In the past 200 years, economic growth has been remarkable in Europe and the US. Even more dramatic in Asia in the last 50 years. The growth in Gross Domestic Product (GDP) tells this story, with the starting point for each country below being the approximate decade in which the economies starting growing rapidly.
#1 - USA GDP - grew 35 times over the past 120 years ($21 Trillion)
#2 - China GDP - grew 73 times over the past 40 years ($14 T)
#3 - Japan GDP - grew 107 times over the past 60 years ($5 T)
#4 - Germany GDP - grew 19 times over the past 50 years ($4 T)
#5 - India GDP - grew 8 times over the past 30 years ($ 3T)
John Kenneth Galbraith coined the term "The Affluent Society" in the 1950s to describe this phenomenon. Initially he was referring to the US and Europe with this term. But as his very successful book started being issued as revised editions through the 1980s, he was also able to observe the success of Japan and Korea and the stirring of China.
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| Friedman & Galbraith |
Galbraith taught Economics at Harvard University, was Ambassador to India for President JFK and astonishingly was recognized twice with the Presidential Medal of Freedom (1946 & 2000). India also recognized him with a Padma Vibhushan Award in 2001.
The book, The Affluent Society is a terrific read and presents a thoughtful description and analysis of the modern world from an economic, managerial, social and moral perspective. Clear writing, a good turn of the phrase, insightful and mercifully brief is how I would describe this book.
One of the most famous terms that Galbraith has coined and that he is remembered for, is straight out of this book - and that is, "Conventional Wisdom." Here is a quote that succinctly describes what he means, "the conventional view serves to protect us from the painful job of thinking."
If there was only one chapter that I would carry with me from this book, it is the second chapter titled eponymously. Indeed, I re-read and listened to that chapter after completing the book.
I started this note above, by listing and ranking countries by GDP and connected it to the rising affluence of societies across the world. Indeed, as Galbraith would say, the average human lives better than a medieval nobleman.
But using GDP as a shorthand hides a lot of painful truths. I recall the story of an inebriated party reveler to make this point. This reveler, was searching for his lost car keys under a street lamp. When a helpful passerby asked him if this was where he lost his keys, the reveler replied, "nope, this is where the light is."
That is, we use GDP because this is what we can measure. It is our conventional wisdom.
Prior to the great depression, the conventional wisdom was that balanced budgets were very important to run a healthy economy. It took the great crash of 1929 and rethinking about debt-spending to break that conventional wisdom.
Through the book Galbraith keeps poking holes in what we accept as working well, using various measures as short hand. In this book, Galbraith predicts inequality and dire consequences of not addressing them. He similarly warns about inattention to climate. To excessive military spending. Ignoring public investments in schools and hospitals. About blind faith in the markets. And of the relentless acquisitiveness of the consumer society.
In one fun illustration he talks about furnishing a house. First we get the bare essentials. And then we keep stuffing the house with more and more until we become a bunch of hoarders, way past any utilitarian or even aesthetic impulses.
Malvyn Reynolds composed a beautiful song titled, "Little Boxes" in 1962 that points to the self-satisfaction and conformity bred by the affluent society. I remember listening to the Harry Belafonte's version of this song growing up in the 1970s on an 8-Track spool tape. I remember this song vividly, but realize now that I did not know quite what it meant!
Author and poet, G.B. Prabhat brings this observation to India. In his debut novel, "Chains" set in 2000, a decade into the period of economic growth post liberalization, the story traces an Indian family returning home after a stint in Silicon Valley and experiencing, "no existential compulsion to fill nothingness with a little something."
Just prior to reading Galbraith's book, I read John Rawls. They could well be cousins! They both recognized by Presidents, the latter with a National Humanities medal in 1999. Galbraith looked at the problem from an economic perspective and Rawls through the lens of political philosophy.
Indeed, as I look at how our world had shaped itself since 1980 over the past 40 years or so - I might regretfully say that it has been the exact opposite of what these two thinkers had prescribed! But I do sense an awakening, where we are all seeking to find a balance. Perhaps we can set aside the conventional wisdom that all economic growth is good and take into account total costs to society and arrive at a better model to govern ourselves with.
Until of course, that eventually becomes the conventional wisdom!
Notes:
#1 - USA GDP - grew 35 times over the past 120 years
1900 - $590 Billion
2020 - $21 Trillion
Growth: 3% per year
#2 - China GDP - grew 73 times over the past 40 years
1980 - $190 Billion
2020 - $14 Trillion
Growth: 11.5% per year
#3 - Japan GDP - grew 107 times over the past 60 years
1960 - $44 Billion
2020 - $5 Trillion
Growth: 8% per year
#4 - Germany GDP - grew 19 times over the past 50 years
1970 - $215 Billion
2020 - $4 Trillion
Growth: 6% per year
#5 - India GDP - grew 8 times over the past 30 years
1990 - $320 Billion
2020 - $2.7 Trillion
Growth - 5.5 % per year
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