Challenge to Affluence
by Gunnar Myrdal
Pantheon, 172 pp., $3.95
“As I see it,” Gunnar Myrdal writes, “the most important problem in the world today…is that America shall succeed in getting out of the rut of slow economic progress.” It is not mere hyberbole that leads Myrdal, an internationally known economist, to call this “the most important problem in the world,” nor mere humanitarian concern that makes him, a Swede, fasten on America’s well-being. Myrdal’s contention is that a rich and expansive America is a force for imaginative, accomodating, and magnanimous international relations, while a stagnant and frustrated America is not. America, says Myrdal, is a poor loser in the game of international politics. As a nation that has not mastered its domestic economic difficulties, it is hardly in a position to assert a natural leadership in foreign economic affairs. Rather, a sense of failure at home is apt to generate a peevish and recriminative attitude abroad. Hence on America’s domestic prosperity hinges not only the well-being of its own citizens, but to an important degree the well-being of the world.
But how to get America out of its rut? The cure, says Professor Myrdal, is for the American government to do what other Western governments (and Sweden in particular) are doing—that is, to take active steps in “applying the new knowledge we have about how to induce economic progress.” Furthermore these measures will not only accelerate America’s rate of economic growth, but they will also serve to help America catch up with the main line of social advance, behind which she now lags badly. “Never before in the history of America” he writes in italics, “has there been a greater and more complete identity between the ideals of social justice and the requirements of economic progress.”
These measures of mixed stimulation and reform stem from Myrdal’s diagnosis of what ails America. More and more people, he tells us, are going to be forced out of the effective working force by the entry of automation, and these unfortunates, unlike their counterparts in the past, will not be able to re-enter the labor market by selling their basic working skills elsewhere. For the trouble is that the market for untrained labor skills is steadily contracting, with the result that those who are once pushed outside the economic circuit remain permanently outside—not only unemployed but unemployable. At the same time their inability to buy naturally inhibits the growth of the very industries from which they are displaced. What portends is a prospect of chronic underperformance, chronic unemployment, and the development of a structurally unprivileged subproletariat.
But the cure follows from the nature of the disease. What we need to do is to prevent the displaced workers from becoming a hard core of unemployables, and simultaneously to increase the purchasing power in the hands of the lower echelons of society. Thus Myrdal calls for a massive program of reeducation and retraining, for the redistribution of purchasing power by taxes and transfers, for increased social security …