Consumerism

What Is Consumerism?

Consumerism is the idea that increasing consumption of goods and services purchased in the market is always a desirable goal and that a person’s well being and happiness depends fundamentally on obtaining consumer goods and material possessions. In an economic sense, it is related to the predominantly Keynesian idea that consumer spending is the key driver of the economy and that encouraging consumers to spend is a major policy goal. From this point of view, consumerism is a positive phenomenon that fuels economic growth.

In common use, consumerism refers to a tendency of people living in a capitalist economy to engage in a lifestyle of excessive materialism that revolves around reflexive, wasteful, or conspicuous over consumption. In this sense, consumerism is widely understood to contribute to the destruction of traditional values and ways of life, exploitation of consumers by big business, environmental degradation, and negative psychological effects. Early uses of the term in the mid-20th century were intended to have a positive connotation, which would emphasize the benefits that capitalism had to offer consumers in improving standards of living and an economic policy that would prioritize the interests of consumers, but these meanings have fallen out of general use.

Understanding Consumerism

As consumers spend, economists presume that consumers benefit from the utility of the consumer goods that they purchase, but businesses also benefit from increased sales, revenue, and profit. For example, if car sales are increasing, auto manufacturers will see a boost in profits. Additionally, the companies that make the steel, tires, and upholstery for cars also see increased sales. In other words, spending by the consumer can benefit the economy, and the business sector in particular. Because of this, businesses (and some economists) have come to view increasing consumption as a critical goal in building and maintaining a strong economy, irrespective of the benefit to the consumer or society as a whole. 

Consumerism also helps shape some business practices. Planned obsolescence of consumer goods can displace competition among producers to make more durable products. Marketing and advertising can become focused on creating consumer demand for new products rather than informing consumers.

Advantages of Consumerism

Advocates of consumerism point to how consumer spending can drive an economy forward and lead to an increased production of goods and services. As a result of increased consumption spending, a rise in GDP growth or Gross Domestic Product can occur. In the U.S., signs of healthy consumer demand can be found in consumer confidence indicators, retail sales, and personal consumption expenditures. Business owners, workers in industry, and owners of raw resources can profit from sales of consumer goods either directly or by downstream buyers. 

Disadvantages of Consumerism

Consumerism can be criticized on economic grounds. In the form of conspicuous consumption, consumerism can impose enormous real costs on an economy. Consuming real resources in zero- or negative-sum competition for social status can can offset the gains from commerce in a modern industrial economy and lead to destructive creation in markets for consumer and other goods. Consumerism can also create incentives for consumers to take on unsustainable levels of debt, which can contribute to financial crises and recessions. 

Consumerism is also often criticized on cultural grounds. Some see that consumerism can lead to a materialistic society that neglects other values. Traditional modes of production and ways of life can be replaced by a focus on consuming ever more costly goods in larger quantities. Consumerism is often associated with globalization in promoting the production and consumption of globally traded goods and brands, which can be incompatible with local cultures and patterns of economic activity.