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Yves here. Having worked a lot with the Japanese, I have to beg to differ with Murphy’s contention, following John Kenneth Galbraith, that advanced economies generate high levels of private consumption. The Japanese are only not Calvinist (as in seeing wealth as a sign of moral superiority) they are if anything anti-Calvinist. The Japanese have their own version of what Australians call the “tall poppy” syndrome, that anyone who tries to stand out too much, such as with showy consumption, will be cut down. Entrepreneurs are revered for creating employment, not for getting rich.
I worked closely with a top Japanese billionaire, rich enough that he should have been in the Forbes 400. He would shop for bargains and on one trip to the US, was pleased with snagging some dressy pants for $15. He and his brothers-in-law would stay in nice hotels but in standard rooms. His big personal consumption items (aside from having inherited a large house, his father had been the closest thing Japan had to Joe Kennedy, a politically influential stock trader) were traveling regularly to Europe to see opera and collecting Goyas.
He and his brothers so did not carry themselves like rich men that at one point during a deal, the oldest brother in law recognized they were not being taken seriously about the need to structure the deal to minimize taxes. He walked up to a white board and wrote “$100,000,000”.
He said:
It is May. This year so far, we have $100 million in portfolio income on our US company. You can see why we are eager to minimize the tax.”
Everyone in the room, ex the other Sumitomo Bank employees, were trying to work out what they must have in Treasury bonds to generate that much income. And yes, they did have ginormous holdings.
Now in fairness, having also seen what was in 1989 a $5 million apartment in Tokyo of a board member, even lavish apartments were tiny by American standards (this one was at the very most 900 square feet, and probably more like 800). You can’t buy a lot of stuff if you have no place to put it. Even with the population of Japan falling, land scarcity and hence generally small homes, are no doubt still a real constraint. Comments from reader who are more current are welcome.
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
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 cConsumption
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.
We Kiwis also had the “Tall Poppy Syndrome”. Until the neo-liberal reforms of the 80s.
There are some of us who agree with the above in detail and view the “live to consume” mentality as a trap that takes away one’s freedom. But one must also suggest that all societies are based on psychological manipulation of one sort or another and Japan’s consensus mentality hasn’t necessarily produced a pacifist paradise–historically speaking. However it did make for a 19th century modernization of astonishing rapidity.
That said, moving social critique from the economic to the psychological realm is progress. And taking a hard look at ourselves may advance to a further critique as to whether all this heedless consumption is destroying our physical home.
It’s hard to see a way out though. The battle of the individual versus the social is part of what we are and trying to blend the two can merely shift the competitive impulse into a nationalistic impulse that didn’t turn out so well in the 20th c. Like misbehaving children we may need all those toys for pacification.
Japan has handled the implosion of its monster bubble and zombification and a decline in relative living standards far better than I can imagine any Western country would. For instance, in the 1990s, major Japanese companies considerably compressed senior v. junior wages (and there was not as big a gap as compared to the West to begin with) to preserve employment.
Of Murphy’s 4 answers I see no movement towards these goals.
Quite the opposite.
In Seattle the sports radio has an ad proclaiming how great the new toll roads are and how they’ll reduce congestion on the main artery, I-5, which I find perplexing. It’s good for uber and amazon I’m sure, because 509 if I’m not mistaken was the secret back way to the airport. Less congestion for the well to do. Same on the east side as 520 is tolled I think, I stay away from seattle as its too expensive to be there. Would the tech bros like to toll every road? you bet. Indeed they would digitize/privatize everything and the role of .gov will simply be the collection agency of their dystopian calvinist fantasyland. In friday harbor a long time company aeronautical services, a decent sized package delivery employer, is canning people as amazon takes their market share, replacing a community with giggers. Did I mention seeing an amazon truck dropping a package at the post office, offloading an expense on the rest of us because bezos obviously can’t pay for it himself the poor(smug p.o.s.) thing only has hundreds of billions. And speaking of the post office does bezos fund pensions for his employees 75 years out? Cue the laugh track.
I’ve lived in Redmond (the Eastside is basically Redmond, Bellevue, Kirkland plus maybe Issaquah) for 25 years now. The Eastside is WAY more expensive than Seattle, especially the Bellevue satellite cities of Clyde Hill and Medina. Bezos, Gates, Ballmer, most Seahawks players live on the Eastside. The commute over 520 is highest eastbound in the morning, and westbound in the evening, one reason being that housing is generally cheaper in Seattle.
There is no tolling on I-5 or I-90 (they do have HOV and/or express lanes in part).
Tolled highways are I-405 (Eastside, HOT lane), SR-167 (feeder to I-5 and I-405 from the south end, HOT lane), SR-520 bridge (all traffic), SR-16 bridge (Tacoma Narrows, now non-galloping, all traffic), and SR-509 (new).
Thanks, for me seattle goes from woodinville to puyallup, and bainbridge island to union hill road. One would have to include redmond ridge nowadays. When I moved there in 89 there were zero toll roads as far as I can recall… Sure do miss picking chantrelles on mt si and anyone who can get up there, now is a great time for it…
I agree with Mr Murphy’s salient and concise opinion, though I would offer that instead of “ Those with wealth have no need for public provision”,this ‘system’ of wealth generation relies on ‘Socialized costs enabling Privatized Profits’.
The republican agenda is to find a morally superior argument in favor of selfishness. JKG.
Close — it was “the modern conservative” whom Galbraith observed as engaged in this pursuit. In America, this has been a bipartisan project since at least Clinton.
Our Home, the Earth, is A-Changin’
“The Times, They Are A-Changin””
Maintenance of a disfigured consumserist culture involves pernicious inequality, a radical narrowing of the affluent consumer base, a necessary growth in conspicuous consumption, and cancerous concentrations of wealth–all required to maintain such pinnacles of pretentious prosperity. Participation in the consumerist project by those whose impoverishment grows daily relies almost entirely on credit. This further benefits the shark tank of already affluent creditors and their remoras, and furthers the floundering and foundering of the precariat, while widening and deepening an unbridgeable canyon of economic, social, political, and spiritual disparity.
The prosperous employ this same precariat to protect them in their rentiér redoubts. This prophylactic is deployed the world around with significant concentrations throughout the US, and only recently visibly dispersed into various of its large cities. Try counting domestic military installations, national guard units, military reserves, and MIC sites.
Call me an outlier. I seem relatively immune to the JKG theme of pressure for consumption. Maybe due to agency, and maybe due to some on-the-spectrum tendencies. Coincidentally, or perhaps not, I’d like to visit Japan some day.
In Japan, people who appear to be doing well financially tend to attract the attention of the tax authorities. For this reason, wealthy individuals usually try to keep a low profile—except for those who actually want to pay more taxes.
“2. Tax private excess. Wealth, inheritance, and speculative gains must be taxed to fund collective provision.”
Sure, to cut down the tall poppies, but this is not for funding, which we can always provide, subject to real resource constraints.
Truman and Eisenhower and their economic advisors were terrified of the US slipping back into another depression. It was only the massive spending for World War II that had fully yanked the country out of the continuing doldrums following the start of the Great Depression, so they were very worried that any slowdown could lead back to a depressed economy again. The two answers were encouraging (practically demanding) exorbitant consumer spending, egged on by massive advertising campaigns in the press and in the new medium of television, and the Cold War, to keep military spending high. The term “planned obsolescence” came into vogue in this era to describe how spending was generated due to consumer goods breaking down or going out of fashion much earlier than had been the case when times were lean. And the “permanent war economy” became a profit center for investors in weapons, engineering and science stocks. As Galbraith says, we could have gone with different answers, like spending for the public good, but apparently more highly influential people had major incentives to choose the two that were implemented by Truman and Eisenhower. The reductio ad absurdum of this approach was reached when Bush Jr. urged the US public to go out and spend more money as the patriotic response to a small bunch of Arabs with box cutters inflicting a stunning and humiliating catastrophe on the nation with the most powerful (and expensive) military in the world.
WW2 was needed to save capitalism, while planned obsolescence was required to keep it working. This is the same as saying that massive amounts of death and destruction were needed to save capitalism, while continuous amounts of waste and human suffering are required to keep it working.
How can there be public goods in a Thatcherite neoliberal dispensation which insists that “there is no such thing as society”?
No public, no public goods …
It must awful to be worth a good many billions and live beneath your wealth, what if others of your ilk saw photos of you flying coach next to Marge from Topeka?
Quite the rat race to the top for the rest of them, in overdoing one another. Say cheese for the camera.
Growing up in the can-do years it was practically a given when I was a lad for every school and most stores to have a drinking fountain for everybody to use.
You still see them once in a blue moon-replaced by private consumption in a plastic bottle.
The truism that “Everybody does better when everybody does better” is too close to “From each according to ability, to each according to need” in neo-fascist capitalist USA, and fascist tendencies have lain just beneath the surface since at least the Gilded Age. The New Deal now seems like an aberration, a fluke of rare democratic fervor thanks to socialist and communist trade union protests and the personal magnetism of FDR, who briefly saved capitalism from itself. We shall not see his like again. Donald Trump is the flip side of that capitalist coin, and he’s no aberration.