Economics and Politics of Opulence

ECONOMICS AND POLITICS OF OPULENCE* HARRY G. JOHNSON As a professional economist, I am honoured to have been invited to participate in a sustained inquiry into "man in the modern age"-for we economists are accustomed to being excluded from exercises of this kind, on the grounds that we persistently spoil the fun by dogmatically insisting on the harsh restraints on man's freedom of action assumed by our discipline. I can promise you that I do not intend to sin in that direction. On the contrary, I shall take as my point of departure the proposition that the society in which we live has attained that happy economic condition which J. K. Galbraith has indelibly branded as a£Huent, but which I prefer for my own reasons to describe as opulent-and which in the vast majority of the countries of the world would be described simply (and enviously) as "developed." In accordance with the general theme of this programme, "Directions of Development in Modern Society," I shall concern myself with emerging concepts, trends, and problems connected with opulence. My title is "Economics and Politics of Opulence ," because these are the main areas I wish to discuss, but I shall also have something to say about the social and personal implications of opulence. In describing our society as opulent, I mean to refer primarily to two of its economic characteristics: it is rich, suffiCiently so to provide a standard of living for its members that is phenomenally high by any comparison either historically with its own not-too-distant past or contemporaneously with the vast majority of the world's population; and what is more important it has built into its structure a variety of mechanisms that automatically generate continuous growth of its wealth. Galbraith, to whose book on The Affluent Society I have already referred, used the notion as a springboard from which to launch an attack on the "conventional wisdom" of O ur social and economic policy, which as he correctly painted out is derived in large part from a system of economic thinking built up when grinding poverty was the lot of the masses, and ..A lecture delivered to the University CoIlege (Toronto) Literary and Athletic Society in the lecture-seminar series on "Directions of Development in Modem Society," February 24, 1965. Volume XXXIV, Number 4, July, 1965 314 HARRY G. JOHNSON is nO longer appropriate to the world in which we actually live. W. W. Rostow, in his The Stages of Economic Growth, used it as a major building block in advancing a theory of economic development in which the crucial step was the so-called "take-off into self-sustaining growth." I shall not, however, explore the particular intellectual avenues opened up by these two authors further, but will instead attempt to explain how contemporary economics approaches the political economy of opulence, as a prelude to discussion of the more important trends and problems in our society connected with it. As a scientific discipline, economics is built on the assumption of rationality of human behaviour, and seeks to explain, and if possible quantify and predict, human behaviour on this basis. Rationality of behaviour does not mean that behaviour is motivated exclusively by consideration of economic gain, but only that behaviour is informed by rational understanding of the relation between means and ends, and changes in response to changes in the costs of achieving those ends by alternative means. Assuming rationality in this sense, economists expect to find logical and empirically reliable relations among economic phenomena . Specifically, economists view the phenomena of opulence as the results of a human desire for high and rising standards of living, conjoined with the existence of opportunities to implement this desire; and they expect that the extent to which a given society has achieved opulence will depend on the extent to which in the past it has had available and has utilized these opportunities. In the technical terminology of economic theory, income is received as a result of the ownership of capital; to increase income it is necessary to increase capital; and to increase capital it is necessary to save and invest, that is, to refrain from current consumption...