American Prosperity and Conventional Wisdom
In his examination of the United States' unique position in world history, Galbraith contends that the nation's extraordinary wealth in the twentieth century sets it apart as a historical anomaly. He argues that traditional economic theories, emerging mostly from societies mired in poverty, fall short in addressing America's economic reality during this time. Introducing the notion of conventional wisdom, Galbraith describes this as the suite of universally accepted beliefs within a society. He warns that because these ideas are deeply rooted in tradition, they often fail to adapt to societal shifts and should, therefore, be approached with caution. He reflects on how early economic thinkers like Smith, Ricardo, and Malthus formed their theories in a world driven by scarcity. Galbraith then traces the evolution of economic thought since the Industrial Revolution, noting how twentieth-century theory began to view financial crises, such as the Great Depression, as inevitable patterns within economic cycles.

Production

Galbraith delves into the undercurrents of American economic thought throughout the twentieth century, highlighting the impacts of Social Darwinism and Marxism. He argues that issues surrounding wealth inequality have gradually lost their prominence in the landscape of American conventional wisdom, with a shift of focus towards the advantages of heightened production across society. Since the 1930s, economic security for both entrepreneurs and workers has consistently improved, paralleled by a rise in overall production. With diminishing worries over economic disparities and insecurity, Galbraith posits that production has surged to the forefront of economic discourse. He critiques how American conventional wisdom equates economic health with production, though he points out this viewpoint misaligns with actual economic dynamics. Galbraith emphasizes the selective nature of conventional wisdom, which favors private sector production as beneficial to the economy while branding government-provided social services as detrimental.

Consumption

Galbraith further notes that as wages have steadily climbed in the U.S., luxury goods have come to be perceived as essential "needs," akin to food and shelter in less prosperous societies. He argues that these so-called needs are not dictated by consumer demand but rather manufactured by extensive advertising campaigns. Galbraith terms this phenomenon the "dependence effect," a dynamic overlooked by contemporary economic theories. Post-1930s, the conventional mindset in economics exalted high production rates. Though recently the metrics for economic prosperity have diversified, the traditional belief still holds production as the prime marker of national success. Galbraith discusses the persistent increase in consumer debt from the 1920s onwards, cautioning that such debt, while potentially perilous, is promoted in the U.S. as an offshoot of robust production and consumption cycles.

Inflation

Turning to inflation, Galbraith scrutinizes how economic perspectives on this issue have evolved since World War II, as inflation has ingrained itself as a constant fixture in the American economy. Economists spar over its origins and potential regulation methods, with conservative voices focusing on product demand levels and liberals on the "wage-price spiral," the concept where rising wages exacerbate inflation. Galbraith explores the Federal Reserve's role in monetary policy aimed at controlling inflation, noting that its tactic of increasing interest rates often harms small businesses more than it shields consumers. He labels monetary policy as a "blunt, unreliable, discriminatory, and somewhat dangerous instrument" for price control, weighing the benefits of monetary measures favored by conservatives against fiscal policies championed by liberals in combating inflation.

Social Balance
In his compelling discourse, Galbraith delves into the prevailing notion within American economic circles that champions the prowess of the private sector's high output as the hallmark of a robust economy, while simultaneously underappreciating the significance of governmental contributions. Consumer spending on personal goods and services...