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The consumer-driven economy of the United States is based on a constellation of concepts about ourselves, God, growth, wealth, and the world we live in. These conceptions deny the relevance of God or spiritual life to business activities. Nature is primarily to be used for human benefit, and anything that cannot be counted or measured in monetary terms has limited or marginal "utility."
The Earth is valued for its resources, which are assumed to be an infinite and inexhaustible. Even if not, we have faith that human ingenuity will find suitable substitutes for any shortages, and technological "fixes" for serious degradation of our natural environment.
The consumer-driven economy presumes that nations and corporations must grow in order to "progress," and assumes that the "rational economic person" will strive to amass as much material wealth and experience as much pleasure as possible. "You only go around once in life," the Schlitz beer commercial used to implore, "So go for all the gusto you can!" These beliefs encourage overconsumption as a way of life, for they posit a world of boundless freedom without natural limits or moral restraints on human action.
Electing freedom to disobey God's limits, mankind exits the Garden of Eden and enters a world where nature is to be conquered rather than accepted or embraced. The roots of our alienation from nature are deep; not surprisingly, then, the institutional engines of overconsumption are many and varied. They include the "free market economy" as presently practiced in the U.S. and the "free trade" regimes of the General Agreement on Tariffs and Trade. The institutional supports for overconsumption also include laws which protect the rights of "free speech" as exercised by large corporations in lobbying, advertising, and contributing to political parties and candidates. Such supports include the U.S. political system generally, political parties, the U.S. judicial system, the media, and administrative agencies.
In the course of this article, various laws, domestic and international, will be examined as part of national and global legal structures, along with international institutions that - unwittingly or not - promote overconsumption. Overconsumption, like any general phenomenon, is multi-faceted and eludes precise definition. In a broad sense, we use or consume many kinds of things in our lives (air, water, electricity, wool, land, cotton, fertilizer, paper, chocolate, plastics, CFCs, graphite, fuel oil, food), and corporations "consume" many things in the production of goods and services for "consumers." Moreover, not all consumption degrades the environment. But a broad and growing literature strongly suggests that we are consuming in ways that are unhealthy for ourselves and unsustainable for our natural environment.
In this article, I will suggest that overconsumption occurs where (1) people (individually or collectively) make consumption an end in itself, rather than a means to some higher human purpose, where (2) economic/legal systems fail to follow free market principles, or where (3) the economic/legal system fails to adequately recognize and account for future costs, the interests of future generations, or finite limits to the use of natural resources as "capital."
We will look first at overconsumption in its first aspect, where consumption has become an end in itself. Creating Want:
Oh Lord, won't you buy me a Mercedes Benz? My friends all have Porsches, I must make amends. - Janis Joplin (1972) The delicious irony in Joplin's lyrics comes from the juxtaposition of crass materialism, feigned penance, and divine intervention. Jim and Tammy Faye Baker's PTL ministry thrived on the notion that increasing material well being was the Lord's fervent wish for us all. In a similar vein, one recent book reassures us that God Wants You to be Rich.
In fact, the illusions created by the corporate dream merchants have become the new religion, as William Leach has pointed out in Land of Desire: Merchants, Power, and the Rise of a New American Culture. In feeding the dreams and desires of material salvation here and now, corporations have deliberately created "the consumer," an ideal marketing target who rejects tradition, focuses on immediate gratification, and is steeped in desire for all things new. Paul Wachtel claims that "having more and newer things each year has become not just something we want but something we need. The idea of more, of ever increasing wealth, has become the center of our identity and our security, and we are caught by it as an addict by his drugs."
This collective addiction is well-entrenched. When environmentalists claim that we need to reduce consumption, business and the consumer both recoil. The U.S. economy was not always built on consumer demand, but consumer demand now accounts for two-thirds of U.S. economic activity. By now the consumer is so well-conditioned to satisfying needs through things that any suggestion to cut back is met with "intense anxiety, depression, rage, and even panic."
In part this is because the average American is exposed to hundreds of advertisements each day, and the process begins at an early age. Even if the specific product is not remembered, the overall message is: there is a product to meet your every need, if only you will buy it. As Alan Durning has noted,
Advertisers thus cultivate needs by hitching their wares to the infinite yearnings of the human soul. As Kanner and Gomes point out.
The irrational nature of this addictive consumption leads many Americans to focus on the self to the exclusion of community. Even as the Gross Domestic Product (GDP) continues to rise, there is strong evidence of declining social welfare in the U.S. and large holes in the "moral fabric" of U.S. society.
The popular desire to consume and possess more and more is also at the root of increasing social inequities throughout the world. Tom Athanasiou, in Divided Planet: The Ecology of Rich and Poor, uses data from demographer Paul Bairoch to contrast the relative wealth of developed and less developed countries from 1750 to the 1980s. From 1750, when living standards in "the North" were not notably higher than those in the "South," the "average citizen of the capitalist world grew to be eight times richer than one in the noncapitalist world, and contrary to all the tales told by friends of "progress," this "improvement" has not always been by virtue of the North's technological and cultural innovations.
The less-flattering and, according to Robert Heilbroner, "more important" side of the story, "was the drainage of wealth from the underdeveloped Periphery to the developed Center - a capitalist version of the much-older imperialist exploitation of the weak by the strong."
Many have expressed disenchantment with overconsumption in the North, both for its negative effects on the South and for its failure to bring social progress in the North. Still, the path of "growth and progress" through consumption remains the principle agenda of consumers, corporations, and the government. As Robert Samuelson notes in The Good Life and Its Discontents, "the central ambition of postwar society has been to create ever expanding prosperity at home and abroad. . . . because prosperity has seemed to be the path to higher goals."
Those goals originally included the end to poverty, crime, slums, and racial conflict, but as the 60s and 70s ended the failure to meet such goals was evident. The 70s and 80s were, increasingly, a time of retrenchment from social progress, a time of self-help psychology, leveraged buyouts, and the celebration of wealth for the sake of wealth. The "hippies" and "yippees" of the 60s gave way to the "yuppies" of the 80s. During those two decades the country retained its belief in greater material wealth but largely gave up the hope of achieving an end to poverty, crime, or racial strife. Samuelson also notes the initial post-war vision of American and the world: global prosperity would contain communism, spread democracy, and solidify U.S. global leadership. The United States democracy would be the most admired and our economy would be the wealthiest.
Several post-war institutions were established to keep the peace and establish commercial prosperity, including the World Bank, the IMF, the United Nations, and the General Agreement on Tariffs and Trade (GATT). The UN would keep the peace, the World Bank would work to bring developing economies into the international trading system, and free trade through GATT would reduce the likelihood of trade wars and, thus, reduce the likelihood of military conflict.
In all of this, the U.S. was a leader, and in our post-war conception of The American Dream, we professed the belief that other nations could develop in the same way. Yet in over fifty years since World War II, "development" and free trade have not brought economic or social well-being to much of the "developing" nations, and much of the blame can be placed squarely on industrialized nations - particularly the United States - that continue to command the lion's share of the world's resources for themselves.
In sum, consumption has become an end in itself, rather than a means to individual enlightenment or happiness, or as a means to social justice, either domestically or globally. And as as the consumption habit becomes an end in itself, we have become blind to our own deeper needs.
In our seemingly irrational addiction to more and more, we practice a kind of collective blindnes. While many of us pay frequent lip-service to the "free market," we do our best to disregard some of its most fundamental precepts, a disregard that often has serious environmental consequences.
At least four aspects of current corporate capitalism are not true to free market theory and result in various forms of overconsumption. First, the current system fails to discourage monopolies and ever-greater concentrations of capital. Second, the system will generally reward a business that imposes costs on others by generating negative externalities. Third, reliable factual information is not easily available to consumers. Fourth, government and business have become inexorably intertwined, with massive subsidies tilting the free market playing field toward some highly consumptive economic activities and away from others.
Overall, systematic pressures on corporate executives to enhance the bottom line are matched by the governmental efforts to assure annual increases in the Gross Domestic Product, yet both sets of measurement are unreliable indicators of social benefits.
Monopolies and Well-Being In the ideal market envisioned by economists, there are few barriers to entry and considerable competition among sellers. Monopoly power is power to break the market. Conversely, it is competition - the existence of many alternatives for both buyer and seller - that keeps profits at normal levels and properly allocates resources. Yet the largest corporations now dictate the direction of global business.
Nearly 70 percent of world trade is controlled by just 500 corporations, and one percent of all multinationals own half the total stock of foreign direct investment. In short, a few MNCs are consolidating their hold on the global economy. Giving MNCs this kind of control over the global economy has repercussions for local economies. In both the U.S. and across the globe, many large corporations - either directly or through intermediaries - are obeying the implacable logic of capital by creating barriers to entry, stifling local economies, and racing to liquidate finite resources.
In the ideal market economy the price of a product as reflected by the demands of buyers and sellers in a free market would represent the best possible allocation of resources. But in reality, many economic exchanges create "spillover effects" or "externalities" which impose costs on people who are not parties to the transaction.
The number and gravity of these "externalities" has risen remarkably in the second part of this century. They include not only localized externalities (for example, toxic substances from industrial manufacturing that leech into public water supplies) but also pervasive externalities (such as acid rain, ozone depletion, or CO2 buildup).
This problem is accelerated by MNCs operating globally. In effect, local markets are no longer local; those responsible for environmental degradation or unsustainable forms of economic activity do not actually witness the harms done, and need not worry about accountability - they can take their profits, cut their losses, and move on to the next investment. As Paul Hawken puts it:
Hawken notes that if the Penan tribespeople of Sarawak experience the utter devastation of their culture and way of life at the hands of logging companies contracted to the Mitsubishi Corporation, nothing happens to Mitsubishi's shares on the Nikkei exchange. "Mitsubishi's bonds are not discounted for cultural annihilation." In short, there is over-consumption, not because free market economic theory is misguided, but because the pervasiveness of negative externalities means that price does not give consumers or corporations the feedback necessary either to optimally allocate resources or to consider the moral consequences of particular production or consumption decisions.
The basic building block of modern economic theory is the rationally self-interested actor maximizing his consumer preferences in a free market context. The rational buyer needs information about the price of a product, its qualities, who produced it and what kinds of warranties are part of the bargain. For a seller, only one piece of information is critical: the buyer's credit-worthiness. Such information is generally available to the seller; It is the buyer whose information is far more limited, and at times that information is deliberately obscured by marketing tactics.
Where large corporations compete with each other for "shelf space" and largely control what is sold and where, it is difficult for the average consumer to have access to local products or know much more about nationally distributed products than their price or general appearance.
In products marketed globally, the General Agreement on Tariffs and Trade (GATT) does not permit nations to mandate disclosure of information about a product's production history, other than its country of origin. Under GATT as well, nations cannot impose penalties or taxes for imported goods that have been produced under desperate labor conditions or produced at a cost to another country's environmental health. Other than price, what the consumer "knows" or desires is crafted by corporate image-makers.
Creating the culture of desire was not an overnight event. According to William Leach, much of the story of big business in America is the story of how the giants of the late nineteenth and early 20th century took a land of spiritually oriented, frugal folk and "created a material culture of self-indulgence." Business became skilled in using colors, glass, and light to create exciting images of a this-world paradise conveyed by elegant models and fashion shows. Museums offered displays depicting the excitement of the new culture. Gradually, the individual was surrounded by messages reinforcing the culture of desire. Advertisements, department store show windows, electric signs, fashion shows, the sumptuous environments of leading hotels, and billboards all conveyed artfully crafted images of the good life. Credit programs made it seem effortless to buy that life.
Advertising gained considerable momentum after World War II, especially with the advent of television. The average American adult sees about 21,000 commercial messages a year; the largest 100 corporations in the U.S. pay for about 75 percent of commercial television time and about half the public television time. With advertising for a 30 second segment in prime time costing over $200,000 on network television, only the largest corporations can afford it.
In giving commercial speech constitutional protection, we are not just giving consumers information about price, quality, maker, and warranties. We are systematically stimulating the addictive, irrational impulse to feed a spiritual emptiness with more and more "goods." To say that commercial speech merely allows buyers and sellers to exchange information in a free market transaction seems utterly naive, if not downright disingenuous.
As we near the end of this century, the "culture" of television has largely replaced community and family life, cultural pursuits, and reading. Coupled with big corporations' ability to influence the legal environment of business, corporate "freedom of speech" encourages a consumer-driven economy, with consumers perennially in pursuit of this year's "hottest toy."
Robert Reich, in The Work of Nations
The government-business partnership in the U.S. is by now well-institutionalized. The Department of Commerce was created for and worked on behalf of U.S. business during Herbert Hoover's presidency, and continues to do so under President Clinton. The military-industrial complex that seemed dangerous to outgoing President Dwight Eisenhower has consumed a large share of the U.S. budget and has helped spawn advances in the computer and aviation industries, among others.
Government research grants to universities have aided U.S. "competitiveness." Government support of large agri-business and "corporate welfare" generally make far greater claims on public monies than "non-working welfare mothers."
In all of this, political contributions from large corporations with a vested interest in government largesse has become more and more evident. In short, the free market as realized in the U.S. gives some players a distinct advantage over other ones.
In terms of overconsumption, some governmental choices have been fateful indeed. In both home construction and automobiles, the government has provided considerable largesse since World War II, making possible the vast suburban areas that the free market, unaided, would not have created. Prior to World War II, people in urban areas tended to live within walking distance of schools, retail establishments, and churches, or within walking distance of streetcars. Streetcar lines moved people efficiently without public subsidies.
While Henry Ford and his competitors "churned out more than a million new vehicles a year," politicians and developers found common interest in advancing auto use. Realtors and developers often dominated city planning boards (and still do); tire makers and members of the building trades saw fortunes to be made in "development," but the streetcar development promoted only a limited corridors within a few minutes' walk of the trolley lines. The automobile could "fill in the blanks" between streetcar corridors, then develop spaces far beyond city limits.
In 1916, the Federal Road Act contributed $75 million to improve post roads, and the Federal Road Act of 1921 sought to improve 200,000 miles of state highways and link them up to form a national network. At the same time, streetcar companies received little government support, and city governments required many companies to stick with nickel fares and continue operating unprofitable routes.
Starting in the 1930s, National City Lines, a company backed by General Motors, Standard Oil, Phillips Petroleum, Firestone Tire and Rubber, Mack Truck, and other auto interests, "systematically bought up and closed down more than 100 electric trolley lines in 45 cities across the country," with GM using its financial strength to buy up streetcar lines, scrap the tracks, and convert the routes for buses.
By the time that GM's activities were reviewed in 1974 by the Senate Subcommittee on Antitrust and Monopoly, GM defended its actions as having given mass transportation a "new lease on life." By now, of course, only the poorest segments of the population ride city buses; everyone else is out on the freeways.
GM's work spanned the depression and World War II. During that time, the housing industry had been devastated. To jump start the housing construction business, the Roosevelt administration created the Federal Housing Administration (FHA), which guaranteed bank loans, allowed 10 percent down payments, and stretched mortgage terms from 10 to 30 years. But the kinds of houses that would qualify for an FHA guaranteed mortgage were typically new ones, built outside of the inner cities. In the 1930s, new suburbs were a short drive from the city, and gas was cheap. Inside the cities, entire neighborhoods became "red-lined," and the process of urban decay accelerated.
At the end of World War II, Congress added another program of easy mortgages for veterans, who could qualify for suburban housing with no down payment. Developers like William Levitt could mass produce "50 houses a day in the potato fields of central Long Island," and under new federal income tax rules, mortgage interest payments became deductible expenses. Meanwhile, easy credit terms released pent up demand for automobiles, and by the mid 50s, suburban expansion ran headlong into the limits of existing highway infrastructure.
Rather than stop the expanding economy (for the auto and housing industries were the economy), the national network of interstate highways was conceived. In 1956, Congress approved the Interstate Highway Act, which called for 44,000 miles of new toll-free expressways. The federal government would pay 90 percent and the states 10 percent. The 1956 legislation also subsidized the widening of local feeder roads to the interstate system, further facilitating suburban sprawl. At the time, it was the largest public-works project in the history of the world.
The political justification was that these expressways would help move military equipment during national emergencies, and ease evacuation of cities during nuclear attack. Most readers already know the rest of the story: suburban development was facilitated by cheap gas and better highways, and the American Dream of a house, yard, and picket fence was realized by more and more people in the middle class. The more spread out people became, the greater demand for asphalt and cement for roads, bridges, and parking lots, as well as new water and sewer lines. Individual homes, spread out from the core of commercial services, would need their own washing machines, lawnmowers, telephones, television sets, air conditioners, and swimming pools.
The expansion of consumer goods spawned by suburban life was good for the economy, and the widespread enjoyment of these commodities came to represent "the world's highest standard of living" and "the American Way of Life."
Not only is the auto industry heavily subsidized by public expenditures on roads, but the social costs of the automobile are not included in either the sticker price or the price of gas.
Social costs - notoriously difficult to measure but real nonetheless - include health-threatening smog and further additions to carbon dioxide buildup. Air conditioners in cars are the single largest source of CFCs that destroy stratospheric ozone. Motor vehicles account for nearly 20 percent of all carbon dioxide emissions worldwide (with the richer nations having 81 percent of all cars even though having only 13 percent of the population). More easily measurable social costs include public road building and maintenance costs, traffic police, courts, accidents, and insurance, all of which contribute to the GDP but not, on the whole, to social well-being.
In addition, there are considerable costs in maintaining a high degree of military preparedness to fight a local or regional conflict. In the Persian Gulf, the U.S. went to war against Saddam Hussein several reasons, but continued U.S. access to oil was a primary concern.
There are also the social costs of time lost in traffic jams and commuting; a person who commutes an hour a day each way in effect spends a month each year in his or her car, time not spent with family or involved in community life. In sum, the price of gasoline is political, not economic. It is driven by all sorts of decisions, not just the invisible hand of a free market with numerous buyers and sellers setting optimal prices. Norman Myers of Oxford University uses work by Durning to calculate that if the total social cost of gasoline used by trucks and autos were included in the price of gasoline, U.S. motorists would pay almost ten dollars a gallon.
Paying less for gas than for bottled water only assures that we continue to overconsume in our use of motor vehicles.
When a small oil company drains an oil well in Texas, it gets a generous depletion allowance on its taxes, in recognition of the loss. Yet the very same drainage shows up as a gain to the nation in the GDP. When the United States fishes its cod population down to remnants, this appears on the national books as an economic boom - until the fisheries collapse. As . . .Herman Daly puts it, the current national accounting system treats the earth as a business in liquidation.
Much of the economic activity created by the rise of the automobile in American life is economically measurable and appears positive. Jobs are created, money changes hands, economic activity is stimulated. The GDP purports to measure the health or overall progress of the economy by measuring the total market value of all goods and services produced in the U.S. in a given year. But, as noted above, the GDP will count as positive the monetary activity generated by a three-car collision, including body shop repairs, lawyer's fees, police activities, wrecker services, ambulance and hospital charges, as well as ongoing physical therapy.
For overconsumption, the basic problem is that GDP does not measure the value inherent in our natural environment. It does not measure any kind of natural resource, such as a pure aquifer, old-growth forest, or an undammed watershed until that resource is "tapped." When, and only when, people find a way to exploit those resources are they counted in GDP, even though "untapped" they all have an important value for ongoing ecosystems and perform a service just by being left alone. As David Suzuki notes,
GDP also fails to account for social and environmental costs arising from economic activities. For example, the wreck of the Exxon Valdez (carrying its cargo of crude oil for refining into motor fuels) created a rise in the GDP.
Finally, as Clive Ponting has pointed out, "In the long term the notion of GNP takes no account of the fundamental question of whether its level at any one time, let alone continual growth in the future, is in fact desirable or sustainable."
In sum, our "free market" economic system allows monopolies, negative externalities, disinformation, and subsidies, thus encouraging inefficiencies, waste, and misallocation of resources.
We do not legally, systematically enforce the discipline of the economically idealized free market. Corporations continue to follow their own logic, which is the accumulation of ever-greater concentrations of capital, while governments continue to play favorites.
The third form of overconsumption is related to "consumption as an end in itself" and to free market fundamentals, but deserves separate identification.
Even if we avoided free market faux paxs such as subdisies, monopolies, negative externalities, and lack of information to consumers, current neoclassical economic theory assumes that the earth's resources may properly be treated as capital - a set of assets to be tapped as a source of profit. As Ponting notes, Trees, wildlife, minerals, water and soil are treated as commodities to be sold or developed. More important, their price is simply the cost of extracting them and turning them into marketable commodities. . . .Yet this view overlooks the basic truth that the resources of the earth are not just scarce , they are finite.
Consider the draw-down of a major aquifer such as the Ogallala Aquifer under the Great Plains. The ongoing, massive draw-down on this aquifer generates no observable externalities (no obvious hurts or injuries are inflicted on humans), there are no significant barriers to entry for competitors (lots of large farms are pumping from the aquifer simultaneously, and farms are being bought and sold on a routine basis), and consumers and producers are all well-aware that the bounty cannot last forever. The market is functioning perfectly, but there is still overconsumption. How so? Because a non-renewable resource is being rapidly depleted with no rational expectation that a substitute resource can be found and utilized.
The market system of neo-classical economics, even in theory, invariably chooses present consumption as rational, even where there is no realistic prospect of finding a substitute resource.
There are, of course, denials from some quarters that future resource deficits pose any serious problem for business or society. Most of these denials opine that wealth is created by the application of human intelligence to the world, and that abundance is our birthright.
Technology and human ingenuity, it is said, will find a way. That may be, but if we extrapolate from the past, it seems clear enough that the dominant patterns of wealth creation have relied on abundant natural resources.
Oakland University - Dept of Decision & Info Sciences
Previously published by Rowman and Littlefield in The Business of Consumption, edited by Westra and Werhane.