Consumerism

The term consumerism may be understood using four distinct interpretations. These interpretations are as follows: (1) the movement within society and government to protect consumers from defective or otherwise unsafe products; (2) the demand-side economic theory (usually associated with Keynesian economics), which states that increasing consumption of consumer goods drives economic growth as opposed to encouraging higher rates of saving as a national economic policy; (3) a societal state in which happiness or success is somehow equated with increased consumption and a concomitant creation of limitless demand; and (4) a combination of the second and third meanings in which an emphasis of advertising and marketing is concentrated on the creation of consumers within a culture that embody limitless demand. Each of these meanings of consumerism has specific and important application in the understanding of business and society and, ultimately, in our collective ability to pursue sustainability.

The first meaning of consumerism can be traced to the Latin maxim caveat emptor (buyer beware). In the United States, government and societal actions to protect consumers predate the creation of a consumer protection agency within the Department of Agriculture in 1862. As more citizens became dependent on others for food and essential materials for daily life, consumers of these products began to demand standards of quality and a mechanism for the assurance of the safety and wholesomeness of these products. It was not until 1906 that legislation was passed to create the first version of the Food and Drug Administration (FDA). This government agency has grown in importance and purview as the variety of products and dependence on commercial sources for these products has increased. However, the FDA covers a bounded spectrum of consumer goods; in 1914, the Federal Trade Commission was created to regulate other types of goods and services. Still, for many, the true start of modern consumerism dates to the 1960s when consumer activists such as Ralph Nader began to influence public perception, culminating in legislation of, for example, the Consumer Products Safety Act of 1972 and the earlier Motor Safety Act of 1966. Since that time, there have been many other actions to protect consumer interests; for example, producers and service providers have lobbied Congress to reduce restrictions and liability standards on the grounds that it reduces competition and it restricts consumer choice.

The second way that the word consumerism is used is to express the idea that increasing consumer demand can be the engine that drives a healthy [Page 427]national economy. While this is an oversimplification of one element of Keynesian economic theory, it is sufficient for our purpose of understanding this usage of consumerism. The important contrast of this usage of the term consumerism with the first usage is that there is a shift away from saving money in banks as a national priority, which is an important element of capital formation in early capitalism, to an emphasis on consumer spending as a means of economic stimulus and continued economic growth. This manifestation of consumerism as put into national policy is exemplified by the exhortation of President George W. Bush for consumers/citizens to spend the tax surplus that he rebated and/or cut for some taxpayers. The idea was to spend our way out of an economic slowdown after the revaluation of stocks and resultant portfolio deflation of 2000 and in the wake of national trauma in 2001.

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