Question

Which of the following is a central argument of the 1958 book, The Affluent Society, by John Kenneth Galbraith?
A. The key to economic growth is government non-interference in the economy.
B. A small group of wealthy and influential Americans had managed to gain control of both the economy and the government.
C. A Soviet-style command economy would best meet the ends of the majority of Americans.
D. The United States should reinvigorate its agricultural sector with heavy subsidies to farmers and high tariffs on imported agricultural products.
E. American society was ignoring social goods in the pursuit of private material gain.

Answer 1

Hint The Affluent Society is a book written by the Harvard economist John Kenneth Galbraith in the year 1958. The book outlines the drastic comparison between countries like the United States which was gaining wealth in various private sectors after the events of the Second World War and those who remained poor in the public sectors, lacking in infrastructures and the eternal income inconsistency.

Complete step-by-step solution
The theme of the book revolved around the demands of the Americans regarding the goods and services not being organic. This showcased how demands were not internally crafted by the consumers. Basic necessities such as food, clothes, and shelter were easily already met by a large population of American society. Yet there are some demands that are created recently by advertisers and associations that aim for consumer demand incrementation, thus gaining heavy profits and benefits. This process was termed as the dependence effect as it kickstarts an increase in consumption and investments by increasing the demands.

Thus, option (E) is correct.

Additional Information The author believed that American society must transition from being a private production economy and aim to become a public investment economy. The three main elements of his proposal were the elimination of poverty, promoting government investment in public schools, and the growth of the "New Class."

Note The Affluent Society ends with the essentials and needs for investing in educating the population rather than exploiting natural resources. Many of the ideas that were originally presented in The Affluent Society were later expanded and refined in Galbraith's book, The New Industrial State published in 1967.