Conspicuous consumption

With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common. Adam Smith


Wikipedia defines conspicuous consumption as “the lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth.” In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining social status. The term was coined by Thorsten Veblen in his classic 1899 book The Theory of the Leisure Class. The name may be relatively new but the idea of trying to impress others is most definitely not. Adam Smith’s description in the quote above shows that the Scottish economist was aware of how material wealth was flaunted. Karl Marx liked to talk about commodity fetishisation.

But we must go back much further back in time and we cannot limit ourselves to humans. Ostentatious display is ubiquitous in the animal kingdom, where the classic example is the peacock’s tail. This may seem like a waste of evolutionary resources but it serves an important signalling function. It is saying I am so fit that I can afford this garish display of extra strength and stamina and still manage to avoid being eaten by predators! Animals have used bright plumage loud roars flashing teeth and oversized antlers to intimidate their rivals and human culture has mimicked their practices.

Conspicuous consumption has been an inseparable part of our history especially since we began to see the stratification of society after the invention of agriculture. The anthropologist Marvin Harris argued that conspicuous exchange, display and destruction of valuables were culturally constructed strategies for winning and then protecting power and wealth. For Harris preciosities such as gold cups jade figures bejewelled crowns and diamond rings did not acquire their status because of their intrinsic beauty. They represented much more than that. They were tokens of concentrated of concentrated wealth and power – the material symbol of the ability of godlike humans to do godlike things. These items had to be scarce or extremely difficult to find. They could be buried deep underground, available only after long and dangerous journeys or be the product of the minds of great craftsmen and artists.

Conspicuous consumption has been a constant factor in human history. What has changed have been the manifestations. In the precapitalist feudal period status was shown with slaves, women and food. With the rise of capitalism a rising upper middle class wanted to get in on the act with expensive clothes and houses. Finally the last 100 years or so has seen the democratisation of luxury as both the middle classes and the masses strive to conform and be individual at the same time.

Whenever there is extravagant spending, there is always a counterreaction. The most typical manifestation was what are known as sumptuary laws, laws that attempt to curb extravagant consumption. The principal motivation behind such laws was not to control wasteful competition, but rather to enforce the existing social hierarchy. Of course the people who made the laws were exempt from them.  Those below them should dress according to your station and not have pretensions. Generally these laws failed because the desire to flaunt one’s wealth is so powerful and will generally find an outlet. Fashion proved an especially complicated area to control with legislators unable to employ the specific fashion terminology to correctly identify luxurious clothing.

Is conspicuous consumption something to be worried about? Critics argue that luxury spending does in fact generate negative spillovers. If we base our spending on keeping up with the Joneses, we are making a wasteful use of economic resources. There is a game theory problem here. If we could all agree not to engage in this wasteful behaviour, we would surely be better off? It’s like if everyone in a stadium stands up, then nobody sees any better.

It was the American Revolution that really changed the world in this sense. Before then we all had our station in life. But the American Revolution upturned this worldview. This had many positive aspects but there was one big downside. We no longer could put down our social situation to our station in life. Now if you weren’t successful it was somehow your fault. It raised people’s aspirations but now they intensely feel your inadequacies. American society had a real sense of status anxiety, which as De Tocqueville accurately foresaw, they would soon export all over the world.

Attacking the vulgarity of consumer capitalism has been a favourite sport for intellectuals for many years now – John Kenneth Galbraith, Herbert Marcuse, Jean Baudrillard and, more recently, Naomi Klein have all made stinging denunciations. This material abundance hides the spiritual poverty of capitalism. These critics really don’t like choice which they see as a subtle form of tyranny.

As I stated in my Adam Smith post, I think that the market is an excellent way of distributing goods but we have autonomy and we are not forced to worship at the altar of consumerism. I would make the case for inconspicuous consumption; we should buy what adds value to our lives. There is a problem with the concept of conspicuous consumption. How do we define it? The line between luxury and need is not always so easy to define.  We often end up with elitists whose superior education gives them the power to define which items are luxuries. I do not consider myself in thrall of consumerism but I am wary of anti-consumerists who seek to tell everyone what they should be buying. I leave the final words to HL Mencken in a satire of Veblen:

Do I enjoy a decent bath because I know that John Smith cannot afford one – or because I delight in being clean? Do I admire Beethoven’s Fifth Symphony because it is incomprehensible to Congressmen and Methodists – or because I genuinely love music? Do I prefer terrapin à la Maryland to fried liver because plowhands must put up with the liver – or because the terrapin is intrinsically a more charming dose? Do I prefer kissing a pretty girl to kissing a charwoman because even a janitor may kiss a charwoman – or because the pretty girl looks better, smells better and kisses better?


One Response to Conspicuous consumption

  1. Alberto says:

    I miss a reference to Protestant work ethic about the success in life prior to the American Revolution, to which you attribute that mental change.

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