, Research Paper After WWII why did the economy prosper and what role did consumerism play in the 1950s? After WWII many economists predicted a recession in the American economy. It is easy to do so when at the peak of post war unemployment in March 1946 2.7 million searched for work. In 1945 people were laid off from their jobs.
, Research Paper
After WWII why did the economy prosper and what role did consumerism play in the 1950s?
After WWII many economists predicted a recession in the American economy. It is easy to do so when at the peak of post war unemployment in March 1946 2.7 million searched for work. In 1945 people were laid off from their jobs. However, “ in 1945 the US entered one of its longest, steadiest, periods of growth and prosperity” (Norton 829). How could this be? With many new developments affecting the United State’s social and economic behavior, the wealth of the nation burgeoned. It is the extreme wealth of this society which supports and creates consumerism, the “Americans’ [increased] appetite for goods and services” (Norton 832). The automobile, television and rising personal income contributed to enhanced consumerism. The American economy in the 1950s is simply defined by increased output and increased demand. The primary economist of the 1950s was John Kenneth Galbraith. According to Galbraith’s The Affluent Society, the economy’s production proliferation in the 1950s created consumerism, forming a beneficial relationship that would serve each others’ needs.
Galbraith states that the drive for economic security motivated corporations to increase production. Men seek to extinguish insecurity and establish economic security. Economic insecurity is only natural in a competitive society. A corporation can experience a vicissitude of fortunes. There are uncontrollable risks that accompany business. That is why, “the elimination of economic insecurity was pioneered by the business firm . . . From the very beginning of modern capitalist society, business men have addressed themselves to the elimination or the mitigation of this source of insecurity.” Having complete control over prices and supply gave firms absolute security (Galbraith 97). Businesses need a “high level of economic security” in order to sustain maximum production (Galbraith 111). So the increase in the production was not to create more goods, although that resulted, but to secure more economic stability. The goods are secondary compared to the their “assured production means assured income for those who produce them” (Galbraith 114). This typical attitude towards production changes in the 1950s.
Galbraith’s five ways in which production can be increased pertains to the 1950’s economy. His first method is to employ labor and capital more (Galbraith 119-120). In the 1950s industries started to invest more capital. In 1950 1.1 billion dollars of capital was invested by industries compared to 1.86 billion dollars in 1959 (Pate 669). Secondly, Galbraith mentions that labor and capital should be used in “the most advantageous combination, one with the other, and the two can be distributed to the greatest advantage, consumer tastes considered, between the production of various things and the rendering of various services” (Galbraith 120). The conglomerate mergers that took place in the 1950s exemplified this suggestion. A conglomerate joined companies in differing industries to combat instability in a particular market (Norton 831). The business corporation became an important part of the functioning of American life. Conglomerate firms represented the most prominent form of diversification. From 1948-55 10.1% mergers were pure conglomerate. During 1956-63 the percentage of mergers that was pure conglomerate was 17.7 percent. Some of the biggest conglomerates of the 1950s were Litton Industries, ITT (International Telephone and Telegraph Corporation) and Beatrice and Thompson-RamoWooldrige (TRW) (French 137). His third proposal was to increase the supply of labor. More job opportunities after WWII arose. In fact the “growing white-collar employment made employment and incomes more stable . . .” (French 189). Also character of the 1950s was the increase in the number of women that were working (French 185). His fourth method was to increase supply of capital. Lastly, “the state of the arts can be improved by technological innovation (Galbraith 120). Since technological advancements fuel greater production, it is in the company’s best interest to invest in this area. That is why more capital was appropriated for technological research especially in the oil, metallurgy, automobiles, chemicals, rubber, and heavy engineering industries” (Galbraith 121). The government clearly aided technological advancement throughout WWII. Overall, the 1950s was an era of increased production. This idea is supported by the rise in the Gross National Product. Starting in 1950 GNP was 284.8 billion dollars. This number skyrocketed to 483.7 billion dollars in 1959 (Pate 225).
The concept of producing for economic security transforms into producing for consumers. Now that America’s production has satisfied the need for economic security, “there remains . . . the task of justifying the resulting flow of goods” (Galbraith 134). Consumerism is born. Production no longer fulfills peoples’ need for necessity but now it creates luxury. Before the 1950s production was meeting the needs of consumers necessities rather than excess. Food, clothing and homes were produced for the hungry, cold and homeless. But, with more wealth that craving transformed into a need for nicer cars and a more luxurious lifestyle (Galbraith 135). The cause of this change was the intention of the producer. What happened was that the “process by which wants are satisfied [also became] the means that the process by which wants are created” (Galbraith 135).
The theory of consumer demand stemming from the increase in production became the basis of consumerism. The reason that Americans keep buying is because their needs are never satisfied. Ironically, “ . . . the urgency of wants does not diminish appreciably as more of them are satisfied . . . when man has satisfied his physical needs, then psychologically grounded desires take over. These can never be satisfied” (Galbraith 138). The economist’s job becomes to seek their satisfaction. This theory cultures a “drive to higher expenditure” stronger than the drive to obtain necessities (Galbraith 148). The rising income of the population of the 1950s facilitates more consumption. Disposable personal income in the 50s reached its highest amount at 2,166 dollars in 1959 and in 1955 people spent on average 240 dollars on durable goods and 746 dollars on non-durable goods. The expansion of the middle class also supported consumption as they gained more buying power. The white workers had now entered the “mainstream of American consumers with middle class aspirations” (Zunz 187). Real national income increased 3.7 % per year between 1948-1973. Again, consumption of products was not just for necessity. The clich? keeping up with the Joneses originated in the 50s. Material possessions assumed a symbolic importance (Rosenblatt 41). Advertising helped significantly in adding to the symbolic importance of materials. The advent of advertising was the most important tool that corporations used to create false demands. The very survival of firms is heavily dependent on its advertising: “Price competition having been foresworn as self-destructive, the firm turns to its salesmen and advertising agency to find new customers and to win customers away from its rivals . . . the firm may be seeking . . . through its advertising and salesmanship so to establish its own personality that it will be protected in some measure from other firms” (Galbraith2 99). Another tactic employed for a company to achieve an image that sets it apart was brand-imaging. Consumers trust well known products that are constantly projected into their lives (Galbraith2 100). In 1956 money spent on advertising totaled approxiamately 10 billion dollars. Advertising has been coined as “modern want creation” (Galbraith 150). Other astronomical amounts of money have been spent on certain advertising campaigns. Forty-two million dollars were spent for cigarette advertising in 1949 and 29 million dollars was allotted to the advertising of alcoholic beverages (Galbraith2 97). Advertising’s goal was to create a nation of “robot consumers” (Frank 41). The spark which churns production is the consumers’ desire, therefore, advertising is pertinent to the continuation of production.
Television becomes the main vehicle for advertising. Televisions stormed the American market. In 1946 only 6,000 TVs were produced. By 1960 90% of Americans owned a television (French 189). With such a remarkable acceptance, TV influenced American society in mass numbers. Advertising on television was a sure way to reach the public. Evidence that TV influenced the American consumer lies in the fact that the number of people that went to the movies dropped drastically. By 1950 only 60 million viewers went to the movies a week compared to that of 1948’s 90 million. People were staying at home watching situated comedies and other programs. The average time that people spent watching TV a day was five hours in 1956. A typical 1950’s advertisement read “More appliances make mom’s work easier” (Norton 838). It is accurate to say that TV told consumers what to purchase (Norton 838).
The automobile industry also contributed to American consumerism. With the movement to the suburbs and the creation of highways, cars became common. Consumption of automobiles showed the largest rise in consumer spending: “New car sales increased from 2.1 million in 1946 to 7.9 million in 1955 . . .” (French 189). The blossoming car industry also supported petroleum and other car-related industries. The auto industry purposely constructed less durable cars so that consumers would have to buy a new car more frequently. This was call “planned obsolescence” (Norton 832). The automobile represented the Americans’ expanding purchasing power.
Basically, as the American society achieves greater wealth, desires are continually created by the means in which they are satisfied. Galbraith describes this as the Dependence Effect. This effect is “the way wants depend on the process by which they are satisfied” (Galabraith 152). The economy and the consumer develop a symbiotic relationship. The consumers need the economy to fulfill their desires, fake and real, while the economy needs consumers to continue to thrive. As a result of America’s capitalist economy, acceptance of free trade and high production, the nation as a whole is one of the wealthiest in the world. But, “our proliferation of selling activity is the counterpart of comparative opulence” (Galbraith2 96). We are a wasteful nation primarily because we find necessity in excess materialism.
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French, Michael. US Economic History Since 1945. New York: Manchester University Press, 1997.
Galbraith2, John Kenneth. American Capitalism: The Concept of Countervailing Power.
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Galbraith, John Kenneth. The Affluent Society. Boston: Houghton Mifflin Company, 1969.
Historical Statistics of the United States: Colonial Times to 1970. Ed. James L. Pate. Bicentennial Edition. Washington D.C.: U.S. Department of Commerce, 1975.
Norton, Mary Beth. A People and a Nation: A History of the United States. New York: Houghton Mifflin Company, 1998.
Schor, Juliet. Consuming Desires: Consumption, Culture, and the Pursuit of Happiness. Ed. Roger Rosenblatt. Washington D.C: Island Press, 1999.
Zunz, Olivier. Why the American Century? Chicago: The University of Chicago Press, 1998.
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