Capitalism => Consumerism?

The basic idea behind capitalism as an underpinning of society is that if you give people the freedom to earn a lot of money however they please, society will tend to get better. They will get better because the best way to earn a lot of money is to sell something which lots of people want, and to sell it cheaper and/or better than everybody else. That means that people get what they want, and they get it cheaper, and so society will get better.

However, this is sort of indirect, and as we all know there are lots of other ways to make a lot of money. The one I’ve been thinking of recently is that one good way to earn a lot of money is to first convince people that they need something, and then sell it to them. This is different from the usual cheaper/better approach, which is to sell people something that they already know that they need. The idea here is to convince them that they need it, and then sell it to them.

The most obvious example is fashion. If you have a warehouse full of ostrich feathers that you want to sell, your best bet is to convince people that they will look better if they wear an ostrich feather hat. If you do that, you will become wealthy. Note that fashion is not useless, and people do gain something by buying something that makes them fashionable. The interesting trick is making the thing that you happen to have become the thing which is fashionable.

A subtler example is the notion of stuff in general. If you convince people that they need a lot of stuff, you can then make money selling it to them. This seems to the driving force behind a store like Target, for example. They have a lot of stuff, you want a lot of stuff, they will sign you up for a store credit card on the spot, life is good. Except that a lot of energy is being spent making stuff, shipping it around the planet, and eventually storing it in a landfill.

Is it possible for people to be happy with less stuff? I don’t really know. I personally am not a big buyer of stuff, other than books. I kind of enjoy walking around Target with my daughter; it’s like going to a museum of consumer goods. Of course I’m careful to tell her before we go in that we aren’t going to buy anything. But I expect I’m a bit of an outlier. It seems that many, perhaps most, people do kind of like stuff–within reason, of course.

What I wonder about is how much people like stuff inherently, and how much they like stuff because somebody has convinced them to like it. That is, is this an example of capitalism making something better, or is it an example of capitalism creating a need in order to fill it?

16 Comments »

  1. BenHutchings said,

    April 19, 2008 @ 3:31 am

    “Is it possible for people to be happy with less stuff?” Yes.

  2. fche said,

    April 19, 2008 @ 6:12 am

    You may be blaming the wrong bugaboo for consumerism (to the extent that consumerism is even bad enough that any blame is necessary). Developed capitalism has existed for hundreds of years without modern shopping malls. Even in non-capitalist countries, there used to be / are commercial messages that aim to propel the audience to buy stuff at (government-controlled) outlets.

    > The basic idea behind capitalism as an underpinning of society is that if you give people the
    > freedom to earn a lot of money however they please, society will tend to get better.

    That seems a bit chip-on-shoulder’d. Capitalism is a good system both on utilitarian (basically what you say, except with the disdainful emphasis on “lots of” money), and on natural rights grounds (i.e., no one else should have the power to keep you from voluntary exchange.).

  3. ncm said,

    April 19, 2008 @ 10:23 pm

    Lately the most reliable way to get lots of money (i.e. billions) has been to arrange for the U.S. government to hand it over to you. Investment returns of 100x+ have not been at all unusual, comparing the cost of lobbying to the size of grants.

  4. rskrishnan said,

    April 22, 2008 @ 12:05 pm

    Convince people they need X and then sell them X at an exorbitant price – sounds like a one line summary of the iPod story.

    ncm – I tend to agree that govt ==> great business.

    The basic idea behind capitalism as an underpinning of society is that if you give people the freedom to earn a lot of money however they please, society will tend to get better.

    Well I think we can all agree that the quote describes the _spirit_ of a free (decentralized?) society. However we are miles off course (imho).
    ncm’s point about legislated handouts is very relevant when you think of “privatizing” everyday life – i.e. from access to roads, to water, to power, to armies (hired guns in iraq), to education, to perhaps in the near future even air (i.e. clean air).
    So then what do we pay taxes ?!? (the usual answer of social sec + health care + general infrastructure for society is at best funny these days). I think besides national parks, and air we pay for everything post tax.

    So back to consumerism-capitalism … why not have a $-for-services model ? Instead of a pseudo-socialist approach that tries to amortize cost-of-society/#of people in society , but with capitalist overtones!

    That has to be the most complex sentence I’ve ever written!

  5. Ian Lance Taylor said,

    April 22, 2008 @ 5:12 pm

    BenHutchings: thanks for the link. I guess we’ll see whether it catches on.

    fche: While I agree that voluntary exchange is good, it’s not a first principle for me. I think it’s clear that a functioning free market requires regulatory oversight, for things like truth in advertising and antitrust. Those are restrictions on voluntary exchange, intended to promote the usefulness of exchange.

    ncm: Definitely true, though not actually a failure of capitalism per se.

    rskrishnan: I don’t think a dollar for services model works for things like social security and health care, which are fundamentally insurance plans. As I’ve written before, for insurance to work, you have to prevent people from dropping out.

  6. ncm said,

    April 22, 2008 @ 9:51 pm

    … except that the people collecting the multi-billion-dollar handouts are the same people promoting unregulated capitalism. It’s a failure of capitalism because the biggest corporations and the individuals who control them have practically unlimited political power, and are able to co-opt the State to their own ends. It’s worth noting that those handouts have typically been no-bid contracts, lately, discarding even the appearance of competition.

    Is it a failure of capitalism, or a success? It depends on whether you believe what is promoted as the purpose of capitalism, or the evidence.

  7. Ian Lance Taylor said,

    April 23, 2008 @ 6:05 am

    To me it seems like a failure of human nature, so to speak, rather than a failure of capitalism. Any society has areas which can be exploited, and people learn to exploit them. I think the goal has to be to on the one hand minimize those areas, and on the other try to ensure that when they are inevitably exploited, the net result is beneficial rather than harmful. I agree that the U.S. is not doing all that well on these grounds, but I still don’t agree that the blame should be placed on capitalism as such.

  8. ncm said,

    April 23, 2008 @ 1:21 pm

    Capitalism, like any engine, needs constant maintenance. If your society is not strong enough to provide that level of maintenance, it devolves into fascism, a process we are witnessing in the U.S. Capitalism entirely lacks any mechanism to limit its own impact, and without external limitation, it crushes institutions oriented to human needs, such as democracy. Is that a failure, or just an intrinsic property? It depends on your expectations.

    What’s not clear is whether any society can be strong enough, in the long term, to contain capitalist extremism. Reform movements come and go, but big corporations can afford to (and do) keep the pressure on continuously, decade over decade. As an engine of production, capitalism is unique in human history. When it gets big enough to determine for itself what it will produce, humanity and life itself become subordinate. That’s actually the theme of every SF story in which robots threaten to take over the world. (Sorry, it’s already happened.)

    Can citizens ever take back control of government from corporations? The blogosphere looks pretty robust right now. If it can sustain this level of activity for decades without getting co-opted, we stand a chance.

  9. Ian Lance Taylor said,

    April 23, 2008 @ 4:10 pm

    Corporations, like governments, are comprised of people. While I am not unsympathetic to your reasoning, it sounds somewhat like the arguments of libertarians about the government. Corporations are not *necessarily* opposed to free society, any more than governments are. There are a number of ways to resist corporations, the most obvious being to not buy their products and not work for them, a slightly less obvious one being to elect politicians who will contain them. Thus I believe that they do have a limit.

  10. ncm said,

    April 24, 2008 @ 2:47 am

    Corporations can (and do) own the public media that shape public opinion, and thus votes, and thus elections. Nowadays corporations also control the machines that are supposed to count the votes. (In the last congressional elections it appears they underestimated the number of fraudulent votes they would need to retain full control by about 30%.) We don’t have any practical choice about whether to buy from corporations or (in aggregate) to work for them.

    Corporations are required by present law to be opposed to free society anywhere it might interfere with profitability, except where their own charter explicitly implies otherwise.

  11. Ian Lance Taylor said,

    April 25, 2008 @ 5:39 pm

    That is all true, but corporations are still run by people, not robots. I think it’s a mistake to analyze corporations purely in terms of their own interests separate from the interests of the people who run them and work for them. That analysis will increasingly break down as the circumstances get more extreme.

  12. ncm said,

    April 26, 2008 @ 12:06 am

    People acting against the interests of the corporation that employs them are easily (and, indeed, routinely) replaced. Just as the Internet treats censorship as damage and routes around it, so large corporations treat conscience. I am always told that corporations are really just groups of people, but that’s false, in every way that matters. The machine is constructed out of people, but as in any machine, it is not the materials but the design that determines what it does.

    The design of corporations is encoded in their charters and in corporate law. It has always been easy to find people to act out their assigned roles. Designing the roles to allow people to feel they aren’t personally doing too much direct harm is an architectural matter, one of understanding the limits of materials, that has little to do with what goals the organization may pursue. Do I really need to cite examples?

  13. Ian Lance Taylor said,

    May 2, 2008 @ 6:17 am

    How does your argument differ from the libertarian argument against government?

  14. ncm said,

    May 6, 2008 @ 12:38 am

    Sorry, I don’t see any similarity. The Libertarian argument favors handing corporations unlimited power, full stop. The only way to contain the power of large corporations, as they are, is with something more powerful, i.e. a government. The only way that can actually work is if the large corporations don’t themselves control it. The only way it can do any good is if it is structurally obliged to answer to the population at large, and if the population at large hasn’t been propagandized out of its collective mind. The blogosphere is chipping away at the effectiveness of the corporate propaganda appratus. Whether it will be enough is unclear, particularly when working against massive automated election fraud.

  15. Ian Lance Taylor said,

    May 6, 2008 @ 4:59 pm

    The similarity I am getting at is that the Libertarian argument, as I understand it, is that it is bad for government to have power. It is bad because the government abuses it, because they control information, etc. I agree that the effect is to hand power to the corporations, but that is not the goal. It seems to me that there is some parallel between the Libertarian critique of government and your critique of corporations. I personally sympathize more with your comments, but I think you are pushing the structural argument too far. I think there is a limit to what corporations can do. In fact I think that history so far shows us that governments can do far more harm than corporations have ever managed. This is because governments have the ability to control society at a much deeper level than corporations can, exploiting obedience to the law and nationalism in ways that are unavailable to corporations. My point is not that corporations are good and government is bad–indeed I tend to think the opposite. My point is that if you are not careful you can push your argument until it becomes unsustainable.

  16. ncm said,

    May 6, 2008 @ 8:10 pm

    I long ago stopped paying attention to the supposed goals of any political group, and discover their true nature by looking at the predictable consequences of the policies they promote. Libertarian policies promote unlimited power of large organizations over individuals. They fetishize government, so that it, uniquely among large organizations, retains little power, but hands it over to whomever is equipped to claim it. In the Libertarian heaven, corporations direct the government to enforce their wishes against you, by court order, after you are forced to sign contracts giving up whatever rights you once had.

    Is there really any limit to what unfettered corporations could do? The prison industry has given us a taste.

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