Two problematic values in 20th century economics

Twentieth-century economics pretended to be a value-free science. Among the values in fact adhered to and promulgated are two that turn out to be especially problematic: the goal of economic growth, and the elevation of consumerism. Growth is a macroeconomic issue, while consumerism plays out on the micro scale of individual motives, choices, and actions. Mediating between these are business enterprises, especially corporations. These are the actors whose interests are served by the promotion of consumerism and the belief that economic growth is good – indeed necessary – for everyone.  . . . . . . 

Economics, as a system of theory, beliefs and practices is not responsible for all the woes of today’s world, but it is deeply entangled with many of them.  . . . . . . 

Dramatic changes in our economy are needed if it is to shift onto a path of social equity and environmental sustainability – to dodge the worst possibilities of climate change – and to cope with the damages that cannot be dodged. System change requires value change.  . . . . . .  

The creation of the consumer society 

Consumerism is closely allied with capitalism. It began as a Western phenomenon, becoming global with the global spread of capitalism. An overview of the historical aspects that appear to have been necessary for this huge shift include: a social revolution in the West, replacing feudalism with capitalism, and replacing a dominant aristocracy with a hegemonic bourgeois; the existence of a commercial revolution, which is pre-requisite for the institutional and productive arrangements required to supply an emerging consumer society; accelerating advances in science and technology; an urban-industrial expansion, shifting a large part of the growing population from a subsistence rural sector to a wage-paying factory locus; the spread of an ethos justifying both capitalism and the increased wealth of the ordinary worker; the encouragement of status ambitions and conspicuous consumption in both the middle and the working classes; and the development of institutions, such as advertising, to awaken and channel newly promoted wants.

Resting on this history, two 19th -20th century economic developments were critical in allowing mass consumption to come into being and to grow as the force supporting ever-increasing production. One development  was the rise in price of human labor, relative to the prices of energy and raw materials – hence spreading purchasing power. The second development was that a growing proportion of the average household budget was liberated from purchasing necessities, and made available for “extras” – starting with pottery dishes and machine-loomed fabrics; moving on to bicycles and oil lamps; through Keyfitz’s “standard package” of electric lighting, refrigerators, televisions and automobiles;. to computer gadgets, cell phones, jet skis and $5,000 barbecue grills.[1]

Although consumerism took root in the eighteenth century, it took some time before it fully blossomed. At the dawn of industrialization, it was not at all clear that workers would become consumers. Early British industrialists complained that their employees would work only until they had earned their traditional weekly income and then stop until the next week. Leisure, it appeared, was more valuable to the workers than increased income. This attitude, widespread in preindustrial societies, was incompatible with mass production and mass consumption. It could be changed in either of two ways.

Neva Goodwin