Critical Text About “the Dependence Effect” by John K. Galbraith

Topics: John Maynard Keynes, Advertising, Need Pages: 6 (2146 words) Published: February 6, 2013
In this text,  Galbraith criticizes the neoclassical theories about product demand and the consumer sovereignty in the market. His basic goal is to fight against those affirmations based on “conventional wisdom” and all the mistakes developed because of them. He insists that a new world with new realities needs new ideas and theories that must adjust to the world they are living in because, in two hundred years, society and its economy vary radically. The neoclassical economical theories affirm that the costumer is the entity that rules the market because it is he and his wants the ones that create the demand of a product. Galbraith denies this, arguing that it is not the consumer who spontaneously creates his wants: it is the same entity of production the one that creates the wants and later sells and satisfies them. For Galbraith it is impossible to defend production as an entity that satisfies wants when that same production is creating the wants that will later satisfy. The production is not really satisfying anything because if it had not created the want in the first place, it would not be satisfying it. The consumer, by himself, never had the urgency of the want that he is satisfying. Galbraith argues his theory of “the production as a creator of wants” supporting on two economists: John Maynard Keynes and James Duesenberry.  The first one says that emulation plays a very important role on want creation: “One man’s consumption becomes his neighbor’s wish”[1], this means that the same process that satisfies one’s want, creates this same want on another person; so the more that a want is satisfied, the more that it grows. Duesenberry goes a little bit farther than this: he states that the basic social goal of modern society is the constant development of a higher standard of living.  This means that, because of this “high standard of living” that society takes almost as if it were part of its moral structure, man is evaluated by the products he possesses and because of the constant production of newer and higher standard commodities; man needs to buy more to maintain his prestige. Although Duesenberry does go a little bit far, his argument implies that production satisfies and creates the costumer’s wants. But more active than the emulation, as a link between production and wants, is the modern advertising and salesmanship. For Galbraith, it is impossible that these two can be reconciled with the consumer created wants because their basic function is precisely to create the wants. Every new consumer product has to be introduced into the market with an advertising campaign that is apt to provoke an interest on the consumer. And the outlay of these campaigns is incredibly high; producers spend absurd amounts of money on advertising, so “Is a new breakfast cereal or detergent so much wanted if so much must be spent to compel in the consumer the sense of want?”[2] This shows perfectly why it is ridiculous to keep on following the conventional wisdom’s affirmations: if producers spend billions advertising a product, if they have salesmen pressuring the equation and then comes the emulation factor that affects the product from the outside, then it is easily seen that those products are not as urgent as they seem to appear because if they were, they wouldn’t need so many help to find a consumer; “A man who is hungry need never be told of his need for food”[3]. Advertisement for food is not needed when a man is dying of hunger; it is only needed for those products (Marx’s “commodities”) that are far away from being really natural, urgent and that man does not even know that he wants them. The point to which Galbraith arrives to is that welfare is not greater in a society with a higher level of production than in another with a lower one. This is because the higher the level of production gets, it produces a higher level of want creation which requires a higher level of want satisfaction, and this is called by...
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