1. Hayek, Friedrich August von (1899- 1992), Austrian-born economist and Nobel laureate. An economic traditionalist, von Hayek won a wide reputation with “The Road to Serfdom” (1944), in which he argued that Governments should not intervene in the control of inflation or other economic matters. Hayek, Friedrich August von (1899- 1992), Austrian-born economist and Nobel laureate. An economic traditionalist, von Hayek won a wide reputation with “The Road to Serfdom” (1944), in which he argued that Governments should not intervene in the control of inflation or other economic matters.

2. In 1974, he received the Nobel Prize in economic science for their “pioneering work in the theory of money and economic fluctuations and for their pioneering analysis of the interdependence of economic, social, and institutional phenomena”.

3. Galbraith Vs. von Hayek Q-1. Whether advertiser should inform consumer to enable them to satisfy existing wants? Q-2. Whether advertiser should persuade and thereby create new/artificial wants? Q-1. Whether advertiser should inform consumer to enable them to satisfy existing wants? Q-2. Whether advertiser should persuade and thereby create new/artificial wants?

4. Galbraith vs von Hayek Galbraith’s response: “ The Affluent Society” (1958), in which he asserted that the United States had reached a stage in its economic development that should enable it to direct its resources less to the production of consumer goods and more toward providing better public services.

5. Galbraith Vs. von Hayek Impoverished Society: –A high importance should be attached to the production of basic goods. Demands: Basic necessities of life such as food, clothing and shelter. Production to meet existing demands. No need for promotion of such basic products. Hence no need of persuasion. Purpose of ad is just to inform. Impoverished Society: –A high importance should be attached to the production of basic goods. Demands: Basic necessities of life such as food, clothing and shelter. Production to meet existing demands. No need for promotion of such basic products. Hence no need of persuasion. Purpose of ad is just to inform.

6. Galbraith Vs. von Hayek Affluent Society: –No urgency of wants and hence no urgency of production. Manufacturing industry can only market more by creating new high-level desires. Creating new breed of consumers. Desires are not ‘innate’ like desires of basic necessities. Affluent Society: –No urgency of wants and hence no urgency of production. Manufacturing industry can only market more by creating new high-level desires. Creating new breed of consumers. Desires are not ‘innate’ like desires of basic necessities.

7. Galbraith Vs. von Hayek We learn to desire them as a result of two causes: a.Society’s pressure “ keep up with others”. b.Influence of modern advertising and marketing. Advertising reinforce social pressures. We learn to desire them as a result of two causes: a.Society’s pressure “ keep up with others”. b.Influence of modern advertising and marketing. Advertising reinforce social pressures.

8. Advertising has to create new demands, giving rise to artificial wants. It is not that supply (production) rises to meet demand, rather producers leads consumer to demand more. (Dependency Effect) Advertising has to create new demands, giving rise to artificial wants. It is not that supply (production) rises to meet demand, rather producers leads consumer to demand more. (Dependency Effect)

9. Galbraith Vs. von Hayek Artificial wants carry no utility. No intrinsic benefits to society. Artificially created demands have lop- sided emphasis, leaving provision of public services such as health, education and welfare lagging behind. Advertising directs resources away from the area of possible benefits to areas of no intrinsic benefits. Artificial wants carry no utility. No intrinsic benefits to society. Artificially created demands have lop- sided emphasis, leaving provision of public services such as health, education and welfare lagging behind. Advertising directs resources away from the area of possible benefits to areas of no intrinsic benefits.

10. Hayek’s Criticism of Galbraith Civilized society demands that rather more than just spontaneously arising wants are satisfied. Aesthetic feelings are “Acquired Tastes” rather than innate or basic desires. Objection to dependency thesis (advertising makes consumption dependent on production). Civilized society demands that rather more than just spontaneously arising wants are satisfied. Aesthetic feelings are “Acquired Tastes” rather than innate or basic desires. Objection to dependency thesis (advertising makes consumption dependent on production).

11. Hayek’s Criticism of Galbraith Meaning of ‘dependent on’. a.‘Arising from’ or ‘result of' (acceptable). b.‘At the mercy of’ or ‘deliberately determined by’ meaning that producers has pre-selected what consumer must buy. (Not acceptable) Meaning of ‘dependent on’. a.‘Arising from’ or ‘result of' (acceptable). b.‘At the mercy of’ or ‘deliberately determined by’ meaning that producers has pre-selected what consumer must buy. (Not acceptable)

12. Hayek’s Criticism of Galbraith Consumers have choice whereas according to dependency thesis they are deprived of the choice. Hayek is defender of free markets to see the minimum intrusion on individual freedom. Advertising enhances individual choices, it follows that restriction on advertising would be an intrusion on that individual freedom. Consumers have choice whereas according to dependency thesis they are deprived of the choice. Hayek is defender of free markets to see the minimum intrusion on individual freedom. Advertising enhances individual choices, it follows that restriction on advertising would be an intrusion on that individual freedom.

13. Advertising and Self-Regulation There are at least certain minimal standards which advertisers can be expected to observe. Voluntary / self-regulated codes of practice. Formation of Consumers’ Association (1950). No more independent journal. There are at least certain minimal standards which advertisers can be expected to observe. Voluntary / self-regulated codes of practice. Formation of Consumers’ Association (1950). No more independent journal.

14. Publication of the journal “Which” famed for its detailed testing of consumer products and for its recommended ‘best buys’.

15. Advertising and Self-Regulation Advertising Standard Authority (ASA) which produced British Code of Advertising Practice (BCPA) in 1960. Independent Broadcasting Authority (IBA) Code of Advertising Standards and Practice (1981). Independent Television Commission (ITC) (1991). Advertising Standard Authority (ASA) which produced British Code of Advertising Practice (BCPA) in 1960. Independent Broadcasting Authority (IBA) Code of Advertising Standards and Practice (1981). Independent Television Commission (ITC) (1991).