Outlines of an Emerging World

▪ 1996

by Sir John Kenneth Galbraith

      Looking back on 1995, I am led to reflect, first of all, on the larger currents of history that have a controlling influence in these times, including the year just past. The first of these is the continuing effect of the release from the international tension that after World War II, a full half century ago, came to be called the Cold War. This, in turn, has given time for attention to the myriad of lesser conflicts, foreign and domestic, that afflict the modern world. Once these would have been assigned a lesser, even minor role except as they might bear on the larger confrontation. They have now come to bulk large in thought and expression.

      Two world focal points in 1995 were former Yugoslavia and the impoverished peoples of Africa. There was also the continuing tension in the former republics of the Soviet Union, most notably in Chechnya, and, in lesser measure, in Mexico and Haiti. One is led, first of all, to consider the causes of conflict.

      The most obvious of these is the continuing righteous and angry assertion of ethnic, religious, racial, and national identity. Even in the rich countries—in Western Europe and the United States, on the Pacific Rim, and notably in Canada—these conflicts exist. Race, however denied by many citizens, is still a source of continuing and bitter dissension in the United States, on which I will have a later word. In Canada there is continuing debate and action involving Quebec separatism and the French language, which was temporarily decided in 1995 but remains wholly unresolved. In Western Europe there is assertion of national identity and difference and, in particular, an adverse reaction to the large numbers of foreign workers who staff the industrial establishments and otherwise do the work to which native-born sons and daughters are no longer inclined or for which they are unavailable.

      The singular aspect of this tension and conflict is that in the fortunate countries it is contained. Relative well-being, one cannot doubt, is a major solvent of social tension. Well-off people become angry, but not to the extent of jeopardizing their comfort. So it is between the rich countries, and so within them. In the United States it is taken for granted that the better sections of the cities and the affluent suburbs will be peaceful and benign. Disorder and crime are the bitter legacy of the impoverished, usually relegated to the central cities.

      I would like to offer here a general guide to the larger world polity of 1995. The rich and the modestly affluent nations were at peace, not only internally but also with each other. There was still tension in the Middle East, culminating as the year came to a close in the cruel and senseless murder of Yitzhak Rabin. This was a deep, unforgivable tragedy to which the leaders and peoples of the whole world responded, not because Rabin was a leader in war but because he was a force for peace. It was in the relatively poor countries of the Balkans, in the poverty-ridden countries of Africa, in the poorest state of Mexico, and among the Kurds in Turkey and Iraq that deprivation, fighting, and death were commonplace.

      The greatly publicized case, of course, was former Yugoslavia. Here the ethnic, religious, and territorial commitments were especially deep—some of many centuries' standing. These people sacrificed a modest well-being for the deprivation of many or all. This, and the efforts to bring peace there, dominated the headlines of the year. There were times when one read or heard the news from the Balkans and all but wished for the stable relationships of the Cold War.

      But the Balkans were not, in fact, the worst case of the year. That was in Africa, in Rwanda, Burundi, and neighbouring Zaire, with the residual effects of conflict in Somalia and Liberia. There starvation, so far from being an episodic affliction, was the norm. Out of poverty came the forces of disorder and conflict that ensured further poverty—and death. Here, more than anywhere else in the world, was the dark side of 1995.

      Although in and between the fortunate countries there was peace, there were also defining crises leading to political tensions. In the United States there were two such crises: there was a major renewal and deepening of the issue of race, and there was a strong reaction against the seemingly solid benefits and services of the welfare state. Each calls for a comment.

      The prime focus of the question of race in the United States in 1995 was the televised O.J. Simpson trial, continuing from the previous year and ending with his exceptionally prompt acquittal. This raised the question whether the criminal justice system could be overridden by racial consciousness and commitment, especially when intensified by the incompetent and deeply prejudicial behaviour of the police.

      The other factor bringing race onto the national scene was, in substantial and even encouraging measure, the social and economic gains of the African-American community. Once, and indeed until relatively recent times, blacks lived in silent anonymity in the rural South or in enclaves in New York City, Chicago, Detroit, Mich., and other large cities. There was peace because they were not seen. In recent times and strongly manifest in 1995 was the emerging economic, political, and social strength of the black community. In consequence of this, where there was once indifference in the white community, there was now a sense of competition, even economic fear. Affirmative action programs were seen as enhancing this competition—as taking employment from white job seekers. This was not an issue when blacks were sharecroppers or menials in the big cities. So, while definitely not recognized as such, the black and white tension evident in 1995 was a mark of social and civilized progress. The deeper improvement in race relations had its more superficial price.

      When Americans were not watching the Simpson trial in Los Angeles or the "Million Man March" on Washington, D.C., they were the silent, approving, or concerned audience for the great political revolt in Washington—the attack on government as a social instrument, more generally on the welfare state. And, as ever, Americans saw the manifestation of extremist popular attitudes, one appalling example being the bombing of the federal office building in Oklahoma City, Okla. In other countries of the industrial world—in Canada and France and in some measure in Germany, Spain, Italy, and The Netherlands—the welfare state was also, at least marginally, under siege. The United States was, as usual, the extreme case. A new Congress, led by young Republican radicals, came to power in Washington in January 1995. There was no reticence as to their aim. Welfare legislation—health care, regulatory restraints, varied government services, and, above all, aid to the poor—was to be rolled back. The word capitalism being no longer politically quite correct, the market system, in the preferred reference, was to be accorded its pristine freedom and power.

      The problem was not that simple. Much welfare legislation, it was being discovered, was the offspring of history, not of politics or ideology. Once the poor in the United States, as observed earlier, were invisible as long as they stayed on the sharecropper plantations of the South or deep in the valleys of the Appalachian Plateau. It was their movement to the cities and away from their primitive sources of support that made welfare, education, crime, law enforcement, and much else public issues and the basis for public action. Once, a predominantly farm population had little need for Social Security and unemployment compensation. On the farm the next generation took care of the one before. Times could be bad, and often were, but there was no unemployment on a farm. Health care, until relatively recent times, was wonderfully inexpensive because the local doctor had very little to sell. It was the enormous advances in medicine and surgery that made health care an issue. The costs of keeping people alive could now range from considerable to huge, and a civilized society, or one with such claim, could not allow people to be sick and die merely because they had no money. From this came the intense debate over health care and how to pay for it. The problem was thought to have been given by ideology; in fact, it was the result of the great thrust of history.

      So it was with much of the political debate this past year in the United States Congress, and this fact goes far to explain why the oratory so far has substantially exceeded the action. What was readily seen as a revolt against costly and intrusive government became, on closer examination, a reaction to larger forces not easy and, indeed, on occasion not possible to reverse.

      The year 1995 was also one in which narrower economic issues became obtrusively evident. In general, with Japan being somewhat of an exception, it was a time of favourable economic performance. Economic growth, as it is called—the broad increase in the production of goods and the rendering of services—was generally favourable. Prices were mostly stable. But there were also some very dark spots on the world economic scene.

      The darkest was in the former communist countries, notably Russia. Here it was still being discovered that the transition to a market system was far more difficult, far more cruel, than once imagined. A poor economic system, defective especially in its meeting of the varied and changing needs of consumers, was replaced in some measure by no system at all. Instead, there were idle factories, badly disorganized agriculture and food supply, continuing if less severe inflation, and a new entrepreneurial class deeply and profitably committed to forthright crime and corruption.

      The economic disorder in Russia and its political consequences cast the blackest shadows on the world scene. When World War II ended, the winning nations, led by the United States, united in a major effort at repair and reconstruction. It was wonderfully successful for both victors and vanquished. Alas, the end of the Cold War brought no such effort, invoked no such generosity, no such intelligence. In international affairs increasing intelligence cannot be assumed.

      Within the fortunate countries in 1995, two economic factors were a lasting reason for concern. One was the continuing high and enduring level of unemployment in the United States and Canada and, notably, in Europe. This has two causes, neither as yet fully recognized and appreciated. There is, first, the fact that in the modern economy and polity inflation is more feared than unemployment, and a reserve army of the unemployed, to use an old Marxian phrase, is now seen as a protection against price increases. Second, the modern welfare state has within its structure factors that are adverse to worker employment. Each of these matters needs to be examined.

      The modern economy and polity has a very large number of people living on fixed or more or less stable incomes and also a big minority who have bank savings or other fixed-income assets. To these, inflation, even a mild increase in prices, is a most unwelcome expropriation. Thus the fear of inflation as it affects a large and articulate community. And thus the acceptance of unemployment, which is now seen as a necessary stabilizing force against the wage increases that might, in turn, drive up prices. We have come close to saying and often now do say that a too great reduction in unemployment is economically adverse, even dangerous. It may be asked if this is not a cruel resolution of a difficult situation: idle workers suffering the pain and deprivation of idleness as a stabilizing factor in the economy. It is, but for a fairly obvious reason: inflation is feared by a wide, articulate, and influential public. Unemployment is suffered by an anonymous and relatively inarticulate community. It is for someone else.

      The other cause of unemployment is deep in the modern structure of the welfare state. This places on the employer a substantial labour cost in addition to wages, the provision of pension and health benefits in particular but other costs as well. These costs can be lessened by not hiring new workers and by resorting to overtime, temporary workers, or laboursaving technology. In the modern factory the computer and the machinery it controls do to industrial workers what the tractor once did to the horse. The time may well come when more of the welfare costs now placed upon the employer will have to be taken over by the state. The cost of hiring a new worker will not have to be so severely calculated. But that is for the future.

      There is an undoubted tendency for an economist to dwell on the controlling role of economics in larger life. Causation is still large in all economic thought. This is not wholly an error. Economic well-being allows, as it always has allowed, opportunity for the higher orders of life. The visual arts have always been the particular opportunity and pleasure of the affluent. So also the theatre, music, and entertainment in general. A strong current of effort has sought, never without success, to find artistic expression in the work and attitudes of the poor. Thus the past and continuing celebration of the folk arts, as they are sometimes compulsively called. This is good, but the larger fact remains: the arts flourish, and from ancient times have flourished, when sustaining well-being and wealth are available. The Medicis would not still be known to us had they been poor. Shakespeare lived a life of more than modest well-being.

      So it is now in a greatly diversified fashion. In the year just passed, a major, even dominant discussion was of music and entertainment, much of it centring, needless to say, on music groups and on television. Heavily involved as they are with sex and violence, music and television were thought to be deeply damaging to the young, who are enthusiastic listeners and viewers. The discussion is one that I, at least, have listened to with a certain detachment. Whatever the adverse effects, they are almost certainly less than those from any efforts at control. The remarkable fact, indeed, is how intense is the discussion of contemporary music and television and how little emerges by way of action. For better or worse, a society with the income and leisure that allows for a major indulgence of entertainment and the arts must all too evidently accept the defective or allegedly damaging along with the good.

      To any discussion of entertainment and the arts, one must add a word on the economic change and development of which they are a part. Once, and in all orthodox discussion, economics was concerned with the production of things—of food, clothing, steel, automobiles. So, in much thought, it remains. The true worker is the man on the assembly line. That is industry.

      With economic development this is no longer the case. As the production and consumption of goods expand, attention turns to design and also to the means of persuading people to buy. Here enters the artist or, in any case, someone with artistic instinct. Design was the basis of the great economic success of Italy in the years after World War II. Italian products became synonymous with good design. Automobiles and shoes had Italian names. There was no Nebraska, Dakota, or Jones.

      But that is only the beginning. After products please as to design and are duly advertised and promoted, itself a large occupation, people go on to entertainment, which becomes a centrally important industry. We are reluctant to admit it, but no country can compete with the United States in the production of television programs, often, no doubt, morally depraved. We do not like to think of entertainment as a solidly based industry such as a steel mill. However, it is inherent in economic advance, as are also, at an undoubtedly higher level, painting, sculpture, architectural design, the fine arts generally, and, I hasten to add, health care. When we view the economic life of 1995, our attention should be as much on the arts and entertainment and the health industry as on industrial production, including its technological advances. We reflect regularly and even compulsively on the workers replaced by robots and computers; we do not reflect on the number who have moved onward, and most would say upward, to the higher claims of employment and enjoyment.

      I conclude with the most discussed, most publicized technological development of the year and the time. Its words and phrases are with us every day—the Internet, the information superhighway, the information revolution. We are to be informed as never before; much of the means by which we once communicated is on its way to obsolescence. I personally have read this and listened with attention, but I am not completely impressed. Others will respond with more enthusiasm.

      In modern times our problem has not been in conveying information. It has been in providing the original knowledge and in deciding what is good, bad, or purely fraudulent. That problem remains. So, I think, it will.

      And so will the basic means for communicating knowledge. When I need some information, my first thought is still of a book—and the library. When I have an inquiry, I still turn first to the telephone. The latter has served with improvement but no basic change for rather more than a century; books have survived for far longer. They will endure the information revolution; they will not be lost on that superhighway. The problem will still be finding the relevant and sorting out the true from the false. Our problem, to repeat, is not a shortage of information or in its transfer. It is in deciding what is useful and what is right.

John Kenneth Galbraith is well known not only as one of the major economists of the 20th century but also as an energetic crusader for liberal causes. Currently the Paul M. Warburg professor of economics, emeritus, at Harvard University, he also has held a number of U.S. governmental positions ranging from department administrator in the Office of Price Administration during World War II to adviser to Pres. John F. Kennedy and ambassador to India. Professor Galbraith consequently has been able to advance the study of economics, explain the field to those who are not specialists, and implement policies based on his extensive knowledge. He is a prolific author whose books include American Capitalism (1952), Almost Everyone's Guide to Economics (1978), and A Short History of Financial Euphoria (1993).

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