In defence of conspicuous consumption

A debate has been raging recently, led by self-appointed economic moralists and social activists, who have been on a war-path against conspicuous consumption; something they perceive as unethical consumerism and an affront on the moral principles of society. Anyone with a shade of active grey-matter would realise that such moral arguments are absolute nonsense.

This futile moral debate was sparked by people who attempted to reconcile the pursuits of individual interests with general interests of society. They sought to invent a moral problem where none existed and further to impose their misguided notions of propriety on our societal virtues. Myopic approach to broader issues of society can never be helpful.

An English jurist, Jeremy Bentham (1748-1832) in “The Principles of Utility” addresses the idea that the moral worth of individual actions is determined solely by their usefulness in maximising utility, which is the measure of relative satisfaction. Bentham’s philosophy recognises that society is a merely the sum of the interests of the several members who compose it; that common interest is a function of the interests of individuals. It is common cause that the pursuit of happiness by a collective of individual members of society would result in the delighted society. Individualism and utilitarianism thrive under capitalism as participation is voluntary and an individual choice as afforded by civil liberties.

In The Social Contract, Jean-Jacques Rousseau (1712 – 1778) maintained that human society is organised along the lines of an implicit contract between members of society, and that the terms of this contract are rightfully decided by the general will of the people. Our social activists against conspicuous consumption would appear to subscribe to the absurd notion of economic collectivism, which is an ideological concept of communism and socialism. The natural assumption by proponents of these archaic philosophical precepts is that society should reach a natural equilibrium as we are all intrinsically linked through a common umbilical cord.

The foolishness of economic collectivism is that some things should be owned by all of society and used for the benefit of all rather than being owned by just individuals; thus resulting in the utilitarian pursuits to be frowned upon and portrayed as offending moral sensibilities of society. The German economist and philosopher Karl Marx (1818 – 1883) had promoted an absurd notion that material happiness can be obtained through organised collectivism, as though there is general congruence of the needs and aspirations of individual members of society.

In an article published in the January 1944 Reader’s Digest titled “The Only Path To Tomorrow”, the Russian-American philosopher Ayn Rand (1905 – 1982) aptly said, “collectivism means the subjugation of the individual to a group — whether to a race, class or state does not matter. Collectivism holds that man must be chained to collective action and collective thought for the sake of what is called the common good”.

During the Gilded Age, an era of rapid economic and population growth in the United States, the Norwegian-American economist and sociologist Thorstein Bunde Veblen (1857 – 1929) published a book titled The Theory of the Leisure Class: An Economic Study of Institutions in 1899. It was in this book that Veblen coined the term “conspicuous consumption”. Veblen argues that economic life is driven not by notions of utility, but by social vestiges from pre-historic times, which somewhat challenged the utilitarian philosophy advanced by Bentham before him.

Veblen defined conspicuous consumption as the waste of money and/or resources by people to display a higher status than others. Our social activists, like Zwelinzima Vavi, would use these feeble arguments on the wastefulness of such consumption to support their moral sentiment. The economic consequences of conspicuous consumption render such argument futile. Consumer spending account for two-thirds of our economic activity and given the slow recovery from the recent recession, consumer spending, whether conspicuous or not, is what helps boost economic growth.

However, the argument supporting the causal factor of conspicuous consumption as described by Veblen may hold some water. A study was conducted in the US in 2007 which revealed that black people and Hispanics devote larger shares of their expenditure bundles to visible goods (clothing, jewellery and cars) than do comparable whites. This study validates what Veblen described as “economic life driven by vestiges of pre-historic times”. Historically black people in the US had been subjected to centuries of slavery and racial prejudice even after the abolishment of slavery. Their social existence had been of humiliation and of impaired dignity. The natural psychological response to such history in an era of freedom and prosperity is for black people to find means to affirm their social status as equal to any other. This is not unique to the US. We have also observed such a trend develop in South Africa.

Those who antagonise conspicuous consumption as an affront on morality are hypocritical. One cannot seek economic growth and wish to reap the resultant benefits but on the other hand vilify the very drivers of such growth. A study by the Bureau of Market Research at the Unisa in 2008 concluded that the number of South Africans who have joined the black middle-class increased by 3 million between 2001 and 2007. At the time, the co-founder and director of the UCT Unilever Institute of Strategic Marketing, John Simpson, said: “We have found them fairly resilient consumers amid recession.”

The rising black middle-class was touted as “black diamonds”, and credited with contributing to the buoyancy of the economy. Why then does Vavi wish to stall the engine of the economy? Where does he think “decent jobs” will emanate from without economic growth? When Vavi says that conspicuous consumption is “spitting in the faces of the poor”, he exposes his ignorance of the elementary principles of economics and assumes the poor do not inspire to greater success and wealth.

The ridiculousness of the moral debate of conspicuous consumption intensified when Jacob Zuma said sushi parties where “a moral challenge that the ANC needed to tackle”. Morality imposes a choice between good and bad. The purported social immorality of conspicuous consumption implies that some form of harm or damage is caused to society, while none of the proponents of economic morality are able demonstrate such harm or damage to individual members of such society. In The Theory of Moral Sentiments (1759), Adam Smith (1723 – 1790) wrote: “Society … cannot subsist among those who are at all times ready to hurt and injure one another.” Where rampant spending and display of wealth harm society, surely there would be inherent measures in the economic system that regulate such behaviour.

Smith in his seminal work An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776 appreciated that the pursuit of individual self-interest was necessary for economic development. Those who are spurred into social activism against conspicuous consumption by envy and resentment should perhaps redirect their energies into productive economic activities in order to improve their miserable existence. The vastness of the income inequality is an indication of transforming economy. Those in possession of wealth, in a capitalist society of ours, ordinarily have greater means to exponentially grow such wealth, while the rest slowly emerge from destitution. The transition into the middle-class can only mean an upward trajectory in the economic status of those Vavi is claiming to represent. Politicians should not hinder progress of the wealthy for political expediency because their success embarrasses and exposes the truth about the inequalities brought about by our economic system.

The decline in consumer inflation in the recent period is an indication of the need for consumer spending to rise in order to spur economic growth and generate much talked about jobs. The SA Reserve Bank dropped interest rates in order to stimulate consumer spending. Though it is widely acknowledged that the majority of consumers are heavily indebted and utilising the lower interest rate environment to service debt than spend, it should be equally accepted that conspicuous consumption by the wealthy few is a necessary complement for lack of spending by highly-indebted consumers.

Moralists should study elementary economics or get a life that is incomprehensible for them.