Hello again, folks.
There is this thing we call ‘the economy’. Everyone talks about it. It is one of the most important and talked-about things in our world. No politician can refrain from mentioning it, no matter his current topic; no news program can ignore it. But what IS it?
Google tells me an ‘economy’ is ‘the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated (emphasis by Google). In an economy, the production and consumption of goods and services are used to fulfill the needs of those living and operating within it.’ It can also refer in a more detailed fashion to a mode (i.e., an agrarian economy, an pre-industrial economy, a post-industrial economy); a sector of an existing economy (i.e., the service economy, the information economy); or a synecdoche referring to the health and wealth of a society (the economy is doing well, the economy took a hit this quarter, etc).
Well, in the words of David Byrne, ‘how did we get here?’ Since this a brief history of the thing- consumerism- that has shaped our ‘economy’ into its current form, I’ll go back about a century. The Great War had just ended and Western society had just roared into the Twenties. Europe had been smashed by four years of ruinous war that killed millions, starved millions more, and wrecked the once powerful industrial might of the Great Powers (England, France, Germany and to a lesser extent Russia, now the new ‘Soviet Union’).
In America, however, things looked quite different. The nation had just come into its primacy as the world’s most industrialized power, having tooled up to produce massive amounts of war materiel but not suffering the enormous casualties or physical destruction visited upon Europe. The owners of the newly expanded factories now found themselves at an impasse; what to do with all of their industrial capacity that they had just bought now that the War was over?
People had always bought things, of course; and a factory that had made rifles or tanks could be retooled to make domestic machinery and civilian automobiles at no great expense compared to just shutting them down and writing them off as massive financial losses. Thing is, though, how do you get people to buy more stuff?
Getting Americans (and later the Europeans, and later still the people of the world) to part with their hard-earned cash proved pretty difficult. Americans of the 19th and early 20th Centuries tended to be thrifty, keeping their wealth in property and cash. There was little precedent for the members of the rapidly-growing ‘middle class’ (the ‘Second America’ of my previous blogs) to spend money on anything they did not immediately need for survival or basic comfort. Having money beyond what was necessary for basic needs was a new phenomena for most members of this new socio-economic class, and due to the wild boom-and-bust of the post-Civil War America most of them realized that they were still just one banking crash away from returning to abject poverty. Better to stay debt-free and your double-eagles buried in a can in the back yard.
Enter ‘consumerism’ and its midwife, advertising. Madison Avenue (itself synecdoche for the soon-to-be massive advertising industry!) provided the hungry industrialists and their idle and expensive factories the thing they needed most- customers. Buying stuff- new clothes, electric lights, a washing machine, a car!- suddenly became glamorous. You too could have these things, even on a clerk or factory worker’s wages, that had recently been the sole prerogative of the ‘rich’. Advertising changed the mores of an entire generation, steering it from frugality and the judicious accumulation of wealth over time into buying stuff, stuff, and more stuff, often just for the sake of having it; ‘keeping up with the Joneses’ became the watchword of the day.
In less time than it takes to tell of it, the industrialists were selling as much stuff as they could make, and re-investing their profits to make even more. The market seemed bottomless; making more stuff meant building more capacity and hiring more people to staff factories, which meant more people with money to- you guessed it- buy stuff. That’s a simplistic take on a fairly complex economic process that was helped along by the godfather of consumerism; credit.
Credit as a concept was nothing new. It had existed in primitive forms probably before actual money. However, it had never been marketed to the masses in quite the form that it now took. Shorn of its negative connotations to the generations of thrifty Americans of earlier generations, the masses took to credit to fuel their Madison Avenue-created need for more stuff. First was the ‘lay-away plan’; pay the store a dollar a week for a year and that new-fangled washing machine could be yours, just in time for Christmas! Even at factory wages of 20$ a week, what’s a dollar?
Credit had its immediate down-side, though; the Great Depression proved it and (without going too deeply down THAT rabbit-hole) it required an even bloodier new World War before the West was able to regain the track of consumerism. Now, however, the owners of the factories that had made B-29 bombers, M4 tanks and M1 rifles KNEW how to keep the factories (paid for by the tax-payer and War Bond buyer) open and more profitable than ever. And the post-War Marshall Plan made sure that the economies of former foes would get back on their feet swiftly, providing more buyers of stuff for the endless production now available.
Once the world’s cash system got unpinned from Bretton-Woods (https://en.wikipedia.org/wiki/Bretton_Woods_system), the money supply available for consumer credit ratcheted up into a realm where credit could be offered without collateral up front but merely on the promise to pay; the debt so incurred actually became money so far as the banking system was concerned and the interest charged on its unpaid balances was pure profit to the lenders. By the late 1970’s the world’s ‘economy’ revolved around debt, and buying and selling huge tranches of same fueled by interest payments on it generated more capital than the world had ever before seen. Consumerism was fueled on debt, secured or (mostly) otherwise, with the interest levels automatically subsuming any losses on forfeited payments- essentially making the system self-sustaining and ultimately generating guaranteed profits to those who ‘owned’ the debts. The most profitable business activity in the current financial system IS the financial system itself; it defines what we would think of as our national and world ‘economy’. And we owe it ALL to consumerism.
The final piece to the puzzle of what defines our ‘economy’ is also the ultimate extension of consumerism. All of us who participate in social media are the final product of consumerism. We have gone from being ‘customers’ to being the product itself. The services rendered to us by social media are incidental to our value as the commodity bought and sold by the social media corporations, just as the wages paid us by our employers are incidental to the profits they make off of whatever goods or services our labor produces- and that we purchase ourselves with those selfsame wages AND the interest we pay on our debt.
You, dear reader, are the ultimate commodity exchanged in our economy; your buying choices, your opinion of services and brands, and even your vote in the next election are worth TRILLIONS collectively to those who would pay a few cents per head for them. Personally, I think we’ve allowed ourselves to be under-valued, if not almost totally trivialized. I ask you to think on it, if you would.
Keep striving, friends.