Richard D. Wolff (University of Massachusetts, Amherst, USA)

Shaun Hargreaves Heap recently reminded us (PAER no. 26, 2 August 2004) that The Affluent Society raises an issue as important today as when Galbraith wrote nearly fifty years ago. Why do consumers want ever more goods and services when the evidence suggests that more consumption delivers no greater happiness? Heap praises, discusses, and adds to Galbraith’s explanations for this riddle of consumption or what might better be called the fetishism of consumption. However, neither Galbraith nor Heap recognize, let alone discuss, one solution to the riddle derived from Marx’s theory of exploitation. Indeed, capitalist exploitation helps to explain not only the fetishization of consumption, but also neoclassical theory’s parallel need to ascribe disutility to labor and a compensatory utility to consumption.

Galbraith and Heap are troubled deeply by the spectacle of endlessly rising consumption spending, by the acquisitive value system it reflects and reinforces, and by the negative social effects flowing from both ever-rising consumption and that value system. The fetishization of consumption strikes them as a serious social problem. It undercuts the happiness of consumers, threatens the environment, and increasingly dominates public services and especially education which they believe could and should be sources of different, preferable value systems. Galbraith and Heap explain ever-rising consumption as the effect mostly of qualities they believe to be intrinsic to modern individuals. For example, people derive utility from consumer goods in terms of their relative – not their absolute – consumption. As others’ consumption grows, so too must theirs, thereby generating an endless rise of consumption. Similarly, people are vulnerable to advertising and mass media that generate ever new desires and tastes. Today’s desires reflect yesterday’s circumstances of the past; because former generations scrambled for subsistence, people keep buying long after subsistence is no longer an issue. The conventional wisdom that more consumer goods and services is always better than fewer endures, notwithstanding all the contrary evidence, because belief in conventional wisdoms is a human predilection. Extending Galbraith’s psychological explanations, Heap stresses modern identity insecurity. Because their personal identities are now fluid and hence insecure, people turn to consumption as the means to define and refine individual identities.

Galbraith and Heap do cite one cause for endless increase in consumption that is not a matter of individual psychology. Because rising consumption keeps the masses employed, it brings ever more people out of absolute poverty. This secures “social harmony” by “mitigating” the social tensions bred by “social inequality.” While both Galbraith and Heap are vague on this point, it does represent the germ of a social (dare one say “objective”) rather than personal, psychological (dare one say “subjective”) theory to explain ever-rising consumption. However, why settle for a germ when a much more developed and nuanced social theory of rising consumption is available from classical political economy and especially from Marx?

John Locke argued that post-feudal European society could work well, despite the loss of social controls operated by absolutist feudal hierarchies, if each worker disposed of only as much land as that worker could farm. He, Thomas Jefferson, and others believed that social inequalities bred social tensions which risked degeneration into civil chaos or regression back to feudal absolutism. The tensions could be avoided if production exhibited a rough equality of labor, means of labor, and hence reward from labor across individuals. However, the actually existing capitalism that came increasingly to prevail in post-feudal Europe generated growing inequality (Adam Smith’s accumulation of land and stock). Capitalism thus risked social catastrophe and self-destruction unless it could somehow “mitigate” the rising inequality between, speaking broadly, capital and labor. Smith’s idea was that capitalism might mitigate deepening inequality by raising consumption. Put bluntly, workers falling ever further behind and below capitalists in terms of wealth, income, power, and culture, might accept that if they enjoyed an ever-rising level of personal consumption. For generations of capitalism’s champions, it thus became axiomatic that a secure capitalism is one that delivers a rising standard of consumption to its working classes. Crises threaten not because rising inequality attends capitalist development, but only when that inequality is not compensated by rising worker consumption.

Marx’s theory of capitalist exploitation developed Smith’s idea further and in new directions. In the theory of relative surplus value presented in Capital vol.1, Marx showed how competition among capitalist firms within each industry typically generated a secular fall in the value per unit of each industry’s output. That meant, in Marx’s mathematical model, that the value of labor power would fall since each item in the worker’s consumption bundle contained less value. Assuming workers labored the same number of hours and thereby produced the same value added, the fall in the value of their labor power left a greater mass and rate of surplus value for their capitalist employers. In short, more of the value added by laborers accrued as surplus to their employers as less was returned to them as wages; the exploitation of labor rose. The real wages of workers remained the same because the reduced value of their wages matched the reduced value per unit of the consumer goods they purchased. Marx concluded that capitalism thus displayed a remarkable self-reinforcing mechanism: each capitalist’s need for more surplus generated a competition that provided it for all capitalists.

Marx recognized, however, that this happy circumstance for capitalists required that workers accept a rising rate of exploitation and its consequences: rising social disparities between workers’ and capitalists’ wealth, income, power, and culture. If, as Marx no doubt hoped, workers resented exploitation per se and its increase still more, the old problem of inequality generating social conflict could resurface with a vengeance. Marx’s argument implies the two parts that a solution to this capitalist problem would require. First, the value of labor power should not fall as much as the unit values of consumer commodities fell, thereby enabling a rise in real wages. So long as the value of labor power falls, the mass and rate of surplus value rises to the benefit of all capitalists. Exploitation can thus increase while workers also enjoy a rising standard of consumption. However, this part of the solution is not, by itself, sufficient. Rising exploitation still entails the same set of deepening inequalities that worried the classicals. Thus the need for the second part of the solution: workers must care much more about their own level of consumption than about exploitation, rising exploitation, and deepening social inequality.

Modern capitalism, in those areas where it is the most secure, reflects the successful combination of both parts of this solution. Exploitation rises to the benefit of capitalists, while real wages also rise and workers focus on rising consumption as the point and purpose of their work. They measure the tolerability of their labor by the adequacy of its compensation in terms of consumption. At a minimum, workers accept exploitation and its social consequences because they are compensated by consumption. Better still, for capitalism’s survival, workers may come to believe that exploitation does not (or no longer) exist, so that consumption can be viewed as the compensation simply for labor activity itself.

For successful modern capitalisms, then, real wages must rise tendentially and workers must be ceaselessly reinforced to believe that rising consumption is the adequate, appropriate reward for their productive efforts. In contrast, unsuccessful capitalisms are those who do not deliver rising consumption or who cannot persuade their workers that rising consumption is all that should matter in relation to their work. In this persuasion, neo-classical economic theory plays a central role. It teaches that work necessarily entails an intrinsic disutility compared to consumption which is an intrinsic utility. Work’s intrinsic disutility flows from exertions of mind and muscle (as opposed to “leisure”). Each worker rationally balances, at the margin, the disutility of those exertions against the utility of the consumption enabled by the worker’s income (revenue from those exertions). Rationality for workers is defined so as to exclude any thought or action in regard to exploitation and its social effects. Indeed, neoclassical economics teaches, contra Marx, that exploitation does not (or no longer) exist; there is no surplus in production. To the extent that neoclassical economics informs journalists, politicians, school-teachers, ministers and others, it organizes the persuasion needed to secure capitalism’s rising rates of exploitation and the social inequalities thereby deepened.

Marx thus offers a different explanation for the seemingly endless rise in consumption from those discussed by Galbraith and Heap. They profess to be mystified as to why people demand more consumption even though it does not make them “happier” and they resort to rather simplistic psychological explanations for that demand. In contrast, Marx’s theory of relative surplus value explains why rising real wages are possible, why they can occur as a consequence of capitalist competition, and why, in successful capitalisms, they are accompanied by a consciousness that ever more consumption is better. For Marx, it is a matter less of intrinsic human psychology than of an attempt to manage the deepening inequalities of capitalism.

Such management would fail if workers recognized exploitation and its social effects and refused to accept personal consumption as adequate compensation for them. It would fail if workers reacted to the disutility of their labor by demanding that the quality of their labor activity be changed by ending exploitation (rather than or in addition to demanding that their consumption be increased). It would fail if workers stopped believing that more consumption is better and focused instead on changing the social conditions of consumption by, among other measures, eradicating exploitation.

This analysis of rising consumption as a means of managing the social effects of rising exploitation implies a Marxist critique of both environmentalism and of socialist politics focused on raising workers’ wages. On the one hand, environmentalism effectively questions rising consumption by stressing its disutilities. However, in so far as that recognition remains disconnected from Marx’s larger argument about exploitation and rising consumption, environmentalism’s impact will be constrained and undermined. One the one hand, socialists’ focus on raising wages and consumption standards mobilizes workers around immediate needs. However, in so far as that focus subordinates or disconnects from Marx’s central opposition to exploitation within production, socialists risk becoming inadvertent adjuncts to capitalism’s successful management of rising exploitation and its social effects.

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SUGGESTED CITATION:
Richard D. Wolff, “The Riddle of Consumption”, post-autistic economics review, issue no. 27, 9 September 2004, article 2, http://www.paecon.net/PAEReviiew/issue27/Wolff27.htm