William Mebane*
The first generic goods were those based on a single model for everyone. The
black model T Ford is the classic example. One model mass-produced permitted
an enormous economy of scale and reduction of costs never before realized. The
basic function of road transport of persons was satisfied.
Business feared that with generic products all needs would soon be satisfied and
there would be little left to produce. A first step in overcoming this was the
introduction of more choices, according to the ability to purchase. A great
differentiation of products was introduced by the differences in price and quality.
The goods might serve the same basic function, but much higher average prices
were possible by the introduction of higher-class (luxury) goods. Psychologists
taught business and marketers how to condition and manipulate consumers’
emotions and needs, getting them to buy things they didn’t need. Products could
be marketed as they appeared to promise higher social status, or they could
suggest anxiety in the consumers’ mind and then present a product to relieve
that anxiety.
Business, referring to the needs pyramid of Maslow, begin supplying more
secondary needs in a variety of qualities and price. This would be more socially
acceptable, if everyone had satisfied his primary needs for food, clothing, shelter
and education. Obviously this was, and is, not the case. But with the excuse that
tide of a growing economy would lift all boats, limited attention was paid to the
excess of non-primary goods and services being produced and consumed.
Furthermore, business aimed at inspiring the upward mobility of goods, passing
from ordinary to extraordinary goods, as a mirror of upward social mobility. This
worked very well when in fact there was social mobility, in the US after WWII until
the 70’s.
Then with the advance of computer processing and eventually Internet, the
habits, purchases, preferences and psychology of individual persons could be
identified, measured and classified. Now products could be aimed at the single
individual according to his particular need with great precision. At the same time
production with the help of automation could introduce a wide variation within
products themselves. Since the preferences were extremely variegated and a
secondary need could be satisfied in an infinite number of ways, the potential
demand exploded. Business had no more fears of oversupply. Consumers give
away their consumption data and individuals are constantly supplied
(bombarded) with advertisements and products that are most suitable for them. It
is hard to resist the purchase, and many families take on considerable debt to
facilitate this. Consumerism has conquered completely, satisfying precisely one’s
individual desires. Of course there is the important question of income and
income inequality, but the consumer satisfaction seems so complete that the
issue of stagnant wages of the middle income, working family has come to the
forefront only in the last decades.
This new consumption has evolved in favor of a short term “sugar burst” of
instant satisfaction: examples include all the computer and video games, and
entertainment of all sorts that are available of on YouTube. There is a renewed
interest in highly dramatic TV serials with very professional directing, providing
short (30 min.) but very satisfying episodes such as NCIS, and the House of
Cards. TV itself has evolved to on demand services and competes with the
instantly available films and programs offered by Netflix. Interest in more difficult
and demanding products, such as books, has declined particularly with the
younger generation. Bookstores along with small cinema are closing everywhere.
Instead, the warehousing and fast delivery of Amazon is revolutionizing
commerce with very wide selection of products, low prices and one or two-day
delivery. Instant consumption is possible. Also the way of producing and
marketing fashion product has evolved with Zara (Inditex) testing the market in
the store and through very rapid production, providing the accepted models in
several weeks. Finally we have social media in the form of Facebook, WhatsApp,
Instagram, and Twitter that perform instant contact, messaging and services.
Obviously Internet and the cell phone have revolutionized communications,
making connection to persons, information and products/services extremely
easy. Nokia, who made the best selling cell phone initially, had envisioned
offering only essential services (to be supplied by Nokia); however the decision
by Apple to allow third party applications unleashed hundreds of thousands of
new online mobile services. This together with the rise of Amazon, offering
unheard of rapid even same day delivery, of millions of products, combined with
individualized advertising, constitutes an unprecedented and extremely powerful
level of individualized consumerism.
At the same time, to catch potential buyers this media has become more
entertaining, well designed, shocking and in a word addictive. And the future with
virtual reality will engulfed us in compelling artificial worlds, not necessarily of our
choosing. Again the potential is enormous, not excluding new forms of art, but
the opportunity for advertising is enormous, as they will have control of the
reality.
Even as adults, we cannot stay off our cell phone day and night. Maybe it is not
surprising that parents from Silicon Valley have become very restrictive of their
children’s use of all mobile devices, an indication of the excess. Apple itself has
begun to introduce applications for monitoring and limiting use.
It remains to be seen what kind of long-term relationships among persons this
new system will favor. And more importantly, the question is what control can we
have, as consumers and citizens, over the design of the new systems? Will we
leave it all up to business as usual?
This evolution of consumption has occurred within the context of globalization
where extremely large economies of scale are possible for countries with mega
sized internal markets and thus with the possibility of producing for those internal
markets and then exporting to the world at very low costs. Even complex
products like the i-phone, with over 300 components, are produced by
outsourcing the production to the best producers worldwide. When less complex
products, such as photovoltaic panels, almost all of them can be produced and
exported from the largest internal market, China. Control of the technology and
access to mega internal markets makes it difficult for more limited players like
Italian industry to compete. Several millions of Italian jobs have been lost
through relocation of Italian factories in East Europe and Asia. Thus by
concentration of production centers from which to export and control technology,
globalization has defined a new set of winners and huge set of losers; creating
unemployment in many sectors and countries where the minor players cannot
compete.
The most important losers continue to be the developing nations that are in fact
not developing: hunger has increased from 460 million in 1974 to 800 million
today and poverty is the same as measured in 1984, about 1 billion persons with
no improvement in over thirty five years. Almost all the gains in relative poverty
have been in one place, China. If a higher threshold of poverty is used, five
dollars a day, the number of poor persons number 4.3 million, more than 60% of
mankind. The net financial inflows/outflows for the developing world are negative
by 26.5 trillion dollars between 1980 and 2012, as confirmed by the 2016 report
of the Global Financial Integrity and Center for Applied Research at the
Norwegian School of Economics. The developed countries are net borrowers to
the developing nations, greatly exacerbating the hunger and poverty situation.
Just the opposite of what one would expect. The “development” model proposed
by the rich for the poor is actually helping the rich. Poverty has more do with the
relationship between the poor and the rich, and how it has evolved in new forms
from the colonial past. To overcome hunger and poverty in the global South, this
must be radically changed. “For decades we have been told a story: that poverty
is a natural phenomenon and will be eradicated through aid. It is a comforting
tale, but it ignores the broader political forces at play. Poor countries are poor
because they are integrated into the global economic system on unequal terms
and aid only helps to hide this.” Hickel, J. (2017).
After decades of intense individualized production and consumption, perhaps
some of us are longing for something else. There is something forgotten based
on social experience and exchange. It is intense human interaction, usually
among several persons that is shared and highly valued. For example, it may be
a tour in a primitive setting and being able to talk and exchange ideas with the
natives. It could be a group cooking class for Americans in Tuscany. Experience
is built around the relationships that may be established locally. A very important
experience is the direct sharing of culture of all types from music to dance to art
to architecture to anthropology. Of course this culture can be indirectly shared
and sold as a product or video. There is a continuum between the direct
experience and the less involving indirect experience. Usually direct experience
is felt as more unique and enriched by numerous details and local happenings.
There is a difference in climbing up the steps of the leaning Tower of Pisa and
seeing the photograph. There are many differences in experiencing the Palio of
Siena and seeing the video. Tourism is in fact an area where the offer of
experience can be greatly reinforce its value. What are required are more local
programs, activity, and personal exchange. Another example of experience is
collaborative education. We are all experts in something, or wish to be more
expert in something: this is the basis of creating value through seminars and
sharing various forms of culture among friends and acquaintances.
Of course experience may involve many contradictions and problems. Usually at
classic music concert or jazz session there is a shared joy between performers
and listeners. This may not always be the case; the provider or facilitator of the
shared experience may not necessarily share the joy. He/she will have to be
adequately compensated. In the best cases the experience facilitator should
stimulate the participants to a deep level of exchange that also will be fulfilling to
the facilitator. This requires considerable psychological skills of all. Training is
needed for providing a high-level of experience. There is also a part of
psychology that investigates one’s peak experiences.
A key characteristic of experience is that it is almost always involving an
exchange among persons and thus gets us away from the individualistic form of
consumerism. Another key element of experience is that it can be applied to any
activity or interest; it has that great variety of form, like that of the individualized
products. This means the space for social experience is also infinite.
And of course social experience is not new culturally and historically. The Greeks
valued it greatly through their love of the music, dance, epic stories, tragedy,
comedy, philosophy, and their participation in direct democracy. Although they
had slaves, most Greeks did not proclaim nor seek the excessive accumulation
of material wealth.
The point is that we can substitute the frenetic consumption of individualized
products and services with that of experience created in large part locally and
with a much lighter ecological foot print. This will benefit us as individuals and
globally. It can be an essential part of the sustainability evolution.
Social experience and exchange may be a partial antidote to globalism. It does
not have to be mass-produced in mega markets for export. Experience is
providing one of the highest needs of the Maslow pyramid, at the same time
providing jobs and primary needs of all the local facilitators.
However, this requires a significant cultural shift towards recognizing the
fundamental importance of social relations. An example can be found in tourism
that can be, and frequently is, a hotel-to-hotel journey with limited contact with
the local population. “It is Tuesday, we must be in Belgium.” Or it can evolve into
relying on local guides, encountering natives, and possibly staying with local
families to learn and share the their culture.
At home, this implies fully developing one’s social opportunities and skills. It may
take the form of friendships in numerous activities such as book clubs, discussion
groups or travelling together. It may involve political activism, continuous adult
education or working with volunteer organizations. It usually involves active
listening to your spouse, neighbors, friends and acquaintances.
The empirical evidence supports the benefits of social experience and
relationships. In international studies on happiness, it has been argued
(Bjornskov 2003; Vermuri and Constanza 2006; Bjornskov et al 2008) that happy
countries have high social capital and strong friendship networks. A notable
study by DiTella and MacCulloch (2008) explores the Easterlin Paradox, referring
to the fact that happiness data are typically stationary in spite of considerable
increases in income. They show that for happiness responses of around 350,000
people living in the OECD, based on actual changes between 1975 and 1997,
only small contributions to happiness can be attributed to the increase in income
in their sample. They are negatively correlated with the average number of hours
worked, environmental degradation (measured by SO emissions), crime,
openness to trade, inflation and unemployment.
The famous Harvard Study of Adult Development, summarized by Mineo L.
(2017), reports that the “Harvard study, almost 80 years old, has proved that
embracing community helps us live longer, and be happier. Close relationships,
more than money or fame, are what keep people happy throughout their lives,
the study revealed. Those ties protect people from life’s discontents, help to
delay mental and physical decline, and are better predictors of long and happy
lives than social class, IQ, or even genes. That finding proved true across the
board among both the Harvard men and the inner-city participants.”
In animals, sociality is a survival response to evolution pressures. Perhaps man
should be considered an animal under evolutionary pressure.
The conclusion is that the recognition of the importance of social experience and
relationships can help us curb individualistic consumerism and allow more
resources to be dedicated to primary and social needs. The consumers, business
and governments need to ‘wise up’ and understand the choices at stake, which
also supports a more effective climate change transition.
References
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Bjornskov, C. (2003). The happy few: Cross-country evidence on social capital
and life satisfaction. Kyklos, 56, 3-16.
Bjornskov, C., Dreher, A., & Fischer, J.A.V. (2008). Cross-country determinants
of life satisfaction: Exploring different determinants across groups in society.
Social Choice and Welfare, 30, 119-173.
Di Tella, R., & MacCulloch, R.J. (2008). Gross national happiness as an answer
to the Easterlin Paradox? Journal of Development Economics, 86, 22-42.
Hickel, J. (2017). The Divide, Windmill Books, London.
Mineo, Liz (2017), Good genes are nice, but joy is better, The Harvard Gazette,
April 11, 2007
Vemuri, A.W., & Constanza, R. (2006). The role of human, social, built, and
natural capital in explaining life satisfaction at the country level: Toward a
National Well-being Index (NWI). Ecological Economics, 58, 119-133
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* William Mebane, former Director of Energy Efficiency Department, ENEA. Article provided to Other News by the autor
