Consumer Capitalism

Anastasios Korkotsides

• Publisher: Routledge
• Year: 2007
• eBook ISBN: 9781134187706
• Topic: Business
• Subtopic: Business General
• Index: Business

An excellent addition to Routledge's strong tradition of publishing exceptional books in heterodox economics, this innovative and groundbreaking volume draws on the work of Schumpeter, Marx and Sraffa, three of the most influential economists of all time. It bases value on a single, inwardly felt scarcity, the scarcity of life, which consumers scramble to experience more of through private possession of the product of socially contributed human time-space, in the form of knowledge embodied in commodities. This coercive urge, which appears outwardly as 'commodity fetishism', sets the context of 'utility' and self-interest, implicating consumers in the plunder of each other's toil and of the earth, showing that capitalistic growth surveys existential distress rather than welfare.

Existential motivational uniformity joins the seemingly disparate individualistic pursuits into a race for growth, while markets promote variety and innovation. Markets assist consumption innovations to blend with Schumpeterian production innovations as consumers try to foresee market conditions and structure their expenditures towards gaining positional advantage. These explain the structural dynamics of increased roundaboutness through adjustment of prices and demand to an evolving techno-structure.

A valuable resource, this book unfolds a new vision of economic theorizing through the extreme basics of agent behaviour.

Part I

1 Theory, society and consumption

While the Athenian democracy of Pericles was declining, Socrates aggravated its citizens with his teaching that the worst thing about ignorance is that those who are neither wise nor virtuous are pleased with themselves; they are self-complacent. So, he made a plea for self-awareness: Gnothi seauton! The Athenians accused him of impiety and sentenced him to death by drinking hemlock. Socrates, a democrat, declined his students’ offer to help him escape, submitting to the institutions of a degenerate democracy.

In his Nicomachean Ethics (I. v. 3), Aristotle averred that ‘The generality of mankind … show themselves to be utterly slavish, by preferring what is only a life for cattle; but they get a hearing for their view as reasonable because many persons of high position share the feelings of Sardanapallus.’¹ The Athenians went after him also, prosecuting him for impiety. Being not an avowed democrat, Aristotle refused to let Athens ‘sin twice against philosophy’ and fled to Chalkis, where he died soon after.

Nietzsche did not meet with much better fate, for maintaining that ‘The Bravest amongst us is not Brave enough …’

Adam Smith admonished, somewhat more guardedly: ‘He is a bold surgeon, they say, whose hand does not tremble when he performs an operation upon his own person; and he is often equally bold who does not hesitate to pull off the mysterious veil of self-delusion, which covers from his view the deformities of his own conduct’ (Smith, 1869: 138). And: ‘If we saw ourselves in the light in which others see us, or in which they would see us if they knew all, a reformation would generally be unavoidable’ (ibid.: 139).

In his Introduction to Leviathan, Hobbes (1991: 10, original emphases) noted:

But there is another saying not of late understood, by which they might learn truly to read one another, if they would take the pains; and that is, Nosce teipsum, Read thy self: which was not meant, as it is now used, to countenance, either the barbarous state of men in power, towards their inferiors; or to encourage men of low degree, to a sawcie behaviour towards their betters; But to teach us, that for the similitude of the thoughts, and Passions of one man, to the thoughts, and Passions of another, whosoever looketh into himself, and considereth what he doth, when he does think, opine, reason, hope, feare, &c, and upon what grounds; he shall thereby read and know, what are the thoughts, and Passions of all other men, upon the like occasions.

Self-awareness is an ideal; a feat of extreme difficulty, a noblest pursuit. But our aggressiveness, which protrudes conspicuously behind a thin civilized veneer, leaves little room for it, as we are preoccupied with concealing our violence from ourselves and from others, covering up its motives and goals. So, the above thinkers were not admired for what they really taught, but for watered-down versions of their ideas. Yet, the lesson to be drawn from them is that they did not cop out of their duty to speak as they saw right. They took it as their moral obligation to revolt against moral decay, resisting siding with the underprivileged and finding malice only in the privileged. They knew that all can do harm and that anonymous masses can do the greatest.

A good part of the said deception is done by twisting of language. For example, car ‘accidents’ are not accidental, neither is their calling them so. Such doing away with one’s own guilt or responsibility should normally be seen as ludicrous, but normal or ludicrous, decent or indecent are socially defined, according to prevailing standards. This is how it is, if this is how many think it is. Nothing practically exists unless it is seen by the many, and what the many see is hard to dispute. Seeing what they don’t is being paranoid. Not believing in what they believe is being impious. All value is social, and sanity is by consensus. Outside consensus, there is insanity. Socrates was insane. Nietzsche was insane. Boltzmann was insane and We are sane. The fence keeps us safe from those inside, ‘inside’ being always the ‘smaller’ part.

Ignorance is never imposed, so it is not an excuse. The right to be thinking cannot be deprived. It can only be voluntarily surrendered. In the darkest of instances, those who meant to keep their spirit alive did so. To be base, one must take pride in it and enjoy it. Those who choose to be base and ignorant enjoy their ignorance and despise anyone who is noble or wise. Baseness and servility feed ignorant veneration and pretentious admiration of great work, without the slightest of understanding or true appreciation. Most would poke fun at Einstein or Beethoven and they would tear the Parthenon down, if they could; what they left standing of it, that is, for being too big to fit in private marble collections or in museums, and too removed from Dresden, to be pulverized in a single air raid.

As Feuerbach (1957) contended, in his Preface to the second edition of The Essence of Christianity, modern society prefers the picture to the object, the counterfeit to the authentic; the reproduction of reality to reality itself; what appears, to what is really there. Delusion is its sanctity, truth is its profanity. And the climax of its delusion is the pinnacle of its sacredness. Fromm (2004: 69) maintained that ‘most people prefer to think in fictions, rather than in realities, and to deceive themselves and others about the facts underlying individual and social life’. It may be more arguable to say that they deliberately select interpretations of reality or actively construct impressions of it that allow them to perpetuate their delusion.

Motivating observations

With its mainstream branch sailing clear of emotions through entertainment of the Homo economicus caricature that obliges to no motives and can be accused of no evil sentiments, and with Marxists siding with the underdogs, economic theorizing appeased and adulated the crowds, avoided to interrogate them, deluding itself and the crowds in the process and missing much interpretative substance. It largely ignored the wisdom of its own patron saints, picking selectively from their ideas. Marx and Smith condemned disgrace, aggression and avarice in such harsh terms, that any theory honestly founded upon their complete spectrum of ideas should pay particular attention to the intrinsic aggressiveness of the economic conduct of laymen. In their philosophies, which were expressed conclusively in the Wealth of Nations and in Capital, but which should be read against the background of the Theory of Moral Sentiments, the Economic and Philosophical Manuscripts and their other writings, they drew economic activity in less bright colours than their followers painted it. They unmistakably sketched it as strife. Urbane Smith argued: ‘The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freeman’ (Smith, 1937: 365). And: ‘For though management and persuasion are always the easiest and safest instruments of government, as force and violence are the worst and the most dangerous, yet such, it seems, is the natural insolence of man, that he almost always disdains to use the good instrument, except when he cannot or dare not use the bad one’ (ibid.: 751).

But vile or not, the psychological underpinnings of economic activity have not escaped notice. Pareto (1916/35, Sec. 2078) insisted that ‘All human conduct is psychological and, from that standpoint, not only the study of economics but the study of every other branch of human activity is a psychological study and the facts of all such branches are psychological facts.’ Duesenberry (1967: 18) contended that

we have to face up to the problems of the psychological bases of consumer choice. But as soon as one considers that problem one sees why economists have tried to avoid it. At first glance every conceivable motivation seems to be involved in consumer choices. If we wish to explain in detail every purchase by every individual we are in a hopeless position. We certainly cannot create a useful analytical scheme on the basis of detailed individual psychology.

This consideration need not detain us very long. We are, after all, primarily concerned with the central tendencies of the relations between economic variables and consumer choices. If it can be shown that one set of forces dominates the behavior of most individuals, we can center our attention on the operation of those forces.

In the present investigation, we look precisely for that ‘one set of forces’ in the terra incognita of existential consumer ontology, wherein lies the unique motivational factor involved ultimately in all economic objects and choices: ANGST. Thus, we divorce with all those brands of political economy which confuse knavish materialism with tastes that appear variegated on the surface, but always converge on some kind of ‘utility’ that has historically taken on a multitude of forms: usefulness, pleasure, associated with positive experiences or with the avoiding of negative ones, or just as content-free preference orderings entertained by neoclassical theory. Whatever nuances these may take in the lasting debate over what utility implies (classical, Benthamite, neoclassical, etc.), none carries any distressful existential connotations. So, for economy, since a precise distinction would matter little for our argument, we will house them under a utilitarian roof, without meaning to smooth out any real differences between them.

Returning to the classical economists, they had neither expelled psychology from their considerations, nor had they cleared the crowds of envious emotions. Marx had not portrayed the many as victims, with all wrongdoing being done by a small class of capitalists seized by greed. His fundamental idea was that humans live their lives in full consciousness of themselves, in conscious relation to each other and to nature. It is thus that they create their own history, which evolves along with the mode of production, itself determined by the stage of development of social forces. So, he expected workers to emancipate themselves and society on their own accord, rebuking those who argued that the masses were poorly educated for this task and that they should be freed from above, by the bourgeois humanists. He held individuals accountable for the history they created, for their own alienation and dehumanization. But by failing to address individual psychological motivators, he helped others draw a gleaming picture of the proletariat.

Analogously, a fragrance of impeccable common welfare was artificially made to emerge from the sludge of avarice that was condemned unequivocally by Smith, setting his economic theory apart from his Theory of Moral Sentiments. Mainstream economics adopted uncritically the hypothesis that economic activity promoted some common good, as a self-evident hypothesis, digging no deeper. This evades that humans covet most what belongs to others, as there is little else to long for after satisfying their basic needs. But Smith (1869: 55) argued: ‘And thus, place, that great object which divides the wives of aldermen, is the end of half the labours of human life; and is the cause of all the tumult and bustle, all the rapine and injustice, which avarice and ambition have introduced into the world.’ But place implies conflict, since there is no such thing as first place for everyone, or an unstratified society where all occupy the same place (except for an ideally anarchic one), and what is a pleasure for one may be displeasure for others. Place is relative.

In his Economic and Philosophical Manuscripts Marx insisted on two things. First, ‘the history of industry and industry as it objectively exists is an open book of the human faculties, and a human psychology which can be sensuously apprehended. … No psychology for which this book, i.e., the most sensibly present and accessible part of history, remains closed, can become a real science with a genuine content’ (Fromm, op. cit.: 109, original emphases). Second, the only thing that truly belongs to social humans and constitutes their personality is their labour, their personal time-space registered in the knowledge amassed through their productive and general attainments. This, Marx maintained, is social man’s nature and, referring to science in general, he argued that ‘One basis for life and another for science is a priori a falsehood. Nature, as it develops in human history, in the act of genesis of human society, is the actual nature of man; thus nature, as it develops through industry, though in an alienated form, is truly anthropological nature’ (ibid.: 110, original emphases).

In spite of these, theory brushed aside motivation and meticulously avoided basing its argument on human psychology. Mainstream agents lack ontology, ‘existing’ in social vacuum, simply acting as vehicles of preferences. The shallowness of all utility-based explanations is plain to the fact that one could come up with the same theory by hypothesizing that people seek anything whatsoever, suffice it that it is non-intersubjective. This could well be forgetfulness, for example, so that, by consuming, people seek to forget their troubles, such forgetfulness being as easy as any other kind of utility to map onto a hypersurface. Such explanation could even fit better with solipsistic social anaesthesia that characterizes modern life, and it could explain better a number of other phenomena, such as that the distracting effect of commodities wanes soon after they are bought, prompting people to keep purchasing. Pleasure could be satiable (few can stand too much bliss without going crazy), but the need to distract oneself never diminishes, because there is no end to the troubles or worries people want to forget about. So, around Christmas, suicides surge as depression becomes deeper, due to disappointment of high expectations and due to one’s impression that others are happy, while those who stay behind consume even more frantically. Similarly, one can offer a present on Valentine’s Day either to show affection, or to suggest that … bygones are bygones.

It is widely agreed by now that utility maximizing does not avail for constructing a meaningful theory of consumer behaviour. The ferociousness with which people go after consumables betrays some coercive emotional driver, which speaks loud and clear of existence: of continuing to experience time-space. And experiencing speaks of knowledge. Cogito, ergo sum, declared Descartes, and Shackle (1972: 156, original emphases) added: ‘So far as men are concerned, being consists in continual and endless fresh knowing.’ Fresh knowing ascribes duration to time, and through this we experience our lives, as we will discuss in more detail. In this lies all that social complexity which theory evades by assuming tastes to be exogenous. The relevance of social standing – a psychological desideratum that appears under various guises such as status, distinction, identity seeking, demonstration or bandwagon effects, norm-guided behaviour, etc., as reviewed by Kahneman et al. (1999), Kasser (2002) and others – cannot be denied. What may escape notice, though, is that this is a manifestation of some underlying compulsion, which explains aggressive acquisitiveness that finds expression through consumption.

Once a knowledge prism is adopted, concepts such as those of welfare, rational self-interest, scarcity, etc. emerge with new meanings that help explain much which remained obstinately opaque under a conventional light. It is also made possible to meet what may be called an ‘additivity requirement’, avoiding an embarrassing inconsistency: It is reasonable to expect that if all agents pursue a certain goal with some degree of success, some expression of it must be visible at every higher level. Individual attainments must be quasi-additive, in some meaningful sense. For example, if people drew pleasure from consuming commodities, one should see pleasure hewed on their faces, social welfare to be really improving not just in the growth statistics and society to be happier. If they found relief by consuming, this should show in their behaviour. But if inexorable angst drives them, distress should be expected to show on their faces and aggression to mark their conduct. All indications are that the latter is the case. People’s faces are tense, carved with anxiety, aggressive. Instead of observing a rising Gross Domestic Product (GDP) to ease tensions, as the usual argument goes, the collective situation in affluent societies is patently violent, depression mars life and despondent human debris adorns the outskirts of the cities. There is little gratifying in a day’s news, most of which is about violence for some kind of gain. There is little of what we might properly call ‘collective utility’. Rather, cynically aggressive, acquisitive national strategies emerge as collective outcomes of similarly motivated individual behaviour.

Explanation of economic behaviour must meet two requirements: First, its basic motivation and its goal must be clearly spelled out and they must be uniform across agents and activities. Second, there must emerge from it some consistent property at every higher level. That is, it must be possible to reconstruct the mechanism which produced and let develop the higher-order entity, in terms of principles that are operative at lower levels. This does not mean that macroeconomics must – or can be – micro-founded in the way of simple aggregation of individual outcomes, since the structure feeds back onto its constituting agency. (Aggregate demand relationships are meaningless, if preferences are interdependent.) But it means that economic theory must be firmly founded upon agency in such a way that what obtains at every higher level will not contradict in any significant way what the theory asserts about individual behaviour. Outcomes at the level of the economy must be somehow deducible from individual conduct and, conversely, individual conduct must be reconciled with the social structure, in reciprocal fashion.

Where one deals with outcomes of human initiation, where things could always have been otherwise, one should not vow for precise conclusions or exact proofs, but for rules of general validity and for underlying principles muddled by contingencies, for mechanisms removed from the observable realm, for universal constructions that can help organize thought, explain stylized facts and condense the description of any individual coherence or regularity there is to be found. Proof, in a strict sense, is of propositions in logic, not for assertions about the real world. As Shackle (op. cit.: 255) noted: ‘In order to achieve demonstrative proof, the economic theoretician must reject time.’ So, in order not to lose contact with reality, the validity, relevance and efficacy of theories should be judged on the basis of explanatory power and consistency with facts. According to Aristotle (1934: I. vii. 20–3, original emphasis):

Nor again must we in all matters alike demand an explanation of the reason why things are what they are; in some cases it is enough if the fact that they are so is satisfactorily established. This is the case with first principles; and the fact is the primary thing – it is a first principle. And principles are studied – some by induction, others by perception, others by some form of habituation, and also others otherwise; so we must endeavour to arrive at the principles of each kind in their natural manner, and must also be careful to define them correctly, since they are of great importance for the subsequent course of the enquiry.

And, as concerns the attainable degree of certitude, he warned against exaggerated promises:

We must therefore be content if, in dealing with subjects and starting from premises thus uncertain, we succeed in presenting a broad outline of the truth: when our subjects and our premises are merely generalities, it is enough if we arrive at generally valid conclusions. Accordingly we may ask the student also to accept the various views we put forward in the same spirit; for it is the mark of an educated mind to expect that amount of exactness in each kind which the nature of the particular subject admits. It is equally unreasonable to accept merely probable conclusions from a mathematician and to demand strict demonstration from an orator.

(Ibid.: I. iii. 4)

Indeed, it would be naïve to demand event-predictive accuracy of an economic theory, or evidence that acting agents are discursively aware of the psychological mechanism that motivates their behaviour. Moreover, no single theory can e...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Preface
• Acknowledgements
• PART I
• PART II
• Epilogue
• Notes
• Bibliography
• Index