Consumption Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The term consumption is used in different academic disciplines in different ways. Depending on the specific academic background, people ask how supply and demand and, in other words, production and consumption in economy and society are related to each other. Or they investigate how individual people, social classes, or societies realize their consumption practices. The consumption practices illuminate differing empirical answers concerning how much actors spend for specific goods and services. Furthermore, consumption research inquires into the preference structures of individual actors, households, or classes and their corresponding rationalities that lead consumption behavior. How consistent are preference structures due to changing empirical backgrounds of time, space, and related culture? Finally, consumption research is also concerned with the relationship between earnings and spending. Are observed consumption practices directly related to a specific level of income and other available financial resources and vice versa? Which socioeconomic context variables (historical time, geographical framework) specify the relationship and in which way do attributes such as age, gender, class, occupation, and lifestyle have their own impacts on the way in which consumption is realized?

Economics has a long history of changing concepts dealing with consumption. Adam Smith argued in The Wealth of Nations that “consumption is the sole end and purpose of all production” while later, John-Baptiste Say in his so-called law of supply and demand saw production as the real ground-work of wealth or value. Criticizing Adam Smith, John-Baptiste Say argued:

How great, then, must be the mistake of those, who, on observing the obvious fact, that the production always equals the consumption, as it must necessarily do, since a thing can not be consumed before it is produced, have confounded the cause with the effect, and laid it down as a maxim, that consumption originates production.

This statement has evolved to textbook knowledge as “supply creates its own demand,” a formulation by which John Maynard Keynes had summarized Say’s law, although ongoing voices say that Say’s thought was more differentiated than such shorthand definition suggests. Keynes turned previous discussion on its head by strengthening the role of customers at a macroeconomic level, which led to the formulation that demand creates its own supply. What Keynes had in mind was that economic growth can be created best by strengthening incentives for consumption. For Keynes, the sphere of consumption was based upon socio-psychological dispositions of human agents which are remote from the economic theory existing before.

Past Consumption Research

During the last 70 years economic consumption research has moved in many different directions. While Keynes attributed the cognitive dimension of perceptions in combination with issues of uncertainties to consumption, other authors strengthened other aspects. Franco Modigliani stressed the aspect that consumers differ concerning their decisions within their life cycles; J. K. Galbraith linked consumption to a historically new phenomenon of an affluent society, while T. Scitovsky bridged the discussion to human needs. The later points of discussion overlapped clearly with historical and sociological views dealing with consumption.

Historians investigate consumption issues from many different perspectives. They ask which specific goods are used and consumed in different centuries, how and why goods are bought, the evolution of consumption patterns within socioeconomic changes, and how different societies are constituted and portrayed by specific “regimes” of consumption. Historians also produce analytic stories of specific consumption goods (e.g., history of tea consumption) or practices of consumption (e.g., history of cooking or traveling) that serve as pieces of historical change and that are simultaneously items of historical diagnosis where particular elements of analysis stand as examples for the whole. Max Weber discussed the rise of industrial capitalism in relation to Protestant ethics and the inherent consumption ascetics, but in the 20th century historians came up with labels of a “consumer society,” which had changed the previous face according to the progress and spirit of changing times.

A pioneer of socioeconomic consumption research was Thorstein B. Veblen, who was a representative of early American institutionalism. Veblen, who also discussed limitations of marginal utility theory and reflected on the organization of science, authored The Theory of the Leisure Class (1899), the first and most famous book among his seven book publications. It is now considered a sociology classic, though its focus was as much economic, anthropological, and psychological as sociological. In the book, Veblen coined the term conspicuous consumption to describe tendencies of economic activities to be driven by nonutilitarian, even impractical motives that are more akin to tribal and prehistoric behavior than rational economics.

Veblen’s discussion of conspicuous consumption went well beyond possession of material objects. He extended his socio-psychological analyses to religious practices, gender relations, sports, the cultivation of accents, manners, and other factors not widely studied at the time. He was highly critical of the leisure class, including its treatment of women. He anticipated the trophy wife phenomenon of the modern leisure class by noting that marriage was largely another acquisitive activity for men of the leisure class. Veblen’s discussion was a starting point of subsequent debate, which we find in the interface between consumption studies, and research on lifestyles and social inequalities.

New Research

Current consumption research is increasingly interdisciplinary. Among many specific perspectives, five empirical research areas are of specific significance. First, the links between consumption behavior and social order are of specific research interest. Drawing the landscape of local, regional, national, and international consumption profiles in contrast to different classes, household types, lifestyles and their modifications over time is specifically on the agenda. The work of P. Bourdieu provides an excellent example of how well an empirical study of consumption patterns can serve as background diagnosis of a society. Inequalities become visible in terms of material and cultural disparities within vertical and horizontal disparities through differing consumption patterns.

Microeconomic and micro sociological patterns and conditions of consumption behavior also need to be fostered for further exploitation. This research area involves social conditions of learned behavior as well as further investigation into decision-making structures and contextualizing network structures that help to decode the grammar of human behavior relevant for consumption processes, including intentional refusal of consumption by saving or philanthropy.

A topic that is getting more attention is the role of consumers as active agents. What is the role of a consumer in society, how can he/she be protected by legal rights strengthening the autonomy of consumers compared to traders or producers? Further, consumers see themselves increasingly as political decision makers or voters through their own decision for (and against) specific products or labels. Since markets often offer a variety of competing products to satisfy a single need, consumers decide for boycott of specific brands if negative secondary information is available, e.g., discrimination practices at the workplace or negative treatment of the natural environment.

Another area of research explores the social code of consumption processes at a symbolic level, or which signs are transported for which purposes. J. Baudrillard wrote:

Consumption is neither a material practice, nor a phenomenology of “affluence.” It is not defined by the food we eat, the clothes we wear, the car we can drive, nor by the visual and oral substance of images and messages, but in the organization of all this as signifying substance. Consumption is the virtual totality of all objects and message presently constituted in a more or less coherent discourse. Consumption, in so far as it is meaningful, is a systematic art of the manipulation of signs.

Consumption processes and their diffusion modes seem to have overlaps to diffusion processes of social trends and social fashions. The research area must integrate elements of thought that have been provided by separate disciplines (e.g., sociology, psychology, consumption behavior, history, economics, anthropology, neurobiology) in order to reintegrate individual aspects for a better theory of diffusion processes of consumption behavior.

Of further interest are those research topics that treat consumption as part of a changing consumption society, which is itself part of international processes of homogenization and heterogenization. An increasing trend toward so-called issues of sustainability and greening of industry and society creates new demands, provides new business opportunities, and changes consumers’ profiles and their consumption patterns. Especially, debate on globalization is asking if consumption practices occur at an international level that are elsewhere labeled as phenomena of an ongoing process of “McDonaldization.” McDonaldization processes can be highlighted in different fields of consumption practices, e.g., in food industries, textile industries, tourism, entertainment industries, by credit cards, or in many other fields of application.

Bibliography:

Baudrillard, The System of Objects (Polity Press, 1988);
Bögenhold, “Social Inequality and the Sociology of Life Style. Material and Cultural Aspects of Social Stratification,” American Journal of Economics and Sociology (v.60, 2001);
Bourdieu, Distinction: A Social Critique of the Judgment of Taste (Harvard University Press, 1984);
K. Galbraith, The Affluent Society (Houghton Mifflin, 1958);
M. Keynes, The General Theory of Employment, Interest and Money (Macmillan, 1936);
Modigliani, The Collected Papers of Franco Modigliani, Vol. 2: The Life Cycle Hypothesis of Saving (MIT Press, 1980);
Offer, The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain Since 1950 (Oxford University Press, 2007);
Ritzer: The McDonaldization of Society: An Investigation into the Changing Character of Contemporary Social Life (Pine Forge Press, 1995);
-B. Say, A Treatise on Political Economy (Lippingcott, Grambo & Co., 1855);
Scitovsky, The Joyless Economy: An Inquiry Into Human Satisfaction and Consumer Dissatisfaction (Oxford University Press, 1976);
Smith, The Wealth of Nations (Dent & Dutton, 1970);
Stehr, Moral Markets: How Knowledge and Affluence Change Consumers and Products (Paradigm Publishers, 2008);
B. Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (Macmillan, 1889).

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