On the Urgency of Wants
IN HIS BOOK, The Affluent Society,' Professor Kenneth Galbraith argues for a better balance between private and social production. In a lucid and convincing manner he voices a judgment in favor of increased social expenditures at the expense of private spending. More should be invested in people and less in goods, and a radical change must be introduced into our economic system which tends to prefer gadgets of marginal usefulness to social goods of high value. In the long run, claims the author, such a reversal of priorities will lead to increased happiness all around. In developing his case Galbraith deals a sharp blow to the accepted theory of consumer demand, and to the economist's preoccupation with production as a goal of economic activity and as a criterion for human welfare. It is with this portion of his argument that the present note is exclusively concerned. Preoccupation with production, claims Galbraith, was appropriate when expanded output was necessary to satisfy such basic needs as food, clothing and shelter. It is obsolete in our affluent society. Expanded output in contemporary United States is not designed to meet "urgent" wants, and cannot therefore be regarded as a vital addition to human welfare. Moreover, production today is not even geared to satisfy pre-existing wants. Demand must be artificially created by social pressures, advertising, and other techniques either following or concurrent with the supply of goods. If, continues the argument, newly-produced commodities add little to human welfare, then losses of production are virtually inconsequential. There is therefore no justification to focus on the problem of economic efficiency, and economists should divert their attention to more important maximands.2 In other words, the argument states that the principle of diminishing marginal utility should be applied to wants in general and not merely to satisfaction obtained from individual commodities. There exists