The Problem with Consumerism

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So let’s start with a short story about consumerism to answer the question – why does consumerism even exist and what the hell is it? Also, what, exactly, is the problem with consumerism?

Once upon a time, there was no such thing as consumerism. People, strangely enough, were just people. They weren’t consumers. They were people.

Then along came capitalism. Capitalism didn’t always exist. It’s a set of ideas about how economies ought to work. People made up those ideas; they didn’t always have them. Feudalism, a different set of ideas about how economies ought to work, was all the rage during the Middle Ages. And then it wasn’t.

Probably the most famous philosopher of capitalism is Adam Smith, who published The Wealth of Nations in 1776, explaining, essentially, why capitalism is so great. Smith didn’t invent capitalism by any means, but you can consider, if you’d like, 1776 to be a turning point in the history of capitalism. That’s partly because, just as Adam Smith was extolling the virtues of capitalism, a little thing known as the Industrial Revolution was, well, revolutionizing the lives of people being swept up in the growing tide of, well, industrialization.

The Industrial Revolution replaced handmade goods with machine manufactured goods. Lots of them. Lots and lots of stuff. Produced by lots and lots of factories – with lots and lots of machines. Machines replaced nature as the source of the stuff that people used to live. Farming and handcrafts didn’t completely disappear, of course, but they got shoved to the side as a way to live by factories and machines and industry and mass-produced stuff. Lots and lots of stuff.

This was exciting, dirty, harrowing, transformational, and it made some people very very rich and lots of people very very poor.

People more or less got used to the exciting, harrowing, dirty richness and poorness of the Industrial Revolution until the Great Depression in 1930. There had been financial panics and depressions before. American history is dotted with them prior to 1930, but the Great Depression was a whole new ballgame. It sucked. It sucked really really badly. It devastated the population financially.

In an ironically fortunate turn of events for the American economy, World War II reared its ugly head, and the United States eventually went all in on a wartime economy. That horrific war couldn’t last forever, though, and the US had to figure out what to do with all its excess industrial capacity and figure out some way not to go back to the hardships of the Great Depression. Consumerism, the idea that getting people to consume lots of stuff produced by all that industrial might of US manufacturers, seemed like the economic savior of the time.

So consumerism is a relatively recent set of ideas about how economies ought to work. It implies that if nations produce excessive stuff, then the best thing for the economy is for people in those nations to consume excessive stuff.

But Why is Consumerism a Problem?

In short, the dependence of the American economy on this idea.

70% of GDP is dependent on consumption

Why Americans buy so much stuff during Black Friday and Cyber Monday :

What this means is seventy percent of American gross domestic product (what America produces) depends on people consuming (buying) excess stuff. That’s a big percentage. That’s not a mixed resilient economy. That’s an economy that is extremely dependent on one fragile idea, the idea that individual people have enough disposable income to purchase excess stuff.

This probably seemed like a perfectly reasonable idea when Franklin Roosevelt was president because there was an associated idea that America was developing a gigantic middle class that needed, wanted, and could buy stuff that it couldn’t buy during the Great Depression and the war years.

However, Ronald Reagan, purposefully or not, declared war on the American middle class in the 1980s, with his own set of ideas (‘supply-side economics’), that tilted the scales of the American economy massively against consumers. The American economy has been sucking relative wealth away from consumers and toward corporations and shareholders for forty years, with a truly frightening level of enthusiasm.

An economy based on a consumption model needs well-paid workers so they have enough money to be able to consume. The American economy declared war on American workers decades ago. One of the first things Reagan did as president was try to break a union. Unions are a vehicle by which workers become well-paid. So Reagan said ‘no more of that!’

In other words, the Republican party adopted an explicit set of ideas designed to kill the very thing the economy depends on – ordinary people with money to buy stuff.

But if That Was 40 Years Ago, Why is Consumerism Still Around?

Good question. There are a bunch of reasons. Technology made the economy more productive, which blunted the effects of the policies. The Democrats embraced ‘free trade’ and ‘globalism’ which allowed American companies to chase consumers around the world, which also blunted the effects of the policies – and embedded consumerism in the world economy to a frightening degree. It seemed like the world economy was growing so much that it didn’t matter if workers weren’t keeping up, at least they still had more stuff than they had before.

And there were other factors. One of which was scary low interest rates and mountains of debt. American society became inundated with propaganda and advertisements encouraging underpaid workers to take on debt to finance buying stuff they weren’t making enough money to be able to afford.

An amazingly un-people-friendly interlocking set of ideas took hold that placed almost all of the responsibility and risk for the economy on ordinary people who don’t have a lot of money and away from wealthy (and billionaire) capitalists and corporations that do have a lot of money.

It’s kind of crazy.

But here we are.

And now artificial intelligence (AI) is predicted to wipe out maybe 300 million jobs around the world.

That’s a lot of people not able to consume because they’re not making any money. In an economy that is almost entirely dependent on consumerism.

This means, whether we like it or not, we’re all going to have to get pretty fed up with consumerism. Or capitalism. Or Republican and Democratic ideas about the economy. Or the war on workers. Or all of the above.

The center won’t hold if you destroy the center.

Get pretty fed up!

Tags: Economics, government