Unless he could be persuaded to buy and buy lavishly, the whole stream of six-cylinder cars, super heterodynes, cigarettes, rouge compacts and electric ice boxes would be dammed up at its outlets. Factory workers icing a steady supply of biscuits in Credit: Getty Images. In his classic book "Propaganda," Edward Bernays, one of the pioneers of the public relations industry, put it this way: "Mass production is profitable only if its rhythm can be maintained.
Edward Cowdrick, an economist who advised corporations on their management and industrial relations policies, called it "the new economic gospel of consumption", in which workers people for whom durable possessions had rarely been a possibility could be educated in the new "skills of consumption".
It was an idea also put forward by the new "consumption economists" such as Hazel Kyrk and Theresa McMahon, and eagerly embraced by many business leaders. New needs would be created, with advertising brought into play to "augment and accelerate" the process. People would be encouraged to give up thrift and husbandry, to value goods over free time. Kyrk argued for ever-increasing aspirations: "a high standard of living must be dynamic, a progressive standard", where envy of those just above oneself in the social order incited consumption and fuelled economic growth.
In this paradigm, people are encouraged to board an escalator of desires a stairway to heaven, perhaps and progressively ascend to what were once the luxuries of the affluent. People were encouraged to board an escalator of desires and progressively ascend to the luxuries of the affluent Credit: Getty Images.
Charles Kettering, general director of General Motors Research Laboratories, equated such perpetual change with progress. In a article called "Keep the Consumer Dissatisfied", he stated that "there is no place anyone can sit and rest in an industrial situation. It is a question of change, change all the time — and it is always going to be that way because the world only goes along one road, the road of progress. The prospect of ever-extendable consumer desire, characterised as "progress", promised a new way forward for modern manufacture, a means to perpetuate economic growth.
Progress was about the endless replacement of old needs with new, old products with new. The non-settler European colonies were not regarded as viable venues for these new markets, since centuries of exploitation and impoverishment meant that few people there were able to pay. In the s, the target consumer market to be nourished lay at home in the industrialised world. There, especially in the US, consumption continued to expand through the s, though truncated by the Great Depression of This was followed by a rapid proliferation of radios, vacuum cleaners, and refrigerators.
Motor car registration rose from eight million in to more than 28 million by The introduction of time payment arrangements facilitated the extension of such buying further and further down the economic ladder.
Electricity sparked a whole new wave of consumer product possibilities Credit: Getty Images. This first wave of consumerism was short-lived. Predicated on debt, it took place in an economy mired in speculation and risky borrowing. In both eras, borrowed money bought unprecedented quantities of material goods on time payment and these days credit cards. The s bonanza collapsed suddenly and catastrophically. In , a similar unravelling began; its implications still remain unknown.
In the case of the Great Depression of the s, a war economy followed, so it was almost 20 years before mass consumption resumed any role in economic life — or in the way the economy was conceived. Once WWII was over, consumer culture took off again throughout the developed world, partly fuelled by the deprivation of the Great Depression and the rationing of the wartime years and incited with renewed zeal by corporate advertisers using debt facilities and the new medium of television.
The stage was set for the democratisation of luxury on a scale hitherto unimagined. Television and radio super-charged advertising, directly into people's homes Credit: Getty Images. Vance Packard echoes both Bernays and the consumption economists of the s in his description of the role of the advertising men of the s.
The products have been the luxuries of the upper classes. The game is to make them the necessities of all classes… By striving to buy the product — say, wall-to-wall carpeting on instalment — the consumer is made to feel he is upgrading himself socially.
In a little-known essay reflecting on the conservation implications of the conspicuously wasteful US consumer binge after WWII, John Kenneth Galbraith pointed to the possibility that this "gargantuan and growing appetite" might need to be curtailed. If it continues its geometric course, will it not one day have to be restrained? Yet in the literature of the resource problem this is the forbidden question.
To Galbraith, who had just published "The Affluent Society", the wastefulness he observed seemed foolhardy, but he was pessimistic about curtailment. He identified the beginnings of "a massive conservative reaction to the idea of enlarged social guidance and control of economic activity", a backlash against the state taking responsibility for social direction.
At the same time he was well aware of the role of advertising. Demand for them must be elaborately contrived," he wrote. Want creation — advertising — is a 10 billion dollar industry. Or, as retail analyst Victor Lebow remarked in "Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption.
Thus, just as immense effort was being devoted to persuading people to buy things they did not actually need, manufacturers also began the intentional design of inferior items, which came to be known as "planned obsolescence".
In his second major critique of the culture of consumption, "The Waste Makers", Packard identified both functional obsolescence, in which the product wears out quickly and psychological obsolescence, in which products are "designed to become obsolete in the mind of the consumer, even sooner than the components used to make them will fail".
The consumerism of the present day has roots that go back at least a century Credit: Getty Images. The commodification of reality and the manufacture of demand have had serious implications for the construction of human beings in the present day, where, to quote philosopher Herbert Marcuse, "people recognise themselves in their commodities".
This is reflected in current attitudes. For instance, the Australian comedian Wendy Harmer in her ABC TV series called "Stuff" expressed irritation at suggestions that consumption is simply generated out of greed or lack of awareness: "I am very proud to have made a documentary about consumption that does not contain the usual footage of factory smokestacks, landfill tips and bulging supermarket trolleys.
Instead, it features many happy human faces and all their wonderful stuff! The capitalist system, dependent on a logic of never-ending growth from its earliest inception, confronted the plenty it created in its home states, especially the US, as a threat to its very existence.
My wife Lisa and I have personal experience with dynamics that the top-down Keynesian view ignores. Several years ago we launched a side-business designing, manufacturing and selling reusable all-in-one cloth diapers to moms interested in saving money and cutting down on trash. To start the business, we got a small capital contribution from my brother-in-law in exchange for equity in the company.
These savings were put to use buying the raw materials, designing the diaper prints, hiring sets of skilled people both to sew the diapers and to build the website. Designing, testing and producing the product and website took over a year. The time Lisa and I spent building the company was also a very real form of investment itself. When we finally began selling our product to customers, the income generated was barely enough to cover the real costs.
We re-invested all of it into new inventory for the business, keeping nothing for ourselves in the hopes of improving our approach.
Investment did. After an additional year of persistent re-investment, we realized that we would need even more investment to make the business viable. Our costs were too high per diaper and our local production capacity was too low to keep up with demand.
Moms loved weehuggers and we struggled to keep the product in stock. The only way to make the business grow would have been to secure enough capital to invest in a major manufacturing facility with higher productivity equipment and division of labor. We chose instead to focus on a business where both of us, as former MTV Networks creatives, believed we could add more value: our new media company Emergent Order. We followed our passion, but we were also guided through market prices and profits toward the best way for us to create value for others.
There is a fundamental illogic to the notion that an economy can be grown by encouraging consumption. When a person consumes, by definition, they use things up. The very process leaves us with less than before.
Consumption is the goal, but it is production that is the means. For most of human history, ordinary people had to spend their lives growing food. Today, we have many billions more people on the planet. And yet food is cheaper, better and of greater variety than ever before. Still, almost nobody works in agriculture. We did it by saving our seed corn, investing and ultimately inventing our way out of farming jobs. Thank heavens we did. There are important lessons for public policy that come from these classical insights.
Any program which accelerates the consumption of value, or worse, the destruction of value, ultimately make our society poorer.
Despite what Keynes and his modern followers claim, Wars , natural disasters , terrorist attacks , faked alien invasions , or programs that encourage us to destroy our used cars -- all make us poorer. These schemes reduce the amount of valuable goods and services available for society. The recipient, after all, is consuming without producing any value for others. Disincentives for people to be productive, which have exploded in recent years , not only reduce employment, but reduce output and growth as well.
Now, I fear that a decade of Keynesian macro follies may have brought Eurosclerosis to America. Savings and investment which enable increased productivity, greater specialization and trade are the true engines of economic growth. Increasing consumption is a result of that growth, never the cause of it. If we want sound and sustainable economic growth, each of us has to discover the most valuable ways to serve others and contribute to the supply of wealth before we can take from it.
Much like everyone else, even Santa Claus must produce all year long before people get to enjoy their presents. This is a BETA experience. You may opt-out by clicking here.
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