The complementary arguments of chapter 9 and 10, “The Paramount Position of Production” and “The Imperatives of consumer demand” respectively, are illuminating and fortifying to the arguments of Lewin on the economic functions of war. Indeed, if we closely examine the empirical evidences and economic theories presented by Galbraith and apply them to the arguments of Lewin, we may, from now on, call Lewin’s satire, “conventional wisdom”. The arguments presented on the two chapters of The Affluent Society explain the “superiority” of war production when looked at through a pure economic lens.
In Chapter 9, Galbraith emphasizes the importance of production to the point of implying its prediscursivity. “…There had been a year in which production was higher and which hence was better. This measure of achievement was acceptable to all. It is a relief on occasion to find a conclusion that is above faction, indeed above debate.” (Galbraith, 99) He says later in the chapter “so all-embracing, indeed, is our sense of the importance of production as a goal that the first reaction to any question of this attitude will be, ‘what else is there?’” (Galbraith, 101) This argument remains solid throughout the chapter, even though Galbraith dedicates much of the chapter to explain the traditional and irrational attitudes concerning production, that don’t conduce to its growth. “by way of summary, then, while production has come to have a goal of pre-eminent importance in our life, it is not a goal which we pursue either comprehensively or even very thoughtfully.” (Galbraith, 112)
Attitudes and practices that hinder the growth of production are mostly absent when it comes to production for war. The instances in which war production in exempt from these attitudes are at times explicitly mentioned by Galbraith and at times inferable from his arguments. Among these instances, mentioned by both Galbraith and Lewin, is investment in technological innovations. Galbraith writes: “...even in the conventional wisdom, no one questions the importance of technological advance for increasing production…they are the result of investment in highly organized scientific and engineering knowledge and skills. Yet we do very little of a systematic sort to increase the volume of this investment, except where some objective of military urgency provides the excuse.” (Galbraith, 103) (BTW, it is not irrelevant to point out how easily and ironically the funding of research institutes like UC Berkeley is cut). Later Galbraith writes: “…large numbers of industries make little or no such investment [in innovation], have little or none made on their behalf, and we are quite untroubled.” (Galbraith, 104). Lewin writes on the same subject “Without a long-established war economy, and without its frequent eruption into large-scale shooting war, most of the major industrial advances known to history, beginning with the development of iron, could never have taken place.” (Lewin, 53)
The next impediment to the growth of production that Galbraith mentions is the traditional economic attitudes which usually concern monopoly, tariffs, subsidies, importing labor-force, etc. He argues that since these old attitudes are now a part of conventional wisdom, anything outside of them has little appeal. Galbraith writes: “our operative concern for increasing production is confined to the measures—for getting greater resource-use efficiency and promoting thrift and diligence—which were relevant a century and more ago. The newer dimensions along which there might be progress attract our attention much less…they are outside the formal and stylized concern of the conventional wisdom for the problem of production.” (Galbraith 107) Galbraith immediately continues by writing how war production provides the necessary circumstances to overcome this impediment. “There is an interesting proof of the point in the increase in production which, in the past, we have regularly achieved during war or under the threat of war. Under the stress of circumstance, the conventional wisdom is rejected. We set about expanding output along all the relevant dimensions. Serious efforts are made to expand the labor force…because of a rational concern for production, war has brought an astonishing expansion in output, and this despite the withdrawals from the labor force for military purpose…Our peacetime concern for production, central though it is to our thoughts, is selective and traditional.” (Galbraith, 107) Similarly, in Report From Iron Mountain we read: “War production is progressive because it is production that would not otherwise have taken place…Far from constituting a wasteful drain on the economy, war spending, considered pragmatically, has been a consistently positive factor in the rise of gross national product and of individual productivity.” (Lewin, 54)
Another important factor that Galbraith points at is the negative attitude towards government spending to provide public services. While almost all sorts of government spending are shunned in conventional wisdom, war spending is even welcomed. This provides the chance for an additional massive spending and production, solely driven by the government. In the Affluent Society we read: “in general view, it is privately produced production that is important, and that nearly alone…Public services, by comparison, are an incubus…Although they may be defended, their volume is almost certainly never a source of pride.” (Galbraith, 109)
Even though Galbraith does not allude to the exemption of War spending from other criticized public spending, most of the arguments he mentions as the reason for the rejection of public spending do not apply to that of war spending. Galbraith writes: “…these services, although they reflect increasingly urgent desires, remain under the obloquy of the unreliability, incompetence, cost and pretentious interference of princes.” Later he writes that conventional wisdom is unyielding in the point that “Any growth of public services is a manifestation of an intrinsically evil trend. If the vigor of the race is not in danger, personal liberty is…the movement toward socialism may be measured by the rise in public spending.” (Galbraith, 111) According to Galbraith, conventional wisdom holds government to be unreliable and incompetent in providing public services and its interference with the market leads to socialism. However, since war spending does NOT compete with the market alternatives, the way other public spending do, and since there is no private alternative for it, it is safe to say that war spending is at least extenuated if not completely approved. Lewin writes on the same notion: “In the case of military ‘waste’ there is indeed a larger social utility. It derives from the fact that the ‘wastefulness’ of war production is exercised entirely outside the framework of the economy of supply and demand. As such, it provides the only critically large segment of the total economy that is subject to complete and arbitrary central control.” (Lewin, 52)
The more interesting demonstration of the “superiority” of war production has to do with the demand side of the binary. In chapter 10, The Imperative of Consumer Demand, Galbraith explains the need for existence of consumer demand for the goods produced to justify their production. Here he introduces some economic theories. He starts the chapter by emphasizing that the increase is production is a belief among economist and in conventional wisdom that must be religiously followed. This cannot be questioned. “There remains, however, the task of justifying the resulting flow of goods.” (Galbraith, 114) For doing so, there was a need for “a defense which makes the urgency of production largely independent of the volume of production.” (114) This is to say that there had to be a formula that assures us, that no matter how much we produce, there is going to be urgency to produce more and under which the production of any kind of goods, even if “frivolous” is justified. Galbraith writes: “The weakness, as well as the ultimate defense, lies with the theory of consumer demand.”(Galbraith, 116)
Galbraith describes the theory of consumer demand by explaining its two broad propositions: first, that the “urgency of wants does not diminish appreciably as more of them are satisfied” meaning that as physical needs are satisfied, psychological and more complicated desires are yet to be satisfied. Second, that “wants originate in the personality of the consumer or, in any case, that they are given data for the economist.” in other words, it is not important to the economist, how the wants of the consumer are formed. The problem that remains with this point, is the problem of the “doctrine of diminishing marginal utility” according to which, the increase in the production and quantity of a certain good, leads to the decrease in its marginal utility. This diminished the importance of production, since, as mentioned, when the quantity of a produced good increases, the importance of the production of more of that same good decreases.
This problem is answered by a two-tier solution. The first step was to get rid of any notion of importance associated with a certain good. “any notion of necessary versus unnecessary or important against unimportant goods was rigorously excluded from the subject.” This way, all goods have almost the same degree of importance in production. If it can be sold, it should be produced. Second, was the “…cognizance of the fact that an almost infinite variety of goods await the consumer’s attention…So long as the consumer add new products…he may, like a museum, accumulate without diminishing the urgency of his wants.” (Galbraith, 120) This simply means that when the production of a certain good reaches a point beyond which its marginal utility will decrease, production can shift to new goods, which the consumer will develop new wants for! Galbraith anticipates the objection that goods that are less necessary will have lower urgency of need, by saying that, once the necessary needs of a consumer have been satisfied, the next level of needs will have the same urgency as the previous one, since the consumer has already satisfied the more basic needs.
The doctrine of marginal utility and the theory of consumer demand, both explain the “superiority” of war production to other productions. Firstly, weaponry gains its usefulness in as much as it is superior in number and technology to those of the enemy. Therefore, weapons of today are not of much use when new technology is introduced and hence the interminable circle of production of weapons. On the other hand, since the enemy is always making more, there is a need for constant production of more and more weapons. On the other hand, each war depletes the inventory of a country of its weapons and necessitates its replenishment. These factors make war production exempt from the doctrine of marginal utility. Besides, the demand of such production is not to be created in the market. Unlike other productions, war production has a demand irrelevant of the market. Its demand is arbitrarily created by the government and its production is consequently justified.