This chapter about the power elite on display and the economics of Thorsten Veblen covers topics like conspicuous consumption and the consumer society, branding and the manufacture of wants. The role of advertisers is explored as well as the way that attention grabbing has become an economic sector that affects the quality of life radically and for the worse.



The Power Elite on Display – the economics of Thorsten Veblen

In 1899 the maverick economist Thorsten Veblen portrayed the power elite of his day in The Theory of the Leisure Class. What he described were extrinsic motivations at work. Success for the business elite was demonstrated through conspicuous consumption, by which he meant display to achieve social status, power and authority:



This growth of punctilious discrimination as to qualitative excellence in eating, drinking, etc. presently affects not only the manner of life, but also the training and intellectual activity of the gentleman of leisure. He is no longer simply the successful, aggressive male — the man of strength, resource, and intrepidity. In order to avoid stultification he must also cultivate his tastes, for it now becomes incumbent on him to discriminate with some nicety between the noble and the ignoble in consumable goods. He becomes a connoisseur in creditable viands of various degrees of merit, in manly beverages and trinkets, in seemly apparel and architecture, in weapons, games, dancers, and the narcotics.

This cultivation of aesthetic faculty requires time and application, and the demands made upon the gentleman in this direction therefore tend to change his life of leisure into a more or less arduous application to the business of learning how to live a life of ostensible leisure in a becoming way. Closely related to the requirement that the gentleman must consume freely and of the right kind of goods, there is the requirement that he must know how to consume them in a seemly manner. His life of leisure must be conducted in due form. Hence arise good manners in the way pointed out in an earlier chapter. High-bred manners and ways of living are items of conformity to the norm of conspicuous leisure and conspicuous consumption.

(Veblen, 1899)

Plus ca change… Contemporary narcissism of this type is visible in the “How to Spend it” weekend supplements of the London Financial Times. Students of narcissism will find the column “Diary of a Somebody” particularly educational. This celebrates people with the message that you will not be a nobody if you have lots of money to spend and are thus able to hang out with other wealthy (and therefore beautiful) people:

If we are to believe economic theory, these “somebodies” are “maximising their utility”. However the word “utility” is an empty concept – it is not information rich in the sense that it does not explain why people of this sort get utility by showing off and profiling themselves in front of all the nobodies. This was a point that Thorsten Veblen made in an essay written in 1909. The idea of marginal utility simply does not tell you very much that can help us understand people like this. (Veblen, The Limitations of Marginal Utility, 1909)

In his essay, Veblen argued that marginal utility theory did have an element of truth in its explanation of people’s actions but that “It deals with this conduct only in so far as it may be construed in rationalistic, teleological terms of calculation and choice.” In their analysis the marginal utility theorists took the institutional framework in which people’s calculations and choices for granted, when it was the very emergence and evolution of the institutional framework, the context, that was the interesting thing. Marginal utility theorists like J. B. Clark were shutting down their exploration and theorisation at the very point at which it scientific inquiry should begin.

It shuts off the inquiry at the point where the modern scientific interest sets in. The institutions in question are no doubt good for their purpose as institutions, but they are not good as premises for a scientific inquiry into the nature, origin, growth, and effects of these institutions and of the mutations which they undergo and which they bring to pass in the community’s scheme of life. (Veblen, 1909)

Marginal utility theory is no help at all if we want to understand where the institutions and practices of a consumer society have come from, how and why they have come into existence and what their consequences are. On the other hand, Veblen’s ideas are helpful, at least as a starting point. This is because he had resources that most economists, in his own time and subsequently, did not and still do not have. Firstly, he was an outsider and no sycophant so was able to view the behaviour of rich and powerful people (and of the poor when they were emulating them) from a standpoint that was uncompromised. Secondly, he had read sufficiently in other social scientific fields. He resorted to sociology, anthropology and psychology without artificially hiving off the subject matter of “economics”. That made him able to recognise that although a market society had its own features that shaped the form in which various social practices took place, many of the features of that society were not fundamentally different from what occurred in supposedly “more primitive” societies. Thus:

Presents and feasts had probably another origin than that of naïve ostentation, but they acquired their utility for this purpose very early, and they have retained that character to the present; so that their utility in this respect has now long been the substantial ground on which these usages rest. Costly entertainments, such as the potlatch or the ball, are peculiarly adapted to serve this end. The competitor with whom the entertainer wishes to institute a comparison is, by this method, made to serve as a means to the end. He consumes vicariously for his host at the same time that he is a witness to the consumption of that excess of good things which his host is unable to dispose of singlehanded, and he is also made to witness his host’s facility in etiquette. (Veblen, The Theory of the Leisure Class, 1899)

Conspicuous consumption and the consumer society

Thus it is that Veblen’s theory of “conspicuous leisure” and of “conspicuous consumption”, whose purpose is to make a status display, provide us with a possible starting point for our understanding. It gives us ideas with which we can start to make sense of the motivations and behaviours apparently underpinning a lot of the actions in a “consumer society”. In a consumer society not only the rich but other strata of society are using consumption goods to profile and project themselves. As in the diary of a somebody, jewels, hair, make-up, i Pad, purple couture dresses and the names in one’s impressive choice of stylists or the beautiful people in one’s guest collection are all a means to an extrinsic end.

To a large extent the end in question is to make a status display – status conscious people are pursuing the acquisition of what are called “positional goods”. These goods signal one’s position in society and depend on relative income. It is the fact that the rich can afford them and others cannot that is on display. If and when poorer people were able to afford a Ferrari then a Ferrari would lose its value for the rich people who first bought them. In that case rich people would pursue another status display. ( Kallis G 2014)

In his article Kallis argues that “..positional consumption is not a personal vice. It is a structural social phenomena to which individuals conform to remain part of the mainstream…..” For Kallis there are risks for those who try to exit the rat race especially if they are from less privileged backgrounds in which case there will be loss of respectability and economic insecurity. What’s more “the system can co-opt its dissidents: even back to the land and “eco-life style choices” by privileged educated and artistical groups can become types of new positional goods”.

Perhaps – but is this too “either-or”? Explaining peoples’ actions through ‘structures’ can be revealing but after a point too much emphasis on the structures within which people act implies this explanation for people’s actions: “The system made me do it”. It removes the idea that individuals make choices. It can tend to the view that regards people as automatons without freedom. As Erich Fromm pointed out, and other psychologists have since confirmed, a market society creates particular personality types, marketing personalities – people who put great store on marketing themselves. However, individuals can come to recognise the features of their own habitual responses – that’s a point of therapy after all. Individuals can and do change and not only in the context of broader “system changes” – one of the tasks at hand is to identify when and under what conditions.

The Helbig society

It must be admitted however that things have moved on from Veblen’s day to make marketing far more prominent – particularly the all-pervasive presence of “brands” which work together with advertising to create what I describe as a “Helbig Society”. That is, a society of technicolour appearance and empty narratives designed to manipulate.

To explain: the term “Potemkin Village” is sometimes used to describe a manufactured appearance, designed to impress, which is a deceptive facade. The phrase refers to a tour of the Crimea and the Ukraine in 1787 by Catherine II of Russia in which it was alleged that her former lover, Prince Grigory Aleksandrovich Potemkin, created pasteboard villages along the bank of the Dnieper River which the monarch was travelling down, with the aim of making an illusory show of prosperity. Recent historical research has shown that this story was largely a slander created by the Saxon envoy to Catherine’s court, Georg von Helbig. The villages therefore ought, with more justice, to be called Helbig Villages.

If the Potemkin Villages of 1787 were a slander, Helbig Villages have existed at other times in history. A number of places designed to deceive are mentioned in the Wikipedia description of “Potemkin Villages”. For example, the Nazi Theresienstadt concentration camp called “the Paradise Ghetto” in World War II was designed as a concentration camp that could be shown to the Red Cross. Apparently attractive, but deceptive and ultimately lethal, with high death rates from malnutrition and contagious diseases, it ultimately served as a way-station to Auschwitz. As is well known, people who arrived at Concentration Camps were sometimes greeted by orchestras playing classical music. An analogous management tool is used today in slaughterhouses. Animals are calmed after a stressful journey before they are put through a process that stimulates their curiosity about what is going to happen just before they are sedated and then slaughtered. If they got upset, the stress hormones would spoil the meat. Or, to put it the other way around – the meat tastes nice to the customers because the animals have been deceived.

Less gruesome, and more like the Helbig Village example, was the PR job done on the town of Enniskillen in Northern Ireland for the G8 Summit in June 2013. Large photographs were put up in the windows of closed shops in the town so as to give the appearance of thriving businesses for visitors driving past them. This has now become a common practice for property companies to cover messy re- development or dereliction. (Wikipedia, Potemkin Village, 2013)

Branding

Deception is ubiquitous in a modern market economy. We might even call a consumer society a Helbig Society. To get a proper sense of the gulf between the illusion and the reality in this kind of economic system we have to delve into the evolution of advertising and of “brands”. In her book No Logo Naomi Klein shows how the economy has moved a long way from when it was about people selling products to other people in markets that were regulated to ensure that prices were fair. By the end of the 19th century and the early 20th century, adverts were about selling innovations. New kinds of products like cars, telephones and electric lights which producers needed to convince people to use. The advertisements were, as Klein explains, rather like product news bulletins. This was to change as a process began of building an image around a particular brand name. Generic goods like sugar, flour, soap and cereal had hitherto been scooped out of barrels by local shopkeepers. These now had names bestowed on them, particularly with a view to evoking a feeling of folksiness and familiarity. Henceforth it was the product brand names – artificial images of imagined personalities – that interfaced between consumer and producer rather than the shopkeeper – Uncle Ben, Dr Brown, the Quaker Oats man…

There were those in the industry who understood that advertising wasn’t just scientific; it was also spiritual. Brands could conjure a feeling – think of Aunt Jemima’s comforting presence – but not only that, entire corporations could themselves embody a meaning of their own. In the early twenties legendary adman Bruce Barton turned General Motors into a metaphor for the American family, “something, personal, warm and human”, while GE was not so much the name of the faceless General Electric Company as, in Barton’s words, “the initials of a friend”. In 1923 Barton said the role of advertising was to help corporations find their soul. The son of a preacher, he drew on his religious upbringing for uplifting messages: “I like to think of advertising as something big, something splendid, something which goes deep down into an institution and gets hold of the soul of it… Institutions have souls, just as men and nations have souls.” he told GM president Pierre du Pont. General Motors ads began to tell stories about the people who drove its cars – the preacher, the pharmacist or the country doctor who, thanks to his trusty GM, arrived “at the bedside of a dying child” just in time “to bring it back to life”. (Klein, 2000, pp. 6-7)

As advertisers evolved their techniques of psychological manipulation, they delved into psychology, anthropology and culture while coming to see themselves as the “philosopher kings” of commercial culture. “It took a while for people managing companies to finally get it. They were not in business to produce stuff, they were in business to sell brands. This meant continuous and increasingly intrusive advertising – the problem being, as one senior ad executive explained, that consumers “are like roaches – you spray them and they get immune after a while”.’ (Klein, 2000, p. 9)



The manufacture of wants – the role of advertisers

One of the few economists to take this on board was John Kenneth Galbraith, whose book The Affluent Society, first published in 1958, argued that, for much of the modern economy, production preceded wants rather than, as economic theory assumes, the other way round.



The even more direct link between production and wants is provided by the institution of modern advertising and salesmanship. These cannot be reconciled with the notion of independently determined desires, for their central function is to create desires – to bring into being wants that previously did not exist. A broad empirical relationship exists between what is spent on the production of consumer goods and what is spent on synthesizing the desires for it. (Galbraith, 2001, p. 34)

Perhaps economists rarely venture into these fields because we can see that advertising, marketing and public relations employ methodologies which are all about shaping preferences and the “methodological individualists” are not interested in how preferences are formed. They are content to assume that people have given preferences and then act rationally on the basis of these preferences in the face of prices and a certain amount of purchasing power. To find out what happens in aggregate the economists simply add together the individual market behaviours.

Such an approach obviously devotes no attention to the way that people influence each other. The very existence of a fashion industry shows that, as well as the efforts that marketing departments work to create collective consumption trends. These marketing approaches actively foster disutility because they “work” by creating dissatisfaction. They seek to put in people’s minds the idea that their intended purchasers cannot live without some new product. They are also intended to be disruptive of relationships because they are based on fostering rival status display.

Sales departments, advertisers and public relations companies do not take people’s preferences as given. They are a big part of the economy and mostly, economists ignore them. The sales departments and the marketers do not use ideas from “utility theory”. They take ideas from group psychological dynamics, crowd psychology and approaches from psychotherapy theory which explores the interplay between human emotion and cognition. We need to do this too in order to understand advertising and PR on its own terms – and hence its usefulness to the people who pay for it, and its ability to influence the political process.



Well-being and marketing

Money is made when people “have to have” products and stay on the treadmill of work, spending and debt. Society functions by advertisers ensuring that people feel uncomfortable, inadequate and bereft unless they have the latest product designed for their peer group which is also an identifiable market segment. That said, if buying a product were to make you satisfied for too long you would not keep on buying it…

So how do the advertisers do this? Often it is by an astute manipulation which forms motivations through the use of stories, rituals, ceremonies and culture. The moral of the stories told by the advertisers is that the audience is lacking in something that possession of the brand will give them. For example, to be attractive, to be in tune with the American grand narrative of rugged individualism, personified by the cowboy, one needs to buy Marlboro cigarettes and participate in the social ritual of smoking them. In contrast with identity in an indigenous society, where people have totem identification with a creature, or a plant, based on deep knowledge and loyalty to part of the natural world, individuals in the consumer society define themselves partly through brand loyalty. The consumer “totems” are the designer labels that fashionistas wear – a sign of their discrimination, knowledge and affluence as consumers.

The implications for psychological well-being are profound. The message of the advertising stories is to convey how products will make us a better and more desirable person – mother, father and lover – which means that we are not good enough as we are now. The insights of Sigmund Freud that people think in emotionally associative ways (cf his therapeutic technique of free association) is hijacked to design the advertising message. Metaphorical allusion portrayed in vivid colour in high definition and on the biggest possible screens attempt to create emotional links between brands and desirable episodes or scenes in personal life stories. Fizzy drinks with sugar in them, are associated with adolescent sexuality in blue jeans. Getting the boy, getting the girl, getting the job, your forthcoming celebrity status, the perfect mum, dependable dad, the happy family – all are associated with a product – perfume or gravy granules… Messages of this type bombard us all with attention-grabbing messages from street billboards, newspapers, magazines, television and cinema commercials, on the internet, on the radio. Over and over again, visual and narrative connections are made between sex, glamour, wealth, power, speed, desirability, happy families, and shiny new products magnified and flashing in front of our eyes, dynamically displayed with clever graphical effects.



Attention grabbing as economic sector

Correspondingly a large part of the economy – its institutions, its technical infrastructure – exists solely for the purpose of grabbing our attention. When we are awake we can only focus on so much during a 24 hour day, a third of which we are asleep and a lot of which we are drilled to attend to employment tasks. At other times advertising agencies, market research companies, public relations companies, publishing companies, theatres, cinemas, television companies, newspapers, internet organisations are all trying to ensure that at every available opportunity, every available surface, every available screen, every available shop window, every available stage, and every broadcast, carries something about their product and/or their message. This is not to mention 9 out of every 10 phone calls on telephone landlines when a complete stranger assumes that they have the right to interrupt whatever you are doing with what they call a “courtesy call” – despite “a service” run by the marketing industry which is supposed to prevent this happening if you don’t want it. (Franck, 1998)

Naturally the more power specific people and specific institutions have, the more this “economy of attention” is skewed in their favour. Rather as the passage of light is bent by powerful gravitational fields, so the “information space” used by a society is buckled to massively magnify the concerns and priorities of the super-rich elite and their hangers on. At the same time rendering virtually invisible and unintelligible the suffering, concerns and needs of the large part of the world’s population. In the information space these people are driven to the edges and almost literally do become “nobodies”.

The nobodies are then only noticed in the crowded messages being transmitted in the information space when they get in the way of elite agendas and/or require expenditure and management because they have become a problem. (For example, because “attention seeking” turns into what is characterised as a mental health issue – mania and depression being opposite emotional reactions to experiencing oneself to be a nobody and being unable to cope with that – excitement at the idea that one is about to become a star as a result of one’s brilliant work and thus, attain celebrity status oscillating with depression as one remains in the wilderness).

These are all properly a subject for economics because there are multiple senses in which the attention seeking assault from the marketing sector impacts negatively on well-being now and in the future. We have already mentioned the way that this vast pantomime is about making its audience feel inadequate. But more than this – there is another economic consequence that Veblen realised over a hundred years ago. A part of his argument was that what the Leisure Class consumed as status displays – and also the way in which many members of the poor tried to emulate them – led to a waste of resources. It is stuff that never needed to be produced and is a waste of the time of the producers, a waste of material and natural resources and a waste of energy. And what Veblen could not have known is that the huge pile of garbage which is still being produced today drains depleting fossil fuel and material resources while exhausting carbon and other kinds of sinks. For no good cause other than the need of the “celebrity class” to be noticed, the planet appears to be locked on the road to destruction.

The Facade

Another way of expressing this is to describe “the economy” as operating with a vast deceptive facade.

I have used the example of Potemkin/Helbig Villages to describe the resulting culture that we live in – a way in which mass psychology is manipulated by a culture of appearances that hide an underlying reality that is much more shoddy. We look at a mass of separate products on the supermarket shelves and see a bright dazzling multi-colour array of images and styles – on the boxes and tins. Yet when it comes down to it, most of them are produced by just ten different business groups. The variety is an illusion – at least when it comes to who owns and produces them. The conservative reassuring man on the Quaker oats packet is owned by Pepsico. Yves Sant Laurent, Diesel (that celebration of fossil fuel) and Giorgio Armani are owned by Nestle, Uncle Ben’s Rice is owned by Mars. (See attached graphic) (Bradford, 2012)



Source: convergence alimentaire, 2012, with permission. Click to access original image

There are many other things hidden by the facade. Why else is such a high proportion of world trade and world finance routed through tax havens and secrecy jurisdiction? Behind the gloss, the cute sentimental products on sale at your local supermarket, there are factories producing the stuff staffed by child and slave labour in unsafe conditions; there are oil spills and air and water contamination; there are greenhouse gas emissions; there is military intimidation of workers and there are mountains and mountains of toxic throw away trash.

In her book Klein describes how the American NBC network aired an investigation into Mattell and Disney just days before Christmas 1996. “With the help of hidden cameras, the reporter showed that children in Indonesia and China were working in virtual slavery “so that children in America can put frilly dresses on America’s favourite doll”. (Klein, 2000, p. 326)

Many other examples can be given between the appearance and the brutal reality. However, if you mock and take on these cuddly friendly folksy corporations you see what they are really like. Like the MacDonald Corporation who tried to ruin activists who took them on with critical leaflets which led to a long running court action in the UK.

Although there is nothing at all glossy and high definition about economics, although it is often tedious and dull, economics is a part of this facade. Too often the descriptions of what is happening stay on the surface. The descriptions of markets are about products not about brands. The fact that branding and advertising are about creating product differentiation makes nonsense of the default assumption in the textbooks that most production is from competitive firms producing homogenous products. Textbooks are still describing a world in which shopkeepers scoop flour, sugar and cereals out of a barrel. Into this barrel the shopkeepers have put the identical products of a large number of producers all of whom were obliged to sell at a going market price. But of course if you go to buy some kind of computer, or a car, or an appliance of some kind there are a bewildering variety of non-comparable products and a barrage of adverts as to the advantages of each. While price plays a role in the choice of a product it is often a minor one.

As regards the huge growth and economic importance of marketing, the textbook writers have little to say. Certainly they do not appear to recognise that the rise and rise of the marketing industry demonstrates that the chief constraints on what companies supply are not production conditions, leading to rising internal costs as companies try to expand. Rather the constraints on firms are external market limits if they try to sell more of their brand beyond their market niche. Pierro Sraffa understood this from as early as the 1920s and wrote a paper to explain his alternative viewpoint. This will be described later. Suffice it to say here, that although Sraffa, and a few others, like Joan Robinson, tried to keep up to date, most economists did not. You don’t update the Holy Scriptures – scriptures are true for all time.