Viewpoint: 'The Affluent Society,' reconsidered

By Cynthia Tucker

October 12, 2008

"The Puritan ethos (save first and enjoy later) was not abandoned. It was merely overwhelmed by the massive power of modern merchandising."

"The Affluent Society," John Kenneth Galbraith

Henry Ford's genius lay not just in his technological innovations, such as the modern assembly line, but also in his social wisdom, which led him to pay his workers $5 a day. That doubled the prevailing wage for 1914 and drew the best workers to his factories. The money also allowed those workers to buy the automobiles they made.

For decades, America's consumer-driven economy purred along on the fuel of good paychecks to regular Joes. Automotive workers could buy Fairlanes and Mustangs, just as Whirlpool's machinists could buy refrigerators and dishwashers.

But wage earners began to fall behind in the 1970s. As productivity and corporate profits soared - so the rich got richer - pay didn't keep pace with inflation. Today's corporate titans have discarded Ford's example of helping workers to prosper.

So what happens when wages flatten and good-paying jobs disappear?

Consumers buy on credit. It's no wonder that consumer debt has soared to a staggering $2.5 trillion. Between mortgages, second mortgages and credit cards, many families, especially struggling wage earners, are barely getting by. More than a third of those carrying credit card balances of $10,000 or more earn less than $50,000 a year.

The conventional wisdom tells us that buying habits are decided by each individual and that personal responsibility dictates that you should only purchase the items you can afford. Indeed, the conservative ideology dominant since the Reagan era insists that anybody standing outside the magic circle of affluence is dumb, lazy or liberal - or all three.

But psychologists and sociologists have done decades of research showing that buying habits cannot be reduced to a simple matter of personal responsibility. Behavioral economists have also proved that human beings (including Wall Street investors) do not behave out of rational self-interest. Most of us are influenced by cultural cues that tell us to keep buying.

Advertising is ubiquitous. Easy-credit come-ons are relentless. Social networks, including neighbors, in-laws and fellow PTA members, affect our judgments. So does the wisdom of the elites. Just after 9/11, when the Dow dropped and the economy verged on a fear-driven recession, President Bush told Americans that the best thing they could do for their country was to go shopping.

After all, consumer purchases account for 70 percent of the U.S. economy. If we stop buying, the entire machinery grinds to a halt. Merchants and manufacturers need to sell cars and clothes, TiVos and iPods, couches and computers. It's no accident that we buy so obsessively that one of the few growth industries left is storage facilities, where we keep all the widgets and trinkets we can't stuff into our houses.

As the blaze from the self-immolation of Wall Street rages out of control, touching not just households from Maine to Alaska but also faraway countries such as Iceland, it's hard to imagine a recovery built on America's out-of-control consumerism. As a nation, we're already deep in debt. Besides, many of us have seen the folly of shop-a-holism.

The prescient Mr. Galbraith saw it 50 years ago, when he published The Affluent Society. He noted then that a nation living in abundance had created excess with little public purpose. And he urged the United States, with its great capacity, to spend more of its capital serving the public good by pouring resources into education, health care and public parks.

The past several decades have been dominated by a very different view - an inherently selfish individualism epitomized by such Ayn Rand acolytes as Alan Greenspan. But the reputation of the once-beloved Mr. Greenspan is now besmirched, since his anti-regulation ideals led directly to this financial crisis.

Maybe it's time to give Mr. Galbraith another look.

Cynthia Tucker is editorial page editor for The Atlanta Journal-Constitution. Her column appears regularly. Her e-mail is cynthia@ajc.com.