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Affluence

AFFLUENCE

If affluence is defined as an abundance of money and material goods, more humans than ever before are affluent beyond what could have been imagined a few generations ago. This growth and diffusion of affluence has been made possible in large part by advances in science and technology. Indeed, the political, social, and economic viability of contemporary market democracies has become linked to a considerable extent to the ability of scientific research and technological innovation to catalyze the growth of affluence. But technologically enabled material success brings with it substantial contradictions, in terms of distributional equity, environmental impacts, and the very notion of what "quality of life" means. These contradictions in turn challenge conventional thinking about the pursuit of affluence and the role of science and technology in society.

Economist Robert Solow (1957) estimated that technological innovation accounts for about half of all economic growth, and subsequent research has reinforced the idea that fields such as solid-state physics, computer science, material science, aeronautics, and genomics are the primary forces creating the new and diverse products and services associated with an affluent way of life (Nelson 1996). Government support of research and development tends to be justified on this basis.


Distributional Implications

The central role of science and technology as the engine of economic growth obscures other important outcomes. For example, the complex processes by which innovation translates into growing industrial productivity also can lead to the disruption or destruction of labor markets and social networks. Controversy in the United States over the outsourcing of high-tech jobs to developing nations is the most recent example of such disruption, whose devastating social consequences were portrayed compellingly in the nineteenth-century fiction of Charles Dickens (1812–1870). Economic theory views such conditions as an unfortunate consequence of a process of "creative destruction" that "incessantly revolutionizes the economic structure from within" (Schumpeter 1975, p. 83) to generate more jobs and more affluence. What is being destroyed in the process may be entire sectors of the economy and the livelihoods that depend on them.

Moreover, the distribution of benefits may be extremely uneven, inasmuch as wealth creation may be accompanied by increasing unemployment or underemployment, decreasing or stagnant real wages, enormous wage inequality, and increasing concentration of wealth both within nations and between nations (Noble 1995, Arocena and Senker 2003). Between 1960 and 1997 the income gap between the top and bottom 20 percent of the world population increased from 30:1 to 74:1, meaning that the poorest fifth of humanity now earns a little more than one percent of that earned by the wealthiest fifth (United Nations Development Programme 1999).

Although the exact causes of these trends can be debated, there is little question that they reflect the capacities of some individuals, sectors of society, and nations disproportionately to capture the benefits of scientific research and technological innovation. This asymmetry is now being reinforced by international rules governing intellectual property and other aspects of innovation policy (Commission on Intellectual Property Rights 2002).


Environmental Implications

Rising consumption has increased use of natural resources and generation of wastes. At least since the work of economist Thomas Malthus (1766–1834), many people have doubted that increasing production and consumption could be sustained indefinitely because of limited resources, and observers in our day have echoed the concern that ever-increasing material affluence is an unsustainable endeavor (Meadows, Randers, and Meadows 1972). To date, however, technologists have pushed back whatever limits may exist by improving resource extraction, by using less material inputs per unit of output, and by substituting artificial products for natural ones. These processes have permitted not only the exponential growth of human populations, but increasing material standards of living for many.

Technological optimists believe this can continue indefinitely as eco-efficiency improvements are enabled by ongoing innovation (Lomborg 2001). Less optimistic observers point to species extinctions, increasing production and proliferation of toxic materials, and other threats to long-term sustainability. If the technological optimists are ultimately proven wrong, and the environment does not sustain endlessly increasing material affluence, major shifts would be required in economic thought, in technological R&D, and perhaps even in the basic political rationale for contemporary market democracies, where worries about inequality have been swept aside by a focus on the pursuit of greater material affluence (Daly 1991).


Quality of Life Implications

A basic tenet of this rationale is that a growing gross domestic product per capita leads to a higher material standard of living, which in turn translates into a higher overall quality of life. All modern societies embrace this formula, though perhaps not to the same degree; this was captured memorably in the phrase that underlay the 1992 campaign strategy of presidential candidate Bill Clinton: "It's the economy, stupid." When economic growth slows or stops, political upheaval often follows.

The contribution of science and technology to the growth of affluence must be understood not just in terms of increased efficiency and diversity of production but also in terms of the willingness, even ardor, of people to consume the results of this productivity. As Rosenberg and Birdzell (1986, p. 264) note, "the long growth in scientific and technical knowledge could not have been transformed into continuing economic growth had Western society not enjoyed a social consensus that favored the everyday use of the products of innovation." This consensus feeds back into the economy to promote more innovation and growth but also feeds back into society, which is transformed continually in ways both expected and surprising by the introduction of new products and systems of technology. To remark that science and technology have resulted in a society that bears little resemblance to that of a century ago is a truism, but hidden beneath the obvious is the more subtle reality that commitment to this path of technological self-transformation is founded on a belief in the equivalence of affluence and quality of life.

But are they equivalent? Research on subjective well-being in countries throughout the industrialized world demonstrates that people's happiness and satisfaction with their lives have not increased during the historically unprecedented scientific, technological, and economic advancement of recent decades. Indeed, there has been a decline in some measures of life satisfaction (Lane 2000). Many people are richer and live longer, healthier lives; but most do not feel better off (Diener and Suh 1997).

These results should not be surprising, for moral traditions and common wisdom long have emphasized spiritual and social relationships over material ones as sources of satisfaction and meaning. Who would really suppose that marginal increases in affluence in already affluent societies would greatly enhance the quality of life? What luxury expenditures could add as much to people's comfort as did indoor plumbing, central heating, and related innovations of an earlier era?

What Goals for an Affluent Civilization?

If affluence raises both ethical and practical issues about how to use technical capacities wisely and fairly, what sorts of inquiries and deliberations might be warranted about the future relations of science, technology, and affluence? One source of inspiration for such queries can be found in John Kenneth Galbraith's The Affluent Society, first published in 1958, which posed fundamental questions about the "social balance" between private and public spending.

Galbraith argued that "the affluent society" was on the wrong track by continuing to behave as if it were living in an age of scarcity, rather than reshaping goals in accord with new priorities appropriate for an age of affluence. A preoccupation with unending increases in "the production of goods ... (is) compelled by tradition and by myth," Galbraith said, not by thoughtfully chosen goals that "have a plausible relation to happiness" (Galbraith 1958, pp. 350–351). In effect, he argued that what economists call "diminishing marginal returns" had set in, such that additional increments of private affluence would not bring very much net gain in people's sense of well being. In contrast, he asserted, great gains in a society's overall quality of life could be obtained by aiding the poor, making work life more enjoyable, investing in scientific research, and generally shifting priorities away from private consumption and toward public purposes. For example, Galbraith recommended instituting larger sales taxes, both to reduce consumption and to assure that those who consume large quantities of private goods contribute commensurately to public services.

That the pursuit of technology-driven affluence remains the political raison d'être of the modern market economy may be less a reflection of "human nature" than one of enormously successful salesmanship by business executives, government officials and politicians, technologists, and economists. As Galbraith concluded, "To furnish a barren room is one thing. To continue to crowd in furniture until the foundation buckles is quite another. To have failed to solve the problem of producing goods would have been to continue man in his oldest and most grievous misfortune. But to fail to see that we have solved it and to fail to proceed thence to the next task, would be fully as tragic" (Galbraith 1958, pp. 355–356).


DANIEL SAREWITZ
EDWARD J. WOODHOUSE

SEE ALSO Consumerism; Money.

BIBLIOGRAPHY

Arocena, Rodrigo, and Peter Senker. (2003). "Technology, Inequality, and Underdevelopment: The Case of Latin America." Science, Technology, & Human Values 28(1): 15–33. Argues that technology-based wealth creation is not enough to reduce pervasive and persistent economic inequality, and that government interventions into economic life are required to alleviate poverty.

Daly, Herman E. (1991). Steady-State Economics, 2nd edition. Covelo, CA: Island Press. A systematic analysis of the possibility of operating an affluent economy sustainably, without net growth, based on the principle that "enough is best."

Diener, Ed, and Eunkook Suh. (1997). "Measuring Quality of Life: Economic, Social, and Subjective Indicators." Social Indicators Research 40: 189–216. Argues that measuring quality of life requires a combination of social indicators such as health and levels of crime, subjective well-being measures, and economic indices.

Galbraith, John Kenneth. (1958). The Affluent Society. Boston, MA: Houghton Mifflin. A classic mid-century analysis of problems and opportunities confronting affluent societies, focusing primarily on the U.S.

Lane, Robert E. (2000). The Loss of Happiness in Market Democracies. New Haven, CT: Yale University Press. A painstaking review of psychological research showing that increasing affluence does not bring much net improvement in life satisfaction, once a family is beyond poverty level.

Lomborg, Bjørn. (2001). The Skeptical Environmentalist: Measuring the Real State of the World. Cambridge, UK: Cambridge University Press. A careful, well documented, and thoroughly partisan argument that the global environment has been improving during recent decades.

Meadows, Donella H., Jorgen Randers, and Dennis L. Meadows. (1972). Limits to Growth. New York: Universe. One of the original warnings about environmental deterioration and the desirability of curtailing economic growth.

Nelson, Richard R. (1996). The Sources of Economic Growth. Cambridge, MA: Harvard University Press.

Noble, David F. (1995). Progress without People: New Technology, Unemployment, and the Message of Resistance. Toronto: Between the Lines.

Rosenberg, Nathan, and L. E. Birdzell, Jr. (1986). How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books. The fundamental causes of the West's unprecedented affluence were not technological innovation and business entrepreneurship per se, but were the political pluralism and flexible institutions that encouraged scientific, cultural, and political freedoms.

Schumpeter, Joseph A. (1975 [1942]). Capitalism, Socialism, and Democracy. New York: Harper. A classic analysis of innovation, economic growth as creative destruction, and the interpenetration of market and democracy.

Solow, Robert M. (1957). "Technical Change and the Aggregate Production Function." Review of Economics and Statistics, August, pp. 214–231.

United Nations Development Programme. (1999). World Development Report. New York: Oxford University Press.


INTERNET RESOURCE

Commission on Intellectual Property Rights. (2002). Integrating Intellectual Property Rights and Development Policy London: Author. Available at http://www.iprcommission.org/graphic/documents/final_report.htm.

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