consumerism

consumerism, in economics, the theory that consumer spending, or spending by individuals on consumer goods and services, is the principal driver of economic growth and a central measure of the productive success of a capitalist economy. Consumerism in this sense holds that, because consumer spending in most countries represents the largest portion of GDP, or gross domestic product (the total market value of all the goods and services produced by a country’s economy in a given time period), governments should focus on stimulating consumer spending as the most effective means of increasing economic output and GDP. (An alternative theory, sometimes referred to as supply-side economics, essentially reverses the roles of consumption and production, holding that stimulating production—e.g., through tax cuts, deregulation, and lower interest rates—results in increased consumer spending.) Many economists who accept some version of the theory of consumerism are also materialists in the sense that they believe that possessing and using consumer goods are necessary for individual happiness and well-being. In a contrasting sense, which concerns the psychology and behaviour of consumers, consumerism is a shared preoccupation with acquiring consumer goods that do not serve a genuine need or want, sometimes with the conscious (or unconscious) aim of projecting an elevated social status—a phenomenon that the American economist Thorstein Veblen identified as “conspicuous consumption.” Psychological-behavioral consumerism is a natural, though not inevitable, consequence of the pursuit of policies based on economic consumerism. In the United States, psychological-behavioral consumerism arose in the latter half of the 19th century and was widespread from the mid-20th century; it is now a common feature of industrialized economies throughout the world. Finally, consumerism in a broadly political or social sense consists of efforts by private organizations and governments to protect the interests of consumers by seeking improvements in the quality of certain types of consumer goods, alterations in the methods used to produce them (e.g., because of adverse effects on human health or the natural environment), or the elimination of business practices that are unfair or detrimental to consumers, including false advertising (see consumer advocacy).

The pursuit of policies based on economic consumerism has provided significant benefits to society, according to the theory’s advocates, the most important being economic growth and increases in individual wealth and income. But it has also created a number of very serious problems, many of which are associated with the psychological-behavioral form of consumerism described above. Those problems include the breakdown of traditional cultures and ways of life; the weakening of altruistic moral values in favour of self-regarding (indeed selfish) materialism and competitiveness; the impoverishment of community and civic life; the creation of environmental externalities such as pollution, high levels of waste, and depletion of natural resources; and the prevalence of negative psychological states such as stress, anxiety, insecurity, and depression among many individuals with consumerist ambitions. Some psychologists and other social scientists have also argued that psychological-behavioral consumerism is a product of the psychological manipulation of consumers through sophisticated corporate advertising and marketing campaigns.