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GALBRAITH, JOHN KENNETH & CAPITALISM IN U.S.   Term Paper ID:17221 Click to get this paper

Essay Subject: Economist's theories on the affluent state; criticisms; compared to Adam Smith, Malthus, Milton Friedman; political aspects; production; poverty; industrial power.... More...

9 Pages / 2025 Words 7 sources, 21 Citations, TURABIAN Format $36.00 Return to List of Papers

Paper Abstract: Economist's theories on the affluent state; criticisms; compared to Adam Smith, Malthus, Milton Friedman; political aspects; production; poverty; industrial power. Paper Introduction: GALBRAITH AND CAPITALISM IN AMERICA: THE FAILURE OF THE AFFLUENT STATE The French political scientist, Alex deToqueville, visited the United States almost 200 hundred years ago for the rare opportunity of examining a foundling nation in an isolated system. America had adopted a political system greatly influenced by European philosophical thought and which could be nurtured free of outside factors like invasion or warfare. Similarly, the economics of free trade were implemented in this isolated system, which developed into America's unique form of capitalism. In The Affluent Society (1958), John Kenneth Galbraith examines American capitalism not only though current Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Vast resources of capital haveenabled big business to follow monopolistic practices such as price fixing,but, more importantly in relation to consumer demand, they have engaged inpersuasive advertising. Detroit churned out larger, luxury automobiles adorned withtail fins and chrome which Galbraith described as "insolent chariots." Theautomobile had evolved from its utilitarian purpose as a means oftransportation to a symbol of affluence and security: In this way, economic theory has managed to transfer the sense of urgency in meeting con- sumer need that once was felt in a world where more production meant more food for the hungry, more clothing for the cold, and more houses for the homeless, to a world where increased output satisfies the craving for more elegant automobiles, more exotic food, more erotic clothing. Galbraith stresses the fact that Smith understood theplight of the working classes yet conceded their disadvantage to themerchants, manufacturers and landlords who held them under their thumbs. Adam Smith (1723-179 ) is the first early economist Galbraithdiscusses as a shaper of today's economy and society. Critics such as Milton Friedman tend to attribute Galbraith's successmore to his gift for writing rather than his theories. New York: The MacMillan Press Ltd., 198 .Sharpe, Myron. Case inpoint is the Ford Edsel, which entered the automobile market the year ofthe publication of The Affluent State. More important, however, was that, with the realization of socialimbalance, the public began a trend away from accepted "conventionalwisdom," as Galbraith describes it, for the first time since the socialreform of the New Deal. John Kenneth Galbraith. Galbraithwrote, Were Ricardo still alive, he could show with little difficulty that the conditions necessary for the rule of the iron law have been in abeyance ever since "On the Principles of Political Economy and Taxation" (Ricardo) was published. The Edsel was a tremendous failuredespite an ardent advertising campaign by the very powerful Ford MotorCorporation. New York: Houghton Mifflin Company, 1984.Gambs, John. . Powerful advertisers have been able to mold thetaste of the consumer to further their own needs. Politically,McCarthyism and the reaffirmation of the American system left manysatisfied with a deeply stratified society, and the idea of a classlesssystem was frowned upon. A nationwould theoretically amass resources in the form of raw materials from itscolonies to be used for production in the mother country. However, as much as the critics may ridiculeGalbraith's policies, it is sure that there is a social imbalance whichprevents the poor from attaining an equal opportunity to succeed.Additionally, history has proven through blood revolutions such as Russiain 1917 or the progressive movement of the late 19th century, that the mosteffective method to bring about change is rallying the support of themasses. BIBLIOGRAPHYFriedman, Milton. Galbraith explains that it was a few decades after The Wealth ofNations that economics was labeled the "dismal science," when it becameapparent that any system seemed to place some, if not the majority, of thepopulation at a disadvantage. He has beendescribed, not as " a scientist seeking explanations," (which should be theproper role of the economist), but rather as a "missionary seekingconverts" (Friedman, 225). To many laissez-fairecapitalists, this would be a blasphemous proposal and a blow to theeconomic foundation of our free market. Obviously, though, it is onlyindividuals with property who rally for greater economic security becausethey have the most to lose, and not the poor, whose lives remain relativelyunchanged through periods of recession or times of great prosperity. As a result of the wars' pent up demand,production operated at capacity, leaving the market saturated with luxurygoods. It was at this time that the Englisheconomists, David Ricardo (1772-1823) and Thomas Malthus (1776-1834),emerged with an ultra-realistic interpretation and a practical, butheartless, scheme to accommodate the reality of capitalism. Galbraith and Market Capitalism. New York: International Arts and Sciences Press, Inc., 1973.----------------------- 1 Galbraith thought this attitude, though not American in origin,"came almost uniquely to root in American soil" (Galbraith, 44).Additionally, Spencer condemns the practice of government intervention inthe form of public assistance, which can only serve to prolong thesufferings of the weak: Public aid to the needy and even public sanction tended to perpetuate the more vulnerable members of the race. (Galbraith, 23).He means that the structure of the economy is set up in such a way that,without government regulation, the bourgeoisie will exploit the workingclass to the fullest extent. Therefore, Galbraithproposes a remedy to the failing capitalist system by ensuring that theprovisions of public services keep pace with the production of goods.However, this may be achieved only through increasing the influence andcontrol of government in the private sector. He put the focus on the production of aggregatewealth and not its distribution. The carindustry during the late 195 's was a reflection of just this mood amongAmericans. So why does our nation follow such a pattern of despair as anaffluent state? America had adopted a politicalsystem greatly influenced by European philosophical thought and which couldbe nurtured free of outside factors like invasion or warfare. The fruits of the nation's labor are notdispersed evenly among the population, but instead fall into the hands ofthe upper classes. Galbraith understands Smith to be the founder of the central Americaneconomic tradition. The enactment of the Economic Opportunity Act of 1964 was aresult of President Kennedy's newfound awareness of poverty and socialimbalance partly as a result of The Affluent Society (Hession, 132). In the 19th century, the classical economists defendedinequality "in terms of natural law, the equity of property rights, and thedanger of disrupting a functional social order" (Hession, p. In addition to thepreviously mentioned change of production from necessities to luxury goods,Galbraith firmly attributes the neglect of government services as thereason why the poor were losing ground. The Wealth of Nations asserted that government shouldassume a laissez-faire position and allow the economy to be guided by whatSmith called the "invisible hand" - that is, supply and demand.Furthermore, he places emphasis on the individual, stressing that oneshould be motivated by self interest, which in turn would benefit thewelfare of all. Inopposition to mercantilist theory, Adam Smith published The Wealth ofNations in 1776, postulating that "regulation was by competition and themarket and not by the state, and in which each man, thrown on his ownresources, labored effectively for the enrichment of the society"(Galbraith, 19). GALBRAITH AND CAPITALISM IN AMERICA: THE FAILURE OF THE AFFLUENT STATE The French political scientist, Alex deToqueville, visited the UnitedStates almost 2 hundred years ago for the rare opportunity of examining afoundling nation in an isolated system. Life for many Americans no longer entailed the struggle forexistence, but instead the acquisition of material objects. . But it was the government that enacted New Dealreforms during the Great Depression when the security of all wasthreatened. Furthermore, itwas necessary to export a great deal more than competitor nations andimplement governmental tariffs to attain a favorable balance of trade. Galbraith strongly believes that "the effect ofeducation and related investment in individuals is to help overcome therestraints that are imposed by the environment." However, just as thesnarled traffic on our freeways is an indication that the production of theautomobile has exceeded in proportion the expansion and repair of thefreeway system, the dire position of the poor shows an obvious lack ofpublic support in the area of welfare reform. The unprecedented concentrationof power among industries in our economy, has resulted in abuses attributedto this new found power (Sharpe, 23). At the time he wrote TheAffluent Society, Americans were enjoying the euphoria of generalprosperity. Spencer thereby allows one tojustify oneself in the pursuit of self-interest in a competitive economicstruggle. Asa result, the apathy of the 195 's gave way to violent civil rightsprotests, public outcry over Vietnam, and environment awarenesscharacterized by the social activism of the 196 's. Inlight of these historical perspectives and economic doctrines, Galbraithhas adequately prepared the reader to understand the nature of economics inAmerica. Boston: CBI Publishing Company, Inc., 1978.Reisman, David. Similarly,the economics of free trade were implemented in this isolated system, whichdeveloped into America's unique form of capitalism. On the other hand, Galbraith's critics argue that a compact has beenreached in the society allowing each individual to pursue his own interestaccording to his values as long as the rights of others are not placed injeopardy. He was largelyresponsible for enlightening the American public to the fact that thepursuit of private affluence was destroying the common wealth and welfareof the nation. Additionally, it is contended that a distribution of wealth wouldprevent the collective formation of capital necessary to invest and grow(Reisman, 54). First, through investigations and surveys,advertising has been shown to be "informative rather than persuasive"(Friedman, 24). (122) AS this frenzy of production continued, few recognized the growingnumber of poor in a society of great affluence. Second, even in the case of a persuasive advertiser, itwould be most practical to survey public wants and then produce the goodinstead of shaping public taste from a clean slate (Friedman, 15). There are at least twoflaws in Galbraith's hypothesis which he fails to support with anyconvincing evidence. Furthermore, this "iron law of wages" wouldensure the perpetuation of labor resource without an increase or decreasein the working class which could act to destabilize the system. It was a post-war era which gave rise to many wants that hadgone unfulfilled during World War II and the Korean War. 74). Galbraith, although constantly under fire from the critics, did insome respects still "play the role of the little boy in Anderson's storywho declared that the emperor was naked" (Hession, 131). To bothMalthus and Ricardo, that reality assumed that poverty was normal andinequality inevitable. Toachieve economic security, large corporations naturally attempt tomonopolize markets to squeeze out competitors. Acentury later, economists "have to defend inequality in terms of itsfunctional economic role. Individuals in society continually seek security - that is,protection of their person and property. John Kenneth Galbraith & His Critics. Malthus affirmed that the population would be determined by the foodsupply. From Galbraith to Economic Freedom. In the 196 's, social reform came about in response totraditional values and unjust government policies voiced by the public. The prospect of riches and retaining what onehas earned serves, it is alleged, as an incentive to effort" (Hession, p.74). Ricardo then asserted that societymight as well keep the working class on the verge of starvation, therebymaximizing capital to be directed towards expansion, research, anddevelopment rather than wages. Unfortunately, thispractice not only serves to squeeze the small businessman or producer outof the market, but also affects the consumer in the form of fixed pricesinstead of those regulated by the laws of supply and demand (Hession, 75).Galbraith argues, in one of the most famous, yet, controversial theories,that production (or supply) is no longer determined by consumer demand.Instead, just the opposite is true. Boston: Twayne Publishers, 1975.Pratson, Frederick. In The AffluentSociety (1958), John Kenneth Galbraith examines American capitalism notonly though current trends but also through historical evidence, andconcludes that it failed because of the unequal distribution of wealthamong is stratified classes. Alluding to Smith'sstatement concerning the market mechanism, conservative economist MiltonFriedman ironically comments that, "in the political sphere, individualslike Galbraith who attempt to pursue the public interest as they view itare led by an invisible hand to further private interest" (35). London: Institute of Economic Affairs, 1977.Hession, Charles. Producers are, in fact, able tomanipulate the supply to create a demand. The time of Smith'swritings was dominated by the great political and economic influence ofBritain and France. Malthus and Ricardo, as Galbraith contends,"had broken decisively with the conventional wisdom of the traditionalistand mercantilist society," paving the way for modern American capitalism. If the liberties of individuals were restrained by the system,it would only indicate the return to the age-old organization of superiorsclaiming their right to rule inferiors (Friedman, 35). These two superpowers pursued an economic system ofgovernment regulation which later became known as mercantilism. Finally, Herbert Spencer brought capitalism to its harshest extremethrough his theory of social Darwinism, wherein the brighter, moreadaptable and stronger individuals would prosper and procreate while theweak would be left to fall by the wayside. According to the 1959 Roper Survey, leadingeconomists tended to disagree with many of Galbraith's central theories.For example, only 34 percent of the economists polled agreed withGalbraith's belief that a more liberal form of unemployment compensationwas necessary (Hession, 225). The Affluent Society. New York: The New American Library, Inc., 1972.Galbraith, John Kenneth. (Gambs, 1 7-1 8)Spencer's opposition to public services reinforces Galbraith's criticismsin The Affluent Society about the lack of public services in America. John Kenneth Galbraith first entered the field of economics as anagricultural economist and could never come to terms with the persistenceof widespread rural poverty in the United States, the most affluent nationand the breadbasket of the world (Pratson, 51). John Kenneth Galbraith and the Lower Economics. . Famine, for example, was an indication of an excessive population,which would soon remedy itself and return to a natural balance throughmalnutrition and eventual starvation. Perspectives on Galbraith. However, it has inequalities which must also beattributed to Smith. Galbraith asserts the Calvinistprecept that "the only sound way to solve the problem of poverty is to helppeople help themselves." Yet, how is the child of a poor family to have anequal opportunity to develop and break free of the chains of povertywithout a descent education, proper nourishment, sound health services,proper community protection, adequate reaction, a pleasant environment, andother public services? If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.