2020s >> 2024 >> no-1439-july-2024

In his seminal work, Stone Age Economics published in 1972, the anthropologist Marshall Sahlins controversially suggested that hunter gatherers, though conspicuously lacking in those sundry accoutrements of what we call ‘civilisation’ – like money, fast cars, an 80-inch flat- screen TV and a semi-detached terrace in the suburbs – may nevertheless have constituted what he called the ‘original affluent society’.

This was a startling claim, to say the least. It certainly challenged what we conventionally mean by the term ‘affluence’. As Sahlins noted:

‘By the common understanding, an affluent society is one in which all the people’s material wants are easily satisfied. To assert that the hunters are affluent is to deny then that the human condition is an ordained tragedy, with man the prisoner, at hard labor, of a perpetual disparity between his unlimited wants and his insufficient means. For there are two possible courses to affluence. Wants may be “easily satisfied” either by producing much or desiring little.’

‘Producing much’ is what Sahlins called the ‘Galbraithean way’ to affluence – named after the economist, J K Galbraith, who had written a book in the 1950s called The Affluent Society – although Galbraith himself was somewhat ambivalent about the whole subject of affluence.

As he saw it, the age- old problem of scarcity had been largely overcome. The emphasis on increasing productivity and output, he argued, may have been apposite in earlier times when large swathes of the population had little option but to endure grinding poverty. However, this was no longer the case in the post- war era of mass production and consumer plenty. Hence, society’s priorities needed to change – from delivering yet more affluence to dealing with the challenges that affluence threw up – such as glaring inequality and environmental destruction. Amongst other things, concluded Galbraith, this called for more Keynesian-style government regulation of the economy, more investment in the public sector and so on.

As a consumption theorist, Galbraith was very much influenced by earlier writers in that tradition – like Thorstein Veblen, author of The Theory of the Leisure Class (1899), for instance. Galbraith argued that the conventional wisdom regarding the role of consumers had become outdated – that is, the idea that the ‘consumer is king’. According to this, whatever the consumer wants, businesses obligingly provide.

For Galbraith, the boot had since transferred to the other foot: it was now the producer who was king and the consumer, the subject. The consumer was, for instance, now more of a price-taker than a price-maker, a tendency that would have been reinforced by the increasing concentration and centralisation of capital in fewer hands. In short, the increasing domination of the economy by giant corporations.

Because of their large size, these corporations were not so much constrained by market competition when it came to setting prices. Nor for that matter, by the single-minded quest to maximise profits. That might well still be the primary goal of small businesses or, indeed, the shareholders of large corporations. However, suggested Galbraith in another book entitled The New Industrial State (1964), the former were in decline while the latter had largely lost control to a specialist planning and technical elite – dubbed the ‘technostructure’ – intent upon promoting technical efficiency and expanding the corporation out of undistributed profits.

In that sense profits still mattered; the corporation would prefer, for example, to finance itself rather than depend on bank loans and this obviously required that it be profitable. But the point that Galbraith was making was simply that the pursuit of profit was not of such overriding importance as it once was and that other objectives had entered into the frame alongside profit-making. With hindsight, however, things have not turned out quite like Galbraith imagined, with ‘shareholder capitalism’ now back firmly in the driving seat.

Dependence effect
For him, all these various developments also gave rise to something that he called the ‘dependence effect’. By this he meant consumer preferences had become more dependent on, or conditioned by, the corporate imperatives of big business. These latter were to increase sales and thereby make the fullest possible use of the large-scale productive capacity they had built up and so reap the benefits of scale economies. In other words, to some extent, these imperatives were technologically driven. While the resulting price reductions might, in the short run, seem to adversely affect the revenue stream of a business and hence its profits, in the long run it enabled the business to undercut its competitors and so capture a larger slice of the market.

However, what this also meant is that more demand for these products had to be created, or stimulated, in order to justify and maintain a high level of output. Price cutting would help in that respect but, in addition, boosting demand necessitated resorting to intensive advertising and ‘salesmanship’. In short, by generally promoting a culture of emulative and acquisitive consumerism.

Strictly speaking, the aim was not so much to satisfy the wants of the consumer as such. Rather, it was to ensure that the consumer remained perpetually unsatisfied and forever in a state of wanting more. In short, it was to promote the idea of ‘consumption for the sake of consumption’ (mirroring ‘production for the sake of production’).

Galbraith argued from what he called a commonsensical premise that the more amply a person´s wants are supplied the less urgent will those wants become. However:

‘If the individual’s wants are to be urgent they must be original with himself. They cannot be urgent if they must be contrived for him. And above all they must not be contrived by the process of production by which they are satisfied. For this means that the whole case for the urgency of production, based on the urgency of wants, falls to the ground. One cannot defend production as satisfying wants if that production creates the wants.’

In other words, the institutions of modern advertising and salesmanship ‘cannot be reconciled with the notion of independently determined desires, for their central function is to create desires—to bring into being wants that previously did not exist’.

Predictably enough, Galbraith´s arguments were excoriated by hostile critics like market libertarians for whom the concept of consumer sovereignty was something sacrosanct. It was key to their model of competitive market economy that works to maximise economic welfare in strict accordance with the wants of rational actors expressed through the market. Since these are essentially both rational and sovereign it was not for anyone else to question or frown upon such wants – whatever might be the social or environmental costs of satisfying them.

Any suggestion that consumer preferences might be moulded by institutional forces emanating from outside or beyond the individual themselves was regarded as anathema, an affront to the individualistic worldview of the market libertarians. If individuals were so easily manipulated, what is to prevent them making irrational choices, perhaps leading to some or other suboptimal outcome that might tarnish the good reputation of the free market?

Rejecting the very idea of a ‘dependence effect’ thus committed these market libertarians to the view that our wants (whether urgent or not) must necessarily always be ‘original’ to the individual themselves – or, to use Galbraith’s expression, will always spring from their own inner disposition alone. Suggesting they can be conditioned or shaped by some external force or factor had one further consequence. It could potentially call into question that most sacred of dogmas upon which much mainstream economic thinking hinges – namely, that our wants are insatiable. For if we can be persuaded to buy more we can also be persuaded to want less and therefore to buy less. Clearly, that would not be in the interests of the business community.

Manipulating wants
For Galbraith, that is precisely what this community was in the business of doing – persuading consumers. As he argued, if wants were genuinely original or innate to the consumer then what would be the point in advertising at all. The consumer would seek out and find the product that might satisfy their particular want of their own accord. The fact that the product is so relentlessly publicised strongly suggests that the purpose of the advertisers is to expand the consumer´s wants or even to supply them with completely novel wants that they did not even realise they had.

Naturally, this has prompted a counterargument from Galbraith´s critics that advertising can be justified on the grounds that it is merely alerting us to the existence of useful products we might otherwise have overlooked. However, this counterargument strikes one as being somewhat disingenuous.

To begin with, there is the sheer scale of advertising to consider. It seems absolutely disproportionate to what the market libertarians claim its purpose to be. It does not seem credible, to put it mildly, to suggest that businesses, ferociously competing against each other for a bigger slice of the market, would spend such vast sums of money merely to provide a public service, as it were – of informing the consumer of the availability of these products and thereby enabling them to better satisfy their wants.

Galbraith might have been naïve if he imagined that advertising could somehow be pruned back to a bare minimum in a competitive market economy. But his critics were no less, if not considerably more, naïve in their understanding of what advertising is about. Its purpose is, very clearly, more to persuade than inform. This is evident in the very of techniques of advertising itself. These involve repetition, reinforcement and the copious use of emotional associations, fantasy, irony and downright innuendo. Such techniques are demonstrably manipulative in style, often preying on people’s vulnerabilities and sense of self-esteem.

In the early days of advertising there was, arguably, rather more in the way of factual or informational content to adverts but those days have long gone. The dark arts of the advertisers have evolved way beyond that since then. Advertising today, suggests Andrew Simms, is about mind control. Like air pollution it seeps into every nook and cranny of our lives. Indeed, it is reckoned that the average American citizen is exposed to anywhere between 4,000 and 10,000 adverts every single day:

‘Advertising works by getting under your radar, introducing new ideas without bothering your conscious mind. Extensive scientific research shows that, when exposed to advertising, people “buy into” the materialistic values and goals it encourages. Consequently, they report lower levels of personal wellbeing, experience conflict in relationships, engage in fewer positive social behaviours, and experience detrimental effects on study and work. Critically, the more that people prioritise materialistic values and goals, the less they embrace positive attitudes towards the environment – and the more likely they are to behave in damaging ways.’

More ominously, Simms goes on to refer to the findings of neuroscience on the effects of advertising on the human brain: ‘advertising goes as far as lodging itself in the brain, rewiring it by forming physical structures and causing permanent change. Brands that have been made familiar through advertising have a strong influence on the choices people make. Under MRI scans, the logos of recognisable car brands are shown to activate a single particular region in the brain in the medial prefrontal cortex. Brands and logos have also been shown to generate strong preferences between virtually identical products, such as fizzy drinks – preferences that disappear in blind tests. Researchers looking to assess the power of advertised brands concluded that “there are visual images and marketing messages that have insinuated themselves into the nervous systems of humans”’ (Guardian, 11 October 2021).

If we accept that the purpose of advertising is more to persuade than to inform then this puts our market libertarians in an essentially untenable position. It means having to concede that our wants are not necessarily those that are original to ourselves and that, consequently, we are not at all like the sovereign individuals depicted in individualist mythology, driven by impulses that arise entirely within ourselves. It means having to acknowledge that we are, indeed, social animals capable of influencing and being influenced by others.

Given the manipulative nature of advertising it follows that weakening or removing its influence would result in a situation in which consumer wants would indeed more closely approximate those of our hypothetical sovereign individual. Therein lies a delicious irony – the fact that market libertarianism through its endorsement of the practice of advertising would appear to be in league with those very forces that threaten our individual sovereignty and our ability to rationally think for ourselves.

Untenable position
Faced with the incontrovertible evidence that advertising does indeed contrive to expand our wants or introduce new ones, some market libertarians have adopted a somewhat different tack than that of outright denial. This might be described as an exercise in damage limitation.

A case in point was the prominent free market supporter, Friedrich von Hayek. Hayek contended that it was a gross exaggeration to suggest corporations could determine consumer preferences through the power of advertising alone. That is undoubtedly true although it misses the larger point. The inculcation of consumerist values in the population is not something for which any one particular agency or institution can be held solely responsible. It is woven into the very fabric of life under capitalism.

It arises from the system´s competitive dynamic and its built-in disposition to grow without limit. The relentless accumulation of capital that competition compels finds its correlate in the no less relentless drive to boost market sales by means of which the economic surpluses to finance that accumulation can be realised.

ROBIN COX

---

Next article: Small change ➤