Galbraith on public and private

Below is an excerpt form John Kenneth Galbraith's "The Affluent Society" (2nd ed., revised 1969). I found it to be a very clear description and a statement that is still relevant to this day. Enjoy.

In the world into which economics was born, the four most urgent requirements of man were food, clothing and shelter, and an orderly environment in which the first three might be provided. The first three lent themselves to private production for the market; given good order, this production has ordinarily gone forward with tolerable efficiency. But order which was the gift of government was nearly always supplied with notable unreliability. With rare exceptions, it was also inordinately expensive. And the pretext of providing order not infrequently afforded the occasion for rapacious appropriation of the means of sustenance of the people.

Not surprisingly, modern economic ideas incorporated a strong suspicion of government. The goals of nineteenth-century economic liberalism was a state which did provide order reliably and inexpensively and which did as little as possible else. Even Marx intended that the state should wither away. These attitudes have persisted in the conventional wisdom. And again events have dealt them a series of merciless blows. Once a society has provided itself with food, clothing and shelter, all of which so fortuitously lend themselves to private production, purchase and sale, its members begin to desire other things. And a remarkable number of these things do not lend themselves to such production, purchase and sale. They must be provided for everyone if they are to be provided for anyone, and they must be paid for collectively or they cannot be had at all. Such is the case with streets and police and the general advantages of mass literacy and sanitation, the control of epidemics, and the common defense. There is a bare possibility that the services which must be rendered collectively, although they enter the general scheme of wants after the immediate physical necessities, increase in urgency more than proportionately with increasing wealth. This is more likely if increasing wealth is matched by increasing population and increasing density of population. Nonetheless, these services, although they reflect increasingly urgent desires, remain under the obloquy of the unreliability, incompetence, cost and pretentious interference of princes. Alcohol, comic books and mouthwash all bask under the superior reputation of the market. Schools, judges and municipal swimming pools lie under the evil reputation of bad kings.

Moreover, bad kings in a poorer world showed themselves to be quite capable, in their rapacity, of destroying or damaging the production of private goods by destroying the people and the capital that produced them. Economies are no longer so vulnerable. Governments are not so undiscriminating. In western countries, in modern times, economic growth and expanding public activity have, with rare exceptions, gone together. Each has served the other as indeed they must. Yet the conventional wisdom is far from surrendering on the point. Any growth in public services is a manifestation of an intrinsically evil trend. If the vigor of the race is not in danger, personal liberty is. The structure of the economy may also be at stake. In one branch of the conventional wisdom, the American economy is never far removed from socialism, and the movement toward socialism may be measured by the rise in public spending. Thus, even the most commonplace of public services, for one part of the population, fall under the considerable handicap of being identified with social revolution.

Finally – also a closely related point – the payment for publicly produced services has long been linked to the problem of inequality. By having the rich pay more, the services were provided and at the same time the goal of greater equality was advanced. This community of objectives has never appealed to those being equalized. Not unnaturally, some part of their opposition has been directed to the public services themselves. By attacking these, they could attack the leveling tendencies of taxation. This has helped to keep alive the notion that the public services for which they pay are inherently inferior to privately produced goods.

While public services have been subject to these negative attitudes, private goods have had no such attention. On the contrary, their virtues have been extolled by the massed drums of modern advertising. They have been pictured as the ultimate wealth of the community. Clearly the competition between public and private services, apart from any question of the satisfactions they render, is an unequal one. The social consequences of this discrimination – this tendency to accord a superior prestige to private goods and an inferior role to public production – are considerable and even grave.