Political Econ of Growth. Paul A. Baran

       Foreword to 1962 Printing

      On looking over this book again with a view to writing a foreword for the French and German translations as well as for a new American printing, I have a strong feeling of ambivalence. There is first the thought that it may be not too immodest on my part to submit this work once more to the reader in its original form. Neither historical events which have taken place since it was written, nor subsequent reflection and study, partly stimulated by the criticism to which it has been subjected, have changed my conviction that taken as a whole the view which it presents and the argument which it advances are still entirely valid. But then there are other considerations—referring not to the whole but to the parts—which are less comforting. For were I at this time to write the book afresh, I would try to eliminate what strike me now as weaknesses and to develop several of its themes in a more comprehensive and convincing manner. However, since the pressure of other, not unrelated, work renders such a major undertaking impossible, I must reluctantly adopt the principle of “letting bygones be bygones,” and attempt to resolve the conflict between the whole and the parts by means of this prefatory note dealing briefly with those aspects of the book which are most in need of reconsideration and supplementation. The order in which the topics are taken up is determined not so much by their general importance as by the sequence in which they appear in the book itself.

      I

      Hard as I tried to clarify the prevailing confusion about a central concept of economic theory, that of consumer sovereignty, the success attained was anything but spectacular. There are few other areas where the limitations of the conventional economist are as obvious and as damaging to insight as in the treatment of this subject. Irrevocably committed to taking the existing economic and social order for granted, and thinking exclusively in categories reflecting capitalist relations of production, even the ablest academic economist is inexorably trapped by the basic predicament of all bourgeois thought: the compulsion to choose continually between equally pernicious alternatives. Like the man condemned to death who was granted “freedom of choice” between being hanged and being shot, bourgeois economics is eternally plagued by the problem whether the irrationality of monopoly is better than the anarchy of competition; whether the cumulation of means of destruction is better than unemployment; whether inequality of income and wealth leading to saving and investment on the part of the rich is better than fair shares and greatly reduced saving and investment. In the same way the problem of consumers’ sovereignty is viewed as the question whether the consumer—however much exposed to the barrage of advertising and high-pressure salesmanship—should be left free to spend his income in any way he pleases or be forced to accept a basket of goods which a “commissar” would judge to be best for him. It can be readily seen that placed before this dilemma, the economist is indeed confronted by a Hobson’s choice. Kneeling awe-stricken before the absolute truth of the consumer’s “revealed preferences” places him in the disturbing position of having to refuse to make any judgments on the resulting composition of output and hence on all the waste and cultural degradation which so obviously characterize our society. On the other hand, rejecting the consumer’s revealed preferences as the ultima ratio in favor of a set of decisions imposed by government would be equally distressing, implying as it would the repudiation of all the teachings of welfare economics and—more importantly—of all the principles of individual freedom which the economist rightly strives to uphold.

      The conservative reaction to this perplexity appears in two variants. One school of thought deals with the problem by denying its existence. This school holds that the molding of consumers’ tastes and preferences by the advertising and high-pressure sales efforts of corporate business is nothing but a bogey, because in the long run no amount of persuasion and no ingenuity of salesmanship can change “human nature,” can force upon the consumer what he does not want.¹ Furthermore—so the argument runs—the revealed preferences of consumers yield results which are quite adequate and call for no particular improvements.²

      Another conservative current of thought takes a different tack. It freely acknowledges that the consumer’s revealed preferences have nothing in common with the traditional notion of consumer sovereignty, that the power of the giant corporations is such as to mold consumers’ tastes and preferences for the benefit of corporate interests, and that all of this has a deleterious effect on both our economy and our society. As Professor Carl Kaysen puts it:

      One aspect of [its] broad power … is the position that corporate management occupies as taste setter or style leader for the society as a whole. Business influence on taste ranges from the direct effects through the design of material goods to the indirect and more subtle effects of the style of language and thought purveyed through the mass media—the school of style at which all of us are in attendance every day.… This, more shortly stated, is the familiar proposition that we are a business society, and that the giant corporation is the “characteristic,” if not the statistically typical, institution of our society.…³

      Yet skeptical and realistic as the writers of this orientation are, they place the utmost emphasis on the fact that these irrationalities and calamities are inherent in the order of things, which they identify with the economic and social system of monopoly capitalism. “To touch the corporation deeply,” remarks Professor Mason, “is to touch much else.”⁴ And in our day touching “much else” is definitely not on the economist’s agenda.

      This is not the stance of the so-called liberal. Considering the consumer’s revealed preferences to be the source of our society’s irrational allocation of resources, of its distressing moral and cultural condition, the liberal is exercised about the pernicious impact of advertising, about fraudulent product differentiation and artificial product obsolescence; he inveighs against the quality of culture purveyed by the educational system, Hollywood, the newspapers, the radio and TV networks; and, driven by this indignation, he arrives at the conclusion that “the choice is not whether consumers or a central planner should exercise sovereignty but whether and how the producer’s power to ignore some consumers and influence the preferences of others should be curbed, modified, or shared in some ways.”⁵ To accomplish this curbing, modifying, and sharing, he recommends a list of “remedies and policies” ranging from regulatory measures such as those taken by the Food and Drug Administration, through government support for opera houses and theaters, to the formation of Distinguished Citizens Committees the task of which would be to influence public opinion in the direction of rational choices and better taste.

      Disappointing as it may be to many, there can be little doubt that at the present stage of capitalist development the conservative “realist” often comes nearer the truth than the liberal meliorist. Just as it makes no sense to deplore war casualties without attacking their cause, war, so it is meaningless to sound the alarm about advertising and all that accompanies it without clearly identifying the locus from which the pestilence emanates: the monopolistic and oligopolistic corporation and the non-price-competitive business practices which constitute an integral component of its modus operandi. Since this locus itself is never approached, is indeed treated as strictly out of bounds by Galbraith, Scitovsky, and other liberal critics, since nothing is further from their minds (or at least their public utterances) than “touching deeply” the giant corporation, what can be expected from their recommending various regulatory boards and even their possible appointment to Distinguished Citizens Committees? One would think that the record of already existing regulatory agencies is sufficiently eloquent in showing that it is Big Business that does the regulating rather than vice versa. And is more evidence needed on the ineffectuality of the Food and Drug Administration, the Federal Trade Commission, and the Federal Communications Commission than has already been assembled thus far?⁶ Nor is there any need to elaborate on the profound impact on society exercised by the recent activities and reports of the President’s most distinguished Commission on National Goals.⁷ But the liberal meliorists