Books - All things being unequal ... Revisiting a reissued post-war economic masterpiece Chris Haskins finds that 40 years on, its author's views on poverty were all too right - The Affluent Society, JK Galbraith, Penguin Books £8.99.
As one of the the icons of the 'moderate' left of the 20th century, JK Galbraith must be the last surviving Roosevelt New Dealer who, for a period during the second world war, had the most un-American Federal public post ever conceived - fixing prices of key agricultural commodities across the US.
He is the most lucid and sardonically humorous of all economists, and a fierce promoter of social justice. Now in his nineties, he has republished, after forty years, his masterpiece The Affluent Society. His attack on what he called 'the conventional wisdom' introduced a new expression to the English language.
The book, concentrating on the post-war US economy, highlighted a new phenomenon - that, for the first time, the majority of a state's citizens could be considered affluent, with only a minority remaining poor. That state of affairs now exists across the developed world.
Galbraith argued that this would revolutionise economic and political thinking. Hitherto, the great economic driver was the satisfaction of essential needs. Now, markets would focus on creating demand for non-essentials. Furthermore, the prospects of the poor would diminish as the affluent majority ignored them. Growing inequality would be the result.
Galbraith warned that the non-essential market would transfer excessive power to the advertisers and the corporations that financed them, introducing instability into economic behaviour. It would be better to promote 'essential' public services, such as health and education, financed by taxpayers.
Forty years later, economic progress has probably surpassed his expectations.
The non-essential market flourished, partly because goods and services that Galbraith would have dismissed as frivolous in 1959 are now deemed essential.
Galbraith has proved to be all too right about poverty. The rise in inequality within Western society has been significant, and the growing inequality between the rich countries and the poor is the greatest challenge for mankind, though Galbraith argues that the greatest threat remains that of nuclear annihilation.
Surprisingly, however, the Affluent Society has demanded that the state provide more and more services.
The supply of publicly funded education, health and social benefits has risen dramatically, although not necessarily fairly. The modern state, despite privatisation, controls far more of the economy than it did a generation ago.
In the late '80s, Galbraith argued in his book The Culture of Contentment that left-of-centre, social-democratic government would never again win power because the affluent, contented majority would always be Conservative.
In the days of Reagan and Thatcher, this seemed highly likely. Yet within a few months of the book's publication, the Democrat Clinton became president of the US. Galbraith confided: 'I never thought Bush could have been that stupid.' Today, 12 out of 15 EU countries are governed by the left-of-centre.
Maybe the right has been profoundly stupid. In post-war Britain, RA Butler and Ian McLeod seized the political middle ground for the Conservatives by endorsing much of the left's universal social ideas, leaving it marginalised. Ironically, Thatcher's success proved a disaster for her party. In her zeal to write the French Revolution out of history, she abandoned the middle ground and gave Tony Blair his opportunity.
The question now is whether the New Left of Clinton and Blair will confound Galbraith by strengthening social justice and tackling inequality, or have they signed up to his pessimistic diagnosis and stolen the high ground of affluent self-interest from their opponents? I hope they will prove the great man to be wrong, but I fear he may be right.
Lord Haskins is chairman of Northern Foods.