This is one of a series of posts that will ask what the most pertinent question raised by a prominent influencer of political economy might have been, and what the relevance of that question might be today. There is a list of all posts in the series at the end of each entry. The origin of this series is noted here.
After the first two posts in this series, the topics have been chosen by me, and this is one of those. This series has been produced using what I describe as directed AI searches to establish positions with which I agree, followed by final editing before publication.
This post refers to one of my economic heroes, Professor J K (Ken) Galbraith, of whose writings I probably have a bigger collection than any others.
John Kenneth (Ken) Galbraith, the Canadian-American economist, was one of the most eloquent critics of modern capitalism.
Writing in The Affluent Society (1958), he observed something that remains as true today as it was then: advanced economies were awash with private consumption - cars, gadgets, advertising, status goods - while public services, schools, transport, and communities were starved of investment.
He called this imbalance the central contradiction of affluence: societies rich enough to provide comfort for all chose instead to tolerate inequality and neglect.
Galbraith skewered the idea that markets automatically meet needs. They meet wants that can pay. And, worse still, they manufacture wants through advertising, turning insecurity into desire. Meanwhile, genuine social needs — health, education, clean air, public spaces — languish because they are not profitable.
This paradox leads directly to what might be called the Galbraith Question: if affluence produces private luxury alongside public squalor, what does that say about the values and survival of our society?
The tyranny of private consumption
Galbraith pointed out that in post-war America, consumer goods multiplied while public schools were overcrowded, roads crumbled, and parks decayed. This was no accident. Markets prioritise what individuals with purchasing power demand, not what societies collectively need. The result was a distorted pattern of growth: glitzy suburbs and shiny appliances alongside underfunded services.
Today, the imbalance is worse. Billionaires build private rockets while hospitals cannot afford basic equipment. Luxury flats sit empty while homelessness rises. Markets pump out smartphones while public broadband lags. Galbraith's warning has become prophecy.
The manufactured wants of advertising
Galbraith also identified the “dependence effect”: the idea that in modern capitalism, demand is not spontaneous but manufactured. Advertising does not simply inform; it persuades, manipulates, and creates dissatisfaction. We are told endlessly that our lives are incomplete without the latest product.
This endless stimulation of private wants diverts resources into trivia, while real needs, such as poverty reduction, social housing, and climate resilience, are neglected. The system thrives on making us feel perpetually inadequate. Squalor is not an accident; it is the shadow cast by a system that profits from dissatisfaction.
The neglect of public goods
Markets undervalue what cannot be bought and sold. Clean streets, safe communities, universal healthcare, cultural life — these do not appear on corporate balance sheets. They require public investment. But under the sway of market dogma, governments have been told to cut, privatise, and outsource.
The result is precisely what Galbraith warned of: gleaming shopping malls surrounded by potholes; private gyms for the rich while public parks decay; high-end medicine for those who pay while basic care is rationed for everyone else. Public squalor becomes the backdrop to private plenty.
The political economy of neglect
Why does this persist? Because those with wealth have no need for public provision. They buy private healthcare, private schooling, and private security. For them, public services are not vital but irrelevant — even threatening, since they require taxation.
Meanwhile, the majority are told that taxes are theft and public spending is a waste. Political elites, funded by the wealthy, reinforce the message. The outcome is a politics that systematically undervalues collective goods while lavishing subsidies on private capital.
Galbraith's challenge today
If Galbraith's critique was relevant in 1958, it is doubly urgent now. Climate breakdown demands massive collective investment in energy, transport, and housing. Ageing societies demand investment in care. Inequality demands redistributive taxation. Yet we are told, relentlessly, that “the money is not there.” Meanwhile, the yachts of the wealthy grow ever larger.
The Galbraith Question stares us in the face: how can a civilisation survive if it allows its collective foundations to crumble while indulging the endless whims of private consumption?
Answering Galbraith
To answer the Galbraith Question, we must reverse the imbalance he described, requiring that we:
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Rebuild public goods, requiring investment in housing, health, education, infrastructure, and culture as the true basis of prosperity.
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Tax private excess. Wealth, inheritance, and speculative gains must be taxed to fund collective provision.
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Challenge advertising. We must regulate the industries that profit from manufacturing insecurity and demand.
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Redefine prosperity. We must measure success not by consumption of status goods but by the quality of public life.
Inference
Galbraith's insight was devastatingly simple: private affluence and public squalor are two sides of the same coin. Markets feed the first and neglect the second. If we allow that imbalance to persist, society itself becomes fragile — glittering on the surface but rotten underneath.
The Galbraith Question is not about economics alone. It is about what kind of civilisation we want. Do we want one in which the rich wall themselves off in private luxury while the public realm collapses? Or one in which prosperity is measured by the strength of our shared institutions and the dignity of our common life? That question has, above all else, dominated my economic thinking ever since I first framed it about half a century ago, as a sixth former when I first read The Affluent Society.
Galbraith's answer was clear. Unless we choose the latter, affluence will prove not the mark of progress but the seed of decline.
Previous posts in this series
- The economic questions
- Economic questions: The Henry Ford Question
- Economic questions: The Mark Carney Question
- Economics questions: The Keynes question
- Economics questions: The Karl Marx question
- Economics questions: the Milton Friedman question
- Economic questions: The Hayek question
- Economic questions: The James Buchanan question
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The New Industrial State is also worth a read. The quality of writing (& the wit) in both books is superb (and noticeably absent in works by his opponents). Both are examples of excellent (& enjoyable) literature whilst also conveying important messages.
The opening para of the Affluent Society is witty & conveys an extremely important (& timeless) message. All in a single para – & the second para nails it wrt nations. Oh to be able to write as well.
Agreed
That was also massively influential on my thinking – before I became a professional accountant I realised data could be used to manipulate.
Galbraith taught me that.
The problem is that Galbraith’s challenge has been answered or weakened perhaps?
The answer we are sold is that living like the wealthy is ‘aspirational’. It is the right thing to do; it is moral to have so much and not need anyone else. The lottery is not successful for nothing. Society has been programmed.
But that still means we should ask the question.
Morality is not relative in this sense
‘Not saying that the question should not be asked.
Musing on how sticky the Thatcherite/Neo-lib ideas are and considering that we are asking people to disown something they have been taught to aspire to – unthinkingly.
In a similar vein, I recall, and was influenced by, when studying at university in the seventies, both Vance Packard’s “The Hidden Persuaders” and Rachel Carson’s “Silent Spring”. What then seemed slightly off beat have proved to be harbingers of what has now come to be and a very useful tool in understanding how people’s ‘wants’ are manipulated into appearing to be ‘needs’. I am staggered by some of the products advertised these days, not to mention deliberate planned obsolescence which is a fundamental characteristic of the tech world. H G Wells was right when he referred to advertising as “ legalised lying”.
I don’t know Packard’s book. But Carson was a big influence.
And now I have sought out a TL;DR of Packard it looks like I agree with what he was arguing.
Galbraith such a profoundly influence on my generation ‘Private Affluence and Public Squalor’ should be revivified – even more apt today than it was all those decades ago.
George Monbiot proposes the positive inverse slogan: “Private Sufficiency, Public Luxury:
I like it
I checked my recollection. from wiki
John Kenneth Galbraith did not say that money is created by an “arcane ritual”. The well-known economist used a similar phrase—about money creation being so simple it repels the mind—to explain the public’s misunderstanding of how banks create new money. The full quote is: “The process by which money is created is so simple that the mind is repelled. When something so important is involved, a deeper mystery seems only decent”.
Correct
An inappropriate place.
Last week I suggested a hands-on model to show parts of the economy. I have worked on a model of the benefits system, with an outline sketch of the function of the model, and a description, as follows. Obviously can’t get sketch and key into word count. Let me know if you want to see more, and approve.
A Hands-On Model of the Benefits System, UK.
This is a vertically mounted set of tubes. glass, all works transparent. Input is by water poured into a funnel at the top; there is a drain at the bottom. Water poured in at the top represents benefits paid; water drained at the bottom is net cost.
In the simplest case, water is poured in at top and goes straight through to bottom. Believed to be current govt model.
In real life, some of benefits goes directly back, through taxation. The proportion for poorest 10% is estimated at 48%, mostly VAT and council tax. This will be represented by a split in benefits stream; half will be diverted, to feed back eventually into “benefits”, which must therefore have a reservoir.
The nest diversion is in remaining 50% or so of benefits stream, where an appreciable fraction feeds back (via taxation of people who receive spending from benefits recipients) This maybe should involve 2 or 3 diversions, but will be rolled into 1 for simplicity. It would be nice to have this variable, with a meter showing how much goes back. Can read from 0 to 100%. This stream also goes back to reservoir going out to benefits. The reservoir has one-way valves for input from loops 4 and 6.
If it works – great!
Too long ago since I read about it to cite details of who and when, but a few decades ago an economics professor at a prestigious institution, might have been the LSE, built a hydraulic model of a whole national economy that worked very well.
They did…. Linda is, I think, familiar with that.
Another gap on my bookshelf! Thank you for the summary and your take on how Galbraith’s ideas look now.
I think this is an extremely important series which raises key questions, such as “Why can you buy anything anyone could possibly want, provided you’ve got the money, whilst the provision of the things you really need go to rack and ruin?”
I’ve put it like this because they provide answers to questions that people really want to know: “Why are things like this?” And “What can we do about it?”, which is why I think they’re really important to share.
But, for each one, I’ve felt that I needed to write an introductory comment, because titles like “The Friedman Question”, “The Marx Question”, or “The Galbraith Question” (I too have always had a very soft spot for Galbraith), are a meaningless turn-off to anyone who isn’t a political economy nerd – and I don’t think they’re the audience you’re actually aiming at in this series.
KUTGW
Interesting – as I thought this was largely for people already here who wanted to learn – so bascially already converted to the issues.
I come from the era after Gilbraith. I don’t recall him be mentioned when I was a student. My textbooks were written by Olivier Blanchard, Greg Mankiw, Paul Krugman and Paul Romer. When I was younger I read a lot of Krugman. I think now, perhaps Paul Romer has the most interesting things to say. Particularly about how macro economics has gone backwards and other branches of the economics profession think it is safe to just ignore it. It is as if the health of macroeconomics is completely unnecessary. It has become a pseudo science, a blind faith, and is worse now than it was in the 1970s.
Agreed
The model David refers to above was conceived by Bill Phillips – he of the famous curve.
Another book from Galbraith, The Culture of Contentment, explores how the relative affluence from the 1950s through to the 1980s left many people with the sense that the struggle against poverty and inequality belonged to the past; self gratification became the norm.
Neoliberalism threw those decades of progress for the majority of working people into reverse, and we now face a culture of discontentment, with no clear sign that people are equipped to understand that Farage et al will strip away the precious rights and protections that were painstakingly won by our forebears.
Thanks, John.
Fortunately for me The Affluent Society was mandatory study for my Economics A-Level in 1969. Pretty much set me on course for who I am today. Samuelson of course was still very much in vogue at that time. Could still be for all I know!
30+ editions later…
This is arguably the most important article in your explainer series so far. Galbraith was a great influence on my economic thinking just before I embarked on a teaching career as a mature student. I also like to think I passed his thinking on to my students, although it was difficult sometimes to oppose the conventional wisdom of the 1980s. I had to present other views, mainly monetarism to give balance. In my own mind, I had no doubt that JK Galbraith was right.
We’ve travelled a long way in time since then while making limited progress in the UK in reducing equality and a fair redistribution of wealth.
As a nation, we are fairly well-off, but tonight I saw an advert with David Tennant asking people to give money to help with food banks and I knew we were really going backwards in some things. They should be unnecessary in the UK. The gov should be giving vouchers to poorer people to use the same food bank that I do, namely Tesco’s.
I’ve even heard people praise Tory gov for providing food banks.
I’m sure Galbraith would be appalled if he was alive today, but maybe not surprised how things turned out since he wrote The Affluent Society in 1958.
I am glad I am not his only fan.
This is exceptional Richard, thank you.
I will need to go an re-read The Affluent Society now!
Do…
The Galbraith Question:-
“If affluence produces private luxury alongside public squalor, what does that say about the values and survival of our society?”
That few recognise the “adversative” nature of market capitalism and as such the need for greater checks and balances as we do with government.
Here is a Google AI overview:-
“Market capitalism can be described as adversative because its inherent drive for profit often leads to systemic inequality, creating a divide between a wealthy elite and the masses, and it can promote instability through cyclical downturns, unemployment, and boom-bust cycles. Critics also highlight how the pursuit of profit can incentivize ignoring social and environmental externalities like pollution, and a competitive focus on shareholder value can undermine the broader community and long-term collective problem-solving.”
When the UK starts to have politicians who openly admit that a central problem of British society is how to tackle the adversative nature of market capitalism with checks and balances we’ll have reality.
Correct
[…] By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future […]