Draft Chapter III - Overall Report

November 11, 1957

THE AMERICAN ECONOMY

The abundance of America is proverbial: if it is not the most meaningful attribute of American civilization, it is certainly the most striking. To a visitor from another land our political system may be difficult to comprehend or our social institutions baffling, but our economic achievement is impossible to miss. The forests of television aerials, the armadas of cars, the enormous display of the supermarkets, the style and dress of ordinary people -- these are aspects of our national life which first impress any observer of the American scene.

Whence comes this American abundance?

Many forces have combined to bring it about. We have been blessed with a magnificently endowed continent, fertile, wooded, rich with mineral deposits and laced with navigable rivers. The great oceans have buffered our shores from military incursions while opening highways of commerce, and the good fortune of history has made possible the gradual acquisition and consolidation of an enormous single economic territory. Our early settlers brought with them a moral and religious tradition which dignified work, spurred effort, and demanded the utmost of each individual. Vigorous measures of our government first protected our nascent industries and later facilitated the great transcontinental expansion of our people. An economic and social philosophy of competitive striving, and the free use of one's own labor and capital laid the foundation for an immense application of private initiative.

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From these and yet other sources the substance of our economy was formed. But to them was added the intangible but quintessential factor of an attitude. This was our national trait of optimism. In part a product of the bracing environment of the New World, in part a result of our severance from feudal limitations of status, in part a spontaneous orientation of our forbears, an air of sanguine expectation has marked and guided our development. All through our history we have plunged headlong into the future. We have insisted on the perfectibility of man, both morally and materially. We have been convinced that men should look upwards and forwards and never downwards and backwards, and that any goal within sight could, by dint of effort, goodwill and intelligence, be reached.

This trait of optimism is not without its drawbacks. Optimism can lead to a philosophy of complacency as well as to one of resolute action. Paradoxically, it can also lead to an over-estimation of action, in the belief that "doing something" will cure every problem -- including those whose essential challenges lie in the area of values and beliefs. But these failings -- and they have been our failings -- must not obscure the overriding momentum which our optimism has conferred upon the American people. Our moral concern has sometimes lacked depth, but it has produced a never-ending stream of reform movements and programs of social improvement. Our belief in the infinite capacities of human action has given us zeal and perseverance. And for our economic development, our optimism has provided us not only with

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a motivation but with a source of support. It has cushioned the strains of
a competitive way of life. It has softened the impact of defeat because it
has given rise to the belief that no setback need be final. It has made us
receptive to change, encouraging of individual effort, and prone to look upon
problems as opportunities.

In a later chapter we shall look again and more closely at the evolution
of American capitalism, and particularly at the moral traditions by which its
evolution was shaped. But at this juncture, as we seek to gain a first broad
view of the economic panorama, we bring the quality of optimism to fore
because it illustrates so aptly the importance of the non-material factors in
the development of our economy of abundance. Without the resources of our
continent, the skills of our people, the policies of our government and the
fortunate insulation from the contemporary turmoil of Europe, the formidable
expansion of the American economy could never have taken place. But the
mere presence of these factors by themselves was also not enough. To a very
real degree the growth of our economy was the result of that complex thing
called the American character. No discussion of our economic growth is com-
plete without including the extraordinary role played by our *aspiration* to
growth. In the driving and sometimes demonic energy with which we assailed
the riches of the earth, bound the continent with lines of steel, subdued our
forests, planted our cities, there was a quality of impetuous vitality and
hopefulness. The economic building of America was not just a matter of plus

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and minus, of deliberate calculation, or of cold economic motivation. Bold, imaginative, sometimes ruthless and even cruel, it was above all a tremendous human advanture.

That quality of adventuresomeness marks it still. But the problems of the future will call for a different direction of the adventuring spirit. It is not the geographic frontier which now beckons to us, but the frontiers of science, and even more importantly, of human well-being. The material abundance whose realization is still in the future is nonetheless the culmination of a past trend. Ahead the challenge lies in subtler fields.

II

Any prospectus of the American economy must begin, as did our previous chapter's inquiry, with the simplest questions. How great is our national abundance? How successfully does our economy work? What seem to be its immediate problems? Only when we have answered these questions can we move on to the longer range challenges of our economic society.

For the year 1957, despite a slackening in the pace of business in the last quarter, the American economy seemed destined to produce a volume of output which would be the largest ever realized in peace or war by any nation-state in history. In terms of physical magnitudes -- that is, in tonnage and yards and bushels rather than in dollar values -- the industrial production

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of our nation was nearly 45% above its average from 1947 to 1949 and almost
two and a half times its level in 1939.

This great cataract of production arose in response to three principal
sources of demand. The first of these was our personal consumption which
took nearly two-thirds of our gross output. The second was our investment in
residential construction and in new productive facilities for industry: this
absorbed somewhat less than half the remaining third of our output. And the
final fraction was destined to fill the demands of our Federal, state, and local
governments for the goods and services they require.

Under the impetus of these three interdependent sources of economic
activity our Gross National Product -- the market value of our total output --
has displayed a spectacular rise over the last decades. For each of its
components has been steadily growing. Consumers in 1957 were purchasing
over 60 per cent more real goods and services than they bought twenty years
before. Business demands for new plant and equipment were nearly 50 per cent
higher than a decade ago to satisfy this burgeoning consumer demand and to
provide facilities for future increases in output. And our government had
increased its demands by more than twice since 1948 -- the bulk of the increase
representing higher expenditures related to our national security. The sum total
of the dollar value of our output in 1957 was nearing, although it probably would
not quite reach the enormous figure of $440 billions. If its rate of growth were
to be maintained, by 1975 it would have exceeded $800 billions -- in terms of
present prices.

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Whether that rate of growth will be maintained is clearly the paramount economic problem facing the nation. For only through a continuation of our past rate of growth is it within our capacities to bring about that society of well-nigh universal well-being which we have already described as our great domestic opportunity. Only by strong and sustained forward movement can we gain not alone higher living standards, but a larger and freer framework of individual life possibilities. Economic growth is the essential precondition to social and cultural enrichment.

But in a free economy it is impossible to guarantee that a given rate of advance will be maintained. Some untoward developments are inescapable in an economy where private decisions are still largely the controlling factor. Interruptions to our rate of growth are certain: they are the price we pay for economic liberty.

Yet short-term interruptions and mild setbacks are fully compatible with an overall forward advance. It is the long-term movement which must display the characteristics of growth; and the long-term outlook is indeed propitious for growth. Clearly the past decades testify to the vast consuming propensities of a nation of increasingly middle-class incomes. Without question the demands of our government will tend to rise over the future, prompted both by the urgency of defense and by widening conceptions of social welfare. And although the pace of business expansion is always a more volatile element, the growing reliance of industry on systematic research

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for new products, the pressure of government expenditure, and not least, the
buoyancy of a high-consumption market promise a considerably enhanced
stability of investment. Thus the long-term view augurs well for continued
growth -- although at what pace, no one can say. The basic problem facing
the economy is not to break out of an economic framework of depression, but
to realize to the hilt the dynamic of an economic structure conducive to growth.

III

At best, however, the astronomical totals of our Gross National Product
are difficult to comprehend. They tell us how well we are doing as an economy
but they reveal little of the meaning of our economic performance in terms of
our individual lives. Most of us are less interested in our national aggregate
output and outlook than in our own individual incomes and prospects. What can
we say about these?

At the end of 1956 -- the last year for which figures are available --
the average family in the United States received an income of $4,783. This
figure was a balance between city-dwellers whose median income was $5,221,
rural non-farmers whose median was $4,619, and farmers who averaged $2,371.
But the full table of income distribution is more revealing yet:

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DISTRIBUTION OF INCOME -- 1956

<table><thead><tr><th>Number of Families</th><th>Percent of Total Families</th><th>Incomes</th></tr></thead><tbody><tr><td>7,000,000</td><td>20</td><td>less than $2,000</td></tr><tr><td>16,000,000</td><td>36</td><td>$2,000 - $5,000</td></tr><tr><td>16,500,000</td><td>36</td><td>$5,000 - $10,000</td></tr><tr><td>3,500,000</td><td>8</td><td>over $10,000</td></tr></tbody></table>

This is more than a statistical representation of a state of facts. It is an illuminating diagram of American capitalism itself. For it shows clearly both our successes and our failures and thus outlines many of the problems which lie ahead.

What is perhaps most disturbing about our distribution of incomes is the fact that one American family out of five subsists at so low an economic level. This is without too large a layer of poverty to permit us to speak of the present American abundance without substantial and severe qualifications. Yet what we must note about this bottom income stratum is that the bulk of its constituents are not victims of economic but of social misfortune. It is certainly not the industrial worker who is found here, for his average weekly earnings in 1957 were over $81. It is not the retail clerk, who averaged $62. Rather the great majority of the lowest income group are to be found outside the economic ambit. Here are the aged pensioners, the broken households,

*Reported by Census Bureau, N.Y. Times, September 9, 1957

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the handicapped and mentally ill, and most important, the submarginal and predominantly Negro farmer. Thus, what characterizes this stratum of poverty is not that it constitutes a body of sweated labor sustaining the economy, but that its low income receivers lie outside the economy.

This has important implications for our policies of social welfare. On the one hand it reveals the magnitude of the problem itself. Public assistance is not only a moral imperative for a rich nation with a poverty-stricken sub-stratum, but it is inescapably a major economic commitment. But on the other hand, the nature of our social distress also clarifies the purpose of public assistance: its aim is not the support of the economically exploited, but the redirection of the socially disprivileged back into the main economic channels. For example, a great deal of our worst poverty is to be found in our three million submarginal farm families -- half of whom have cash incomes below $1,000 a year. Hitherto these families have been maintained by an agricultural price-support program which, while it aims at some valid economic objectives, is built on an invalid social premise. For in effect our agricultural poor have been given an incentive to remain in the very occupation which they should leave.

The task is clearly to induce submarginal farmers to shed their impoverished agricultural work for more promising urban occupations. Needless to say, this requires much careful planning if we are not merely to move rural poverty to an urban setting. But it serves to illustrate that the principal policies must not

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be to prop up the lowest economic groups, but to enable them to regain their
full economic status elsewhere. In a later chapter we shall deal at some
length with the tasks which this obligation imposes.

Above the socially disadvantaged lies the lowest echelon, from an
income point of view, of the economy proper. Here are the unskilled laborers
and many of the semi-skilled; the great mass of farmers who manage to make ends
meet but little more; the marginal storekeepers and the fringe of small business
enterprise. An income of between $2,000 and $5,000 today is not poverty or
acute neediness, but neither is it large enough, even at its upper end, to permit
its recipients to enjoy more than a taste of the American abundance.

The problems of this group therefore also fall partly within the concern
of public welfare. There is no question, for instance, that consumers at this
level of income cannot or do not adequately provide for their own health, parti-
cularly when illness assumes "disaster" proportions. Later we shall turn to a
consideration of health measures and social security changes which may
ameliorate this situation. But this income group as a whole presents a very
different picture from the preceding one. We must note that the most rapid
percentage rise in income has accrued to this layer of our economic pyramid.
Between 1935-36 and 1948 the second lowest "fifth" of our income pyramid --
the group which is roughly that which we are now considering -- increased its
income by 93 per cent, compared with an overall gain of all groups of 59 per cent,

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And this upward tendency not only continues today but should be accelerated by the upgrading of work under the impact of automation which we mentioned in our previous chapter. It is here that the greatest gains from growth should first accrue.

The next large group -- that between $5,000 to $10,000 -- is the single most impressive phenomenon of the American economy. It is the growing middle class whose expansion has been the most striking outcome of our economic and social dynamic. The middle class is now the single largest economic group: it is the great mass market on which capitalism has come to base its strength.

Every indication points to a steady further expansion of the middle sector: if the performance of our economy measures up to its capacities, we may expect this income class to comprise not only a plurality but a majority of income receivers within the span of our lifetimes. This is not to say, of course, that economic problems do not exist for this group. Typically its desires are in excess of its incomes, for a whole new range of living patterns opens within its economic brackets. But certainly this is also an economic status in which the individual achieves a self-sufficiency -- an independence -- which it is the ultimate purpose of our economy to promote.

The top bracket of our income receivers deserves attention for another reason; now we pass from the problems of poverty to those of wealth. Of the 3-1/2 million families receiving more than $10,000, 900,000 received over

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$15,000; and tracing this still further we note that in 1954 -- the last available statistical year -- some 85,000 families had incomes of $50,000 or more. Here are the rich of America: some of the beneficiaries of inheritances; others receiving the level of pay accorded to our top echelon of executive skills.

The share of the rich in our American abundance is worth further exami-
nation. In 1928, the top one per cent of the nation enjoyed nineteen per cent
of the nation's disposable income. From that high point, however, their share
has regularly decreased. It ranged between 11 and 14 per cent of the nation's
income in the 1930s. By the late 1940s it had fallen below eight per cent --
a drop of nearly 60 per cent in twenty years. While there are no more recent
statistics, we may note that the impact of taxes has moved against the top
brackets since the last study was made. Great wealth, inherited and earned,
still exists in America, but there can be little of its declining importance in
our over-all economic or social structure. An astonishing and nearly revolu-
tionary redistribution of income has taken place without social upheaval. No
more dramatic testimony to the durability of the American social fabric could
be given.

In a society which rewards achievement largely by income, but which
cherishes social ideals of equality, the attitude toward high rewards will
always be a somewhat ambivalent one. If, in the past, we have looked
somewhat askance upon the winning of very large incomes -- and have brought
the tax powers to bear against them -- it was not because we wished to reduce

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the rewards of success, but because the disproportion between great success and average performance was so great as to threaten social disharmony.

That condition has very largely been rectified today. Extremes of wealth and poverty may strike one in those special areas where luxury and squalor exist side by side -- as in many great cities -- but a jarring contrast of economic conditions cannot fairly be called characteristic of our nation. But in its place a new problem of income distribution has arisen. This is the fact that the scale of relative rewards no longer fully reflects the scale of the relative social importance of work.

For the size of executive business rewards which characterizes our system is a measure of the emphasis and importance which society has in the past placed upon the business function. Today that function is rapidly losing its former position of unquestioned eminence. Important as the bold and intelligent conduct of business is, nonetheless it is not to this sector, as a generality, that we now look for the most critically important direction of society. This we seek in the spheres of science, government, military and diplomatic service and the like. In an age less crucially dependent on these tasks, they could be left to those who had no taste for or success in a race largely run for business prizes. But today the importance of these critical non-business tasks has risen to the point where the weighting of rewards toward business enterprise threatens to divert talent away from its most strategic and crucial employments. It is this difficult matter of the

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attraction of talent to its proper stations rather than the mere size of incomes
as such which seems likely to become the critical income distribution problem
of the future.

Any broad prospectus of the American economy must take into account
not alone the results of its operations as they reveal themselves in our
national production or distribution of income, but also the inner dynamic
of our system. In a word, it must deal with that aspect of economics to
which Americans are usually least willing to face up candidly: the aspect of
power.

Much of the social history of our nation over the past century and a
half can be described as the continuing effort to define and control the exercise
of economic power. And it has not merely been the abuses of power which
have evoked attention and remedy: not merely the arbitrary acts of government,
or the misrepresentations of fraudulent business, or the racketeering margin
of labor. It has been the central core of _legitimate_ economic power which
we have sought to define and circumscribe: -- the extent to which the Federal
government's sovereignty extended over the economic resources and activity
of the nation, or the extent to which business might conduct its affairs by
considerations of profit maximization alone, or the bounds within which labor
unions might properly use their fundamental right to strike.

In a democratic society the framework within which economic power
may be legitimately exercised is never static. The definition of legitimacy is

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constantly subject to public review and to new interpretations. The past
half century, for example, has seen a steady narrowing of the limits within
which business' power may freely operate. Today, business" access to
many raw materials, its right to acquire other businesses by purchase or
merger, the quality of many of the goods it produces, the terms of its advertising,
the manner of its own financing, the nature of its dealings with labor -- all
matters which were once its uninhibited and unquestioned rights -- have been
made partly or wholly subject to control.

More recently labor power has come under similar social scrutiny. In
the early days of labor's rise to power, most labor legislation was designed
to protect and facilitate this then precarious social movement. However with
the virtual complete unionization of big industry and with the growing demon-
stration of the economic impact of union decisions, the question of the bounds
of legitimate labor power has now emerged as a new area of social concern.
To what extent may unions conceal their financial strength, when the survival
of the union itself is no longer a matter of danger or even dispute? To what
extent may labor extend its interests into areas previously reserved for manage-
ment itself -- such as the promotion of employees or the design of employment
policies? Can labor unions be permitted to ask for wage increases regardless
of their public impact?

These delicate and difficult questions are far from commanding general
assent today just as in the past, the efforts to legitimize business power

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were hotly disputed. Yet it is likely that the future will witness attempts to legitimize labor power similar to those which have in the past defined, and which will in the future continue to define the power of the business community.

A final delineation of business or labor power will never be achieved so long as our society itself is dynamic, and as its goals and its internal environment are changing. Broad questions of social philosophy still remain to be worked out, and the boundaries of business and labor power may have to be redrawn many times over the future. Yet it seems fair to say that the future definitions of private economic power are unlikely to assume socially disrupting proportions.

Something like a broad consensus has been reached in our nation: if business has long ceased to be regarded as an inviolable institution, so too labor has now achieved the institutional solidity which makes it subject to a new public responsibility.

For underlying all our efforts to legitimize power is a tacit agreement on the need for a pluralistic exercise of economic strength -- on a need for a counterbalance of force against force, and on a limitation of what appears to be an excess of force on either side. An essential element of our American consensus is a general agreement on the basic nature of the economic society which we wish to achieve: a society in which economic decision-making is fragmented, in which broad public responsibilities are conscientiously upheld by private economic organizations, and in which the individual person is given an optimum chance for self development.

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V

To future historians the most significant development of the last twenty five years may well appear to be not in our gradual curbing of private power, but in the forging of a consensus on public economic powers. For the past three decades have seen nothing less than a new definition of the role which government can legitimately occupy in a basically free enterprise society.

During the 1930's, in the heat of the great debate over the legitimacy of public economic power both sides of this issue were badly misrepresented. Those who wished to deny to government any positive role in the economic conduct of the nation's affairs tended to overlook the historic partnership between government and enterprise: a partnership beginning with the early protection of the infant industries of our young republic; later evidenced when the government aided the accomplishment of our herculean transcontinental railway projects; and continuing down through the 1920s in the guise of conservation, commercial stimulation, central banking, and a hundred other universally accepted government functions. The opponents of "government intervention" often talked of government as if it were a foreign body in the American economy, rather than an indispensable public element of that economy.

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Equally one-sidedly, many of the proponents of all-out government planning failed to recognize the long-term trends of vitality, flexibility and invention which American business enterprise had revealed. They discounted the value to a free society of the fragmentation of economic power which a multiplicity of private centers of economic activity insured. Dismayed by the suffering wrought by the depression and worried over the concentration of economic power into large private units, the advocates of the planned economy often proposed remedies for real shortcomings which portended an aggravation of the very problems they feared: for the concentration of big business they would have substituted the concentration of the big state; and for the lack of private investment initiative, the lethargy of a public bureaucracy.

It is one of the evidences of the pragmatism and adaptability of the American economic system that this rift of views is now virtually healed. There continues to be, and there will quite properly continue to be, divergences of opinion about the exact line of demarcation which is best drawn between public and private economic responsibility, but the passions are now largely a thing of the past. The broad lines of a workable philosophy seem to have emerged.

In its essence this agreement has charged the government with the overall guardianship of the economic health and vitality of the nation. The *source* and *direction* of economic energy continue to be lodged primarily in the motivations of free individuals and in the pursuit of profit by business organizations. But the responsibility for the overall framework within which this

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energy is expended -- for its balance, its restraint, its continued forward movement -- now rests to a considerable degree with our government.

Specifically this places many responsibilities on the shoulders of our public agencies, local, state, and especially federal. Some of the major ones are these:

Our government is charged with the husbanding of our scarce resources lest we jeopardize our national strength through lack of public foresight.

Our government is charged with the provision of those necessary public assets, such as schools, or roads, or hospitals, without which private growth lacks a balanced underpinning.

Our government is made responsible for the rehabilitation of those areas of economic life which are beyond the scope of private enterprise, such as agricultural poverty or urban redevelopment.

Our government is broadly given responsibility for our social welfare, assisting in the provision of private economic well being and taking the lead in the rehabilitation of underprivileged.

These social and economic functions of our public institutions derive their support mainly from a moral agreement. This is an insistence that our abundance, to be made meaningful, must be applied for the social good. But what is perhaps an even more important new area of public economic power rests on a somewhat different source of legitimacy. This is the agreement that our government must aid the growth of abundance itself.

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In a word, our government is charged with the basic responsibility for our economic growth. Through its tax policies it must seek to ensure a maximum flow of new private investment. Through its fiscal and monetary policies it must seek to reverse any major recession and to restrain an inflationary trend. Through its economic controls, such as those over installment purchase, it must seek to balance the demands of the consuming public with the resources available to it. And finally, within its own sphere of activities it must establish priorities of importance among programs ranging from defense to welfare, not all of which can necessarily be simultaneously accommodated within the capacities of our nation.

These are formidable responsibilities, and we do not yet know the extent to which they can be adequately discharged. The fact that our government is democratically responsive often places political obstacles in the path of economic policy: thus its tax policies or its choice of priorities may reflect popular prejudice to the detriment of economic wisdom. And even in the less politically sensitive areas, we are not yet sure of our mastery of economic forces. The experience of the two mild recessions of the recent past indicates that the government can indeed cushion a decline and can create conditions that favor expansion, but we have yet to test our arsenal of economic weapons against a formidable economic setback. And on the other side of the fence, our record in combatting inflation has thus far been less than reassuring. From the end of World War II to the present, the consumer price level has risen by

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roughly one-fifth. And it has not alone been the pace of inflation which has
been worrisome but its "built-in" character in the pressures of a tight-
employment, tight-market economy. Unless greater self-discipline is
maintained by strategically placed labor unions in pressing for wage increases,
or by powerful industrial groups in passing them along price increases, far
more drastic controls than our present indirect ones may be needed.

Thus the fact that our government is now given the legitimacy to
promote economic growth does not mean that growth is thereby assured. With
the power to take forceful action inescapably comes the ability to make
powerful mistakes. At best the encouragement of our government can create
conditions in which growth may flourish. In the later chapters of this book
we shall return to many of the problems which we have hitherto barely
indicated. Our resources, our welfare programs, our tax and fiscal policies,
and other vital aspects of government economic power will there be discussed
at length and recommendations for action be given.

Here, where we are concerned with a broad perspective of the problems
ahead, it is sufficient that we make but two main points. The first is that
we clearly possess a greater capacity for economic self-direction than ever
before in the past. The second is that this capacity is not an assurance of
performance. Government action cannot provide the technological innovation,
the executive skill, the labor morale to make growth an actuality. In an econo-
my where voluntarism and not obedience is the basic motive force, the overall

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momentum will depend to a high degree on the degree of aspiration, of effort, of self-control which inspires the economic actors themselves. It may well be that a successful exercise of government functions will act to sustain and perhaps elevate the level of private economic striving, but in the end the vitality of our economy is beyond public control.

VI

For ultimately the drive of our economy derives from its meaning to the human beings who sustain it and whom in turn it sustains. The painful efforts of the underdeveloped countries for economic advancement illustrate the importance of the human element in economic growth. The experience of many of these countries shows that perhaps the single most important ingredient in growth is an intangible quality which may be called economic faith: a belief in a realizable future and a confidence in the economic system as a means for arriving there; a willingness to undertake tasks whose fruition may be beyond the life span of the individual and a readiness to make sacrifices in the present for the sake of the future.

Without such faith the motivation of a people will be low. They will refuse to exercise the drive or the self-discipline demanded by a high level of economic activity. The economic system will either stagnate as in many parts of Asia, or else it will be sustained only by governmental compulsion as in the Communist countries.

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The problem of human motivation is therefore at the center of an
economic system, and it comes as a particular challenge to a society poised
at the threshold of universal well-being. We have already noted in the
organizational complexities of our society a threatening deterrent to the full
pursuit of individual self-achievement. Now we must add a second dampening
factor.

This is the tendency, in an atmosphere of economic well-being, for
our traditional economic motivations to decrease in effectiveness. We are
no longer stimulated by the harsh economic climate of needier days. But we
are also no longer so responsive to the economic ambitions of an earlier day.
The pressure of an economy in which there were too few jobs to go around has
given way to the security of a full-employment society at the same time, the
Puritan drives of our forefathers, with the self-discipline and unflagging effort
which they tended to produce, seem to be giving way to less intense, less
self-demanding goals. Such intangibles are difficult to measure or demonstrate,
but it is doubtful if many would disagree that the aspirations of young people
are more temperate and security-orientated, less grandiose and ambitious then
a few generations ago. To a certain extent this change in the nature of
aspirations may reflect a reaction from the excessive cult of individualism
which marked the twenties. Undoubtedly it has been reinforced by social
institutions, such as higher taxation. But to some extent our tempered aspira-
tions may simply reflect the narrowing of the gap between desires and

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achievement brought about by our rising level of social well-being.

Can the lessened aspirations of a more bureaucractic society be raised? Can the diminished efficacy of economic incentives in a society of ever greater abundance be offset? Perhaps there is no more basic question which our society must face.

For in a very real sense the purpose of our economic growth is to _provide_ morale as much as to benefit from it. A feeling of purposefulness is one of the highest rewards which an economic system can offer. In the past that purposefulness has centered about the idea of individual economic growth -- of working one's way up the income scale, of "getting rich". Today most of our people are far from rich but they are increasingly _well-off_. And the _better_ off we become, the less compelling is the goal of monetary improvement _alone_. It is the content, the meaningfulness of work which assumes ever greater significance as the first requisites of a decent and modestly substantial life are fulfilled.

No honest appraisal of our society today can reassure us about the meaningfulness of our work. As far back as the 1920s, experiments with workers' morale at the Western Electric Company revealed that productivity was directly related with the _participation_ felt by the worker in his task, but the lessons of those experiments have yet to be applied. Recent studies show that worker dissatisfaction today is not primarily caused by rate of pay, but by the dullness, the lack of creativity of his job. At the lower echelons of work

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this boredom and lack of personal identification with work is the great weakness
of an industrial society. It is a problem to which we must now devote ourselves
with the same energy which we have addressed in the past to the creation of
the industrial process itself. We have made our magnificent industrial
machine. Now we must learn to humanize it.

And the problem is not limited to the lower echelons alone. The challenge
of a free society is to staff the whole hierarchy of social tasks with men and
women who are dedicated to their employments -- who seek from it not merely
the rewards of income and status but the intense personal satisfaction that
comes from a *belief* in one's work. For the ultimate test of our economic
system will be the quality of deep seriousness of purpose and of joyful personal
engagement which it brings forth among its members. American society was
built in a spirit of optimistic adventure in which the individual felt, however
inarticulately, a sense of deep personal commitment to a great social enterprise.
If his eyes were fixed on his own chances for advancement, he was also aware
of the nearing horizon of a tremendous social accomplishment.

As a society of abundance comes within our realization, that horizon
becomes the ground underfoot. Like all human goals, it is not an end in itself,
but only a new starting place. Another horizon must be sought -- one which
measures both the individual and the social potential achievement in terms of
self-realization rather than self enrichment. This will be the overriding problem
and the opportunity of the American economic future.