The troubled economics of anti-consumerism


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Anti-consumerism as a gut-feeling has been around for ages. But the attempt to rationalise the sentiment in economic terms is a product of our times – and a successful one at that. With titles like The Spirit Level, Affluenza, All Consuming, The Selfish Capitalist, Prosperity without Growth, Britain on the Couch, Consumed and many more, anti-consumerist literature has become a thriving consumer-good market.



Here’s anti-consumerist economics in one lesson: suppose two individuals, X and Y, attain a monthly consumption level of 100 gold coins each, and are perfectly happy with it. Now X decides to increase his weekly workload slightly, in order to increase his consumption relative to Y. He generates 5 additional gold coins, and spends them on a good which has no practical use whatsoever; it merely serves as a marker of social status vis-à-vis Y.



Y is now under zugzwang. He decides to reduce his annual holidays in order to increase his consumption to 110 gold coins. Y does not derive any pleasure from the additional goods he buys either. They merely serve to demonstrate his ability to keep up with X.



The retaliation of X is not long coming, and so the arms race begins. There is no way out, because given each individual’s preference for a high status relative to the other, both behave rationally from an individual perspective.



A narrow-minded old-school economist would say: “Great, GDP is increasing, economic growth is high. Everything is getting better.” An enlightened anti-consumerist economist would counter: “Look closer. Both X and Y now have stomach ulcers from overwork, take antidepressants, their family lives are brittle, and their social lives are in tatters. They are richer – but only in useless status symbols.” In the words of the Spirit Level authors:



 



“If an important part of consumerism is driven by emulation, status competition, or simply having to run to keep up with everyone else, and is basically about social appearances and position, this would explain why we continue to pursue economic growth despite its apparent lack of benefits. If everyone wants more money because it improves self-image and status in relation to others, then each person’s desire to be richer does not add up to a societal desire for economic growth” (pp. 224-5).



But there is a daring logical step: from the mere fact that so-called “conspicuous consumption” exists, anti-consumerists conclude that apart from bread, butter and a dry bedsit, virtually all consumption serves no other purpose than status-signalling. This is like jumping from the observation “There are black-haired people in Finland” to the conclusion “Almost all Finns are black-haired.” 



A superficial glance at a large-scale expenditure survey is enough to cast doubt on the anti-consumerist premise. Yes, the average British consumer spends £110 per year on jewellery, clocks and watches; and £290 on hairdressing, beauty treatment and cosmetics. But he/she also spends £135 on milk, £450 on public transport services (excluding air travel), and £760 on insurance products. In total, most of us spend a large part of our budgets on things that are barely observable to others.



Besides, economies where absolute levels of wealth stabilised after having reached a certain level of development have already existed. This describes, more or less, the situation of Argentina between the early 1930s and the early 1990s. According to the logic of the anti-consumerists, Argentinians should have lost interest in material wealth, and fully dedicated themselves to family life and civic engagement instead. A visit to a shopping mall in Buenos Aires suggests otherwise.




16 thoughts on “The troubled economics of anti-consumerism”

  1. Posted 02/09/2010 at 13:45 | Permalink

    A narrow-minded old-school economist would look at welfare (utility). If the process is making people better off in their own opinions, the narrow minded economist would say good thing. Economists have never regarded maximizing output as an end in itself.

  2. Posted 02/09/2010 at 14:08 | Permalink

    Luis,
    that passage is, of course, a persiflage on the anti-consumerists’ self-perception. And it’s not a strawman, by the way.

  3. Posted 02/09/2010 at 15:40 | Permalink

    I getcha.

    And I thought only Stephen Fry used the word persiflage.

  4. Posted 02/09/2010 at 18:05 | Permalink

    Indeed – it’s a huge if in that quotation. As usual the authors are being procrustean; just because some adopt conspicuous consumption, it does not follow that we all adopt such behaviour. They ignore the central desire in human behaviour to better oneself and don’t consider the possibility that we wish to become wealthier in order to obtain the things that we desire. Whether we are ‘happy’ as a result is not for the authors to say, but if we didn’t wish to compete, it’s quite easy to opt out – we aren’t, after all, compelled to buy flashy trinkets and we don’t all do it because we want to show off to our peers. This all reminds of von Mises’ The Anticapitalistic Mentality.

  5. Posted 02/09/2010 at 21:43 | Permalink

    And, of course, if the anti-consumerist thesis was correct it would surely be impossible that working hours would be falling (as they have steadily since the 1970s). If these guys took just one good (cars) and drove a car that had the reliability and safety record of a car that was made in the 1970s they would realise how fatuous their argument was. Yes, some people like cars as a status symbol, but the vast majority of us buy modern, more expensive, cars because they work, don’t rust and are safe.

  6. Posted 02/09/2010 at 22:13 | Permalink

    Weeeelllll (to adopt a Tim Worstallism), it’s not all quite this simple, is it.

    Partly, as Luis says, the old fashioned economist is going to worry about welfare utility not just output; a long-standing justification for inequalities and other nasty side effects of (most especially) economic capitalism (which of course is not necessarily the same thing as modern consumerism) is that overall everybody gets better-off than they otherwise would be, an argument going back to at least the early 18th Century. If that’s not happening, because say mindless competitor-consumption is driving people into early graves, then many sensible pro-capitalist/consumerists will take a dim view of procedings…

  7. Posted 02/09/2010 at 22:15 | Permalink

    …however, there’s more to it than that.

    You somewhat arbitrarily declare that the position is zugzwang. But this isn’t chess (nor need it be rational choice game theory). As Adam Smith remarked, the pieces on the chessboard have their own principles of motion.

    Why might economic agents be propelled to choose tit-for-tat retaliatory competition? Well, the anti-consumerist might crudely put it by saying: they have been indoctrinated into a lifestyle that ultimately harms them, thanks to the long-standing efforts of powerful corporate interests going back to especially Alfred Bernays…

  8. Posted 02/09/2010 at 22:17 | Permalink

    …and that ends up being a significant nub. Many anti-consumerists are going to want to raise issues about “false consciousness” in the mentality – and in turn, rationality – of the agents under discussion. Thus it’s to jump a very big gun to just state the problem as zugzwang. For rival conceptions of why it is (or for that matter, perhaps isn’t) zugzwang are going to cut quite deep in a debate which is about far more than economic rationality and utility maximisation.

  9. Posted 02/09/2010 at 22:23 | Permalink

    Sorry, i’ve not made myself clear: what I meant to get at was the point that anti-consumerists don’t just operate (though they often do operate) a crude view of consumers as mechanicaly competing for status vis-a-vis conspicious neighbours. They often also subscribe to the more plausible view that corporations invest huge amounts of time and money into getting people to buy crap that they don’t need, and didn’t want until adverts created the desire for it.

    On this, I think JK Galbraith’s The Affluent Society is still pretty effective.

    (Apologies for HTML fail above).

  10. Posted 03/09/2010 at 08:13 | Permalink

    @Paul Sagar – ‘anti-consumerists’ may be more subtle than Kris allows (I’m sure he’s aware of this anyway). However, their conceptions are still flawed. Firstly, how do you know that people don’t ‘need’ (you mean want I think, there’s very little that humans actually ‘need’)the things they buy? Why do you, or anti-consumerists, possess such wisdom and insight into people’s minds that you can tell us this? Further, the point of all innovations is that they create a desire that wasn’t pre-existing. We didn’t have a desire for the car, say, before the car was invented and marketed. Subsequent cars have also vastly improved on that position in terms of safety and comfort etc…

  11. Posted 03/09/2010 at 08:18 | Permalink

    … And you, or any anti-consumerist, is not in a position to tell me what I should or should not aspire to, utility is subjective after all. The idea that evil corporations have somehow forced us into buying their ‘crap’ is unsustainable. We’ve chosen to buy it freely and of our own volition; one man’s crap is another man’s treasure after all. Many of my peers have things I don’t aspire to own and vice-versa; they have free choice, however, as to whether they own them. Advertising might be potent, but it cannot forcefully compel us to do something (unless the evil corporations are reaching out from our TV screens and pointing a gun at us??). The choices may seem utterly ‘irrational’ but only

  12. Posted 03/09/2010 at 08:25 | Permalink

    …by an abitrary (that is, predetermined according to someone else’s arbitrary criteria) of what constitutes rationality. Interesting that you raise Galbraith – in the New Industrial Society (which is fuller than the Affluent Society) he argues that influence over government policy is a key means by which large firms can create the necessary conditions for them to reduce risk. One central feature of anti-consumerism is a frequent belief that government policy can mitigate against the domination of large firms, but we see (e.g. Public Choice theory) that it is only by government policy that large firms are able to dominate because they can use the coercive power of government to create …

  13. Posted 03/09/2010 at 08:36 | Permalink

    …oligopolies and to manipulate markets. Ignoring the flaws in Galbraith’s work (no sector is dominated in the long-run by large firms except where government has intervened and he attaches too litle weight to the adverse role of government), it still stands as an indictment of government intervention. Big firms like big government because they can manipulate it, and big government helps create the big firms via regulation and barriers to entry. Take big government away and such firms would be unable to exert undue influence; that’s the root of the problem of modern consumerism, not the ‘power’ of advertising, which consumers can freely disregard if we choose to do so.

  14. Posted 03/09/2010 at 10:33 | Permalink

    Broadly, there are two variants of anti-consumerism. The more popular one is that consumer desires are artificially manufactured by corporations through advertisement. According to the other one, it’s individuals themselves putting status pressure on one another. Corporations are portrayed as taking advantage of it and adding fuel to the fire, so they get a big share of the blame in this version too, but they’re not the sole villains who seduce an innocent populace. I limited myself to the second variant because it tries to be a serious economic theory.

  15. Posted 07/09/2010 at 08:12 | Permalink

    Kris – I agree with you, but then the prevalence of anti-consumerist ideas in both forms (as demonstrated by our friend here) suggests that they both need refuting even if they are both nonsense.

  16. Posted 10/09/2010 at 08:45 | Permalink

    “Many anti-consumerists are going to want to raise issues about “false consciousness” in the mentality – and in turn, rationality – of the agents under discussion.”

    Indeed they are. Isn’t it amazing how Marxists are able to dismiss the preferences expressed by individuals simply by using the old conservative trick of treating the proletariat as mindless children who do not know what’s good for them.

    The idea that corporations are brain-washing us with advertising is equally patronising. A large part of advertising is about conveying an image or emotion to accompany a product, to be sure, but who is to say that status is not a valuable consumer good? Maybe it’s worth buying!

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