficulty, is the central problem of our lives.
However, as always, it is sound strategy to deal with the conventional wisdom on its own terms. If it inquires how we escape the present preoccupation with production; or how we escape the race to manufacture more wants for more goods and then yet more wants for yet more goods; or what is to fill the seemingly vast vacuum which abandoning this race would leave in our lives; or what are to be the symbols of happiness if goods cease to be so regarded, then it is well that there be answers.
Let us take Galbraith’s main point at face value, and consider its consequences.
If the production of goods and services is not the center of the economy, what is?