Friday, March 27, 2015

Even if capitalism has problems, consumerism is fine

I've heard a few people complain about "consumerism", identifying it as one of the evil consequences of capitalism.  For example of this mentality, see here:
People in consumerist societies live by the influence of advertisements, and often methodically buy things they do not need, and in most cases, cannot afford. This, in turn, leads to greater economic disparity, and despite having the most or latest products, consumerists have a feeling of unfulfillment due to spending a lot of money yet having nothing of personal importance.
Even as I agree that capitalism has some problems, I do not agree that consumerism is one of those problems.  Furthermore, consumerism mitigates economic inequality, rather than exacerbating it.

My problems with capitalism are summarized as follows:
1. Whenever returns on capital exceed economic growth (which is the typical state of the economy), capitalism leads to increasing economic inequality.  That's the thesis of Capital in the 21st Century, one of the most important books of our time.

2. As I've previously observed, even an ideal free market only optimizes for the sum utility as measured in dollars.  In the presence of economic inequality, this skews the market against poor people, who have a lower dollar-to-utility conversion factor.
My understanding is that "economic growth" is a measure of the rate of increase of consumption.  So if people consume more, that will lead to less inequality.  This is easy to understand if you consider the alternative to consumption: investment.  Investing money produces returns, and the people with the most wealth are the people who get the most returns.

It is true that I've previously expressed a desire to consume less.  However, that's partly a matter of personal taste, and it's partly a matter of labor politics.  I advocate reducing the 40 hour work week because I would rather consume my leisure time than have an increased ability to buy status goods.  In other words, I'm just favoring one kind of consumption over another.  Or put another way, I advocate that leisure time is allocated more sensibly, with unemployed people having less leisure (ie by being employed), and employed people having more leisure.

I think people who complain about consumerism might be trying to express a similar sentiment about not buying status goods.  But ultimately I feel they've botched the point with a poor understanding.

The consumption of goods is one of the most fundamental of goods in society.  If it happens to be true that capitalism leads to increased consumption, that would be one particular point in capitalism's favor.


I just wrote this as a personal reaction to things I heard "on the street".  However a brief google search revealed that many people have said things that are very similar.  I will look into these and post a follow-up if I find anything interesting.


miller said...

Just FYI, Piketty's book has been widely criticized in economics circles for cherry-picking data on which its claims are made (among other criticisms). The wikipedia article covers just the tip of the iceberg.

miller said...

You may have to highlight the particular section where Wikipedia says that. I see many critiques but cherry-picking is not among them.

miller said...

After further looking around, I believe that you heard that somewhere, and simply assumed it would appear on Wikipedia. But it does not appear, nor is it even mentioned on the Wikipedia talk page. I really don't know where you heard that, but it appears the source was so disreputable that not even Piketty's opponents saw fit to mention them.

miller said...

I agree with your points about equality, but I do think that unbridled consumerism is a problem, because of the point made that advertisers do get people to consume goods that may be neutral or detrimental to their welfare (e.g. soda), and because consumption tends to deplete resources and have environmental externalities that the market alone does not address.

miller said...

To address the second point, one way of framing the externalities is to say that short-sighted use of resources will harm the environment and decrease our ability to consume in the future. So the reason we care about the environment is again because we are pro-consumption.

miller said...

That seems to me to be a very odd framing. Harming the environment decreases our ability to exist in the future. We should clarify how we're defining "consumption of goods." One could define it very generally to include most economic activity, in which case I agree with your point but think it tautological. However, I think most critiques of "consumerism" / consumption (I haven't read the article you linked) are singling out the kinds of consumption epitomized by the late-20th century US: non-edible, limited-durability, mass-manufactured, physical-resource-intensive consumer goods-- as opposed to, say, information goods. I'm not sure if "consumption" excludes services, but "consumption of goods" seems to exclude it, and generally consumption of labor-intensive services (ranging from education to visiting restaurants to enjoying art) are more environmentally and economically sustainable (not to mention generally making people happier) than resource-intensive goods.

miller said...

It isn't clear what people mean when they criticize consumerism. The essay I linked does not name a single example, and just refers vaguely to black friday and household debt. Other people complain about electronic devices. Or status goods. Or in your case physical resource-intensive goods. These are some very dissimilar complaints!

My view is that all of it counts as consumption. Anti-consumerists would do better to say what they mean--that they oppose a particular kind of consumption.