american prosperity

F.A .Hayek

Following the Second World War, Hayek tried in vain to warn Western capitalists that they had set themselves on the “road to serfdom” at the very moment when the West stood on the threshold of unprecedented economic affluence, which would have been impossible without the intervention of government. At the turn of the twentieth century, the financier J. P. Morgan had quipped that those concerned about the price of a yacht couldn’t afford one. Decades before I went to work in the steel mill during the late 1970s, steelworkers, like truck drivers, plumbers, electricians, and other workingmen, could afford speed boats and fishing vessels, if not yachts, second and even third vehicles, summer homes, and Caribbean vacations for their wives and daughters, during which time many lavished expensive attention on their mistresses, all pleasures reserved for the well-to-do in a bygone era. Karl Marx got it wrong, but so, too, did Friedrich von Hayek. Marx predicted that as capitalism advanced, the number of poor would grow and the number of rich diminish, inflicting ever more cruel torment on the masses. In the twentieth century, even before the Great War, the opposite was happening. Increased wealth, much of which finding its way into the hands of workers, helped to dissolve class barriers and to make possible upward social mobility.

When prosperity returned to the United States during the 1950s, it seemed widespread, enduring, even permanent. It wasn’t. An important point of contention in the presidential campaign was whether Barak Obama or Mitt Romney had the best plan to revive the economy. The concerns were, and remain, serious and the efforts of both candidates were no doubt sincere, but the debate as it was conducted was irrelevant, for it neglected a more basic condition: the fable of American prosperity.

The most significant development in the lives of many Americans, to say nothing of hundreds of millions around the world, during the second half of the twentieth century was the advent of mass consumption. This phenomenon had its origins not chiefly in the surge of real wages but rather in the expansion of credit from which even former communists are no longer immune. According to the Reuters News Agency, the Sparkasse Bank in Chemnitz (formerly that bastion of East German socialism, Karl-Marx-Stadt) recently issued a MasterCard adorned with the hoary visage of Marx himself. You can use it when you’re short of Kapital or are in the Red. “There is a spectre haunting Europe–the spectre of high interest rates. . . . Debtors of all countries unite! You have nothing to lose but your irksome monthly payments and a good credit score to win!”

As perplexing as is the existence of a Karl Marx MasterCard for those of us who wish the world to make sense, it highlights a more troubling reality in a global consumer economy dependent on credit. Already by the 1960s, Americans were experiencing discontent amid their plenitude, though few of them knew how to articulate these feelings. Permit me to suggest that such unhappiness emerged because the consumption of goods had become more vital than the ownership of property. The dominance of consumption engendered a sense of the pervasive impermanence of things, since the act of consuming involves the disappearance of matter. We thus live not in an “acquisitive,” or an “affluent,” or even a “materialist” society, for none of these adjectives describes the millions of consumers who now discard things as rapidly as they buy them.

At the same time, poverty is still with us–the old-fashioned poverty in which people don’t have enough money to spend or enough food to eat. Statistics from the Census Bureau released in July, 2012 disclose that poverty is approaching the levels of the 1960s and predict that the poverty rate will reach 15.7 percent by the end of the year. The waning interest in durable possessions and the mounting frustration with consumption, meanwhile, have bred a new poverty that is not material, but social, psychological, and spiritual. Against that predicament Romney’s devotion to the free market, President Obama’s faith in the administrative state, and all the Karl Marx MasterCards in the world will be of little use. Even once prosperity returns, restlessness, disillusionment, and anxiety will linger.

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