Thursday, November 3, 2011

Mass Consumption

Jeremy Rifkin, The End of Work, 1996

The term "consumption" has both English and French roots. In its original form, to consume meant to destroy, to pillage, to subdue, to exhaust. It is a word steeped in violence and until the present century had only negative connotations. [In the past the word was] used to refer to the most deadly disease of the day--tuberculosis. Today the average American is consuming twice as much as he or she did at the end of World War II. The metamorphosis of consumption from vice to virtue is one of the most important yet least examined phenomena of the twentieth century.

The mass-consumption phenomenon did not occur spontaneously, nor was it the inevitable by-product of an insatiable human nature. Quite the contrary. Economists at the turn of the century noted that most working people were content to earn just enough income to provide for their basic needs and a few luxuries, after which they preferred increased leisure time over additional work hours and extra income. According to economists of the day like Stanley Trevor
and John Bates Clark, as people's income and affluence increase, a diminishing utility of returns sets in, making each increment in wealth less desirable. The fact that people preferred to trade additional hours of work for additional hours of leisure time became a critical concern and a bane to businessmen whose inventories of goods were quickly piling up on factory floors and in warehouses across the nation.

With an increasing number of workers being displaced by new laborsaving technologies and with production soaring, the business community desperately searched for new ways to reorient the psychology of existing wage earners, to draw them into what Edward Cowdrick, an industrial relations consultant of the time, called "the new economic gospel of consumption." Converting Americans from a psychology of thrift to one of spendthrift proved a daunting task. The Protestant work ethic, which had so dominated the American frontier ethos, was deeply ingrained. Parsimony and savings were cornerstones of the American way of life, part of the early Yankee tradition that had served as a guidepost for generations of Americans as well as an anchor for newly arrived immigrants determined to make a better life for their children's generation. For most Americans, the virtue of self-sacrifice continued to hold sway over the lure of immediate gratification in the marketplace.

The American business community set out to radically change the psychology that had built a nation--to turn American workers from investors in the future to spenders in the present. Early on, business leaders realized that in order to make people "want" things they had never previously desired, they had to create "the dissatisfied consumer." Charles Kettering of General Motors was among the first to preach the new gospel of consumption. GM had already begun to introduce annual model changes in its automobiles and launched a vigorous advertising campaign designed to make consumers discontent with the car they already owned. "The key to economic prosperity," said Kettering, "is the organized creation of dissatisfaction." The economist John Kenneth Galbraith put it more succinctly years later, observing that the new mission of business was to "create the wants it seeks to satisfy." [..]

Consumption economists like Hazel Kyrk were quick to point out the commercial advantages of turning a nation of working people into status-conscious consumers. Growth, she declared, required a new level of consumer buying. "Luxuries for the well-off," she argued, had to be "turned into necessities for the poorer classes." Overproduction and technological unemployment could be mitigated, even eliminated, if only the working class could be re-educated toward the "dynamic consumption of luxuries."

Transforming the American worker into a status-conscious consumer was a radical undertaking. Most Americans were still making most of their own goods at home. Advertisers used every available means and opportunity to denigrate "homemade" products and to promote the "store-bought" and "factory-made" items. The young were particularly targeted. Advertising messages were designed to make them feel ashamed of wearing or using homemade products. Increasingly, the battle lines were drawn around the issue of being [..] "old-fashioned." Fear of being left behind proved a powerful motivating force in stimulating purchasing power. Labor historian Harry Braverman captured the commercial spirit of the times, remarking that "the source of status is no longer the ability to make things but simply the ability to purchase them."

By 1929 the mass psychology of consumerism had taken hold in America. The traditional American virtues of Yankee frugality and frontier self-sacrifice were fading. That year President Herbert Hoover's Committee on Recent Economic Changes published a revealing report on the profound change in human psychology that had taken place in less than a decade. The report ended with a glowing prediction of what lay ahead for America: The survey has proved conclusively what has long been held theoretically to be true, that wants are insatiable; that one want satisfied makes way for another. The conclusion is that economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants as fast as they are satisfied .... By advertising and other promotional devices... a measurable pull on production has been created... It would seem that we can go on with increasing activity... Our situation is fortunate, our momentum remarkable.

Just a few short months later the stock market crashed, plunging the nation and the world into the darkest depression of the modern age. The Hoover Committee, like many of the politicians and business leaders of the day, was so fixated on the idea that supply creates demand that it was unable to see the negative dynamic that was careening the economy into a major depression. In order to compensate for the rising technological unemployment brought about by the introduction of new laborsaving technologies, American corporations poured millions of dollars into advertising and marketing campaigns, hoping to convince the still-employed workforce to engage in an orgy of spending. Unfortunately, the income of wage earners was not rising fast enough to keep up with the increases in productivity and output. Most employers preferred to pocket the extra profit realized from productivity gains rather than pass the savings along to the workers in the form of higher wages. Henry Ford, to his credit, suggested that workers be paid enough to buy the products companies were producing. Otherwise, he asked, "who would buy my cars?" His colleagues chose to ignore the advice.

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