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 Galbraiths The Affluent Society, the economys 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.
Galbraiths five ways in which production can be increased pertains to the 1950s 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 companys 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 .