Is Consumer Capitalism Outdated?

occupy wall street arrestContinuing high unemployment, growing disparities in income, an Occupy Wall Street movement that continues to spread, bizarre weather that could be linked to climate change. These and other recent developments suggest that we are in the midst of a crisis that cries out for new thinking about our economic system.

For the sake of simplicity let’s call the system consumer capitalism. Doing so does not ignore the fact that from the Progressivism of the early twentieth century through Franklin Roosevelt’s New Deal up until the present this consumer capitalism has been modified. A U. S. State Department publication in 2001 declared that though “the United States is often described as a ‘capitalist’ economy,” it “is perhaps better described as a ‘mixed’ economy, with government playing an important role along with private enterprise.”

Thus, what we have might also be called modified consumer capitalism, or perhaps what Robert Reich has labeled Supercapitalism. Democratic liberals would like government to restrain and channel it so it best serves the common good,  Republican conservatives are more inclined to favor a more laissez faire approach that lets the market operate with a minimum of government interference. But consumer capitalist values still dominate our economy. A majority of economists continue to emphasize that the health of our economy depends on increasing productivity, consumer demand, and our Gross Domestic Product (GDP). To meet these ends, vast amounts of money are spent to convince us that we need to consume more.

One marketing consultant of the mid-1950s stated: “Our enormously productive economy . . . demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. . . . We need things consumed, burned up, worn out, replaced, and discarded at an ever increasing rate.”  In the early 1990s the American Advertising Federation wrote an open letter appearing in Time magazine to the U. S. president reminding him “of advertising’s role as an engine of economic growth.  It raises capital, creates jobs, and spurs production. . . . It increases revenues since jobs produce taxable income, and greater sales increase sales taxes. . . . Incentives to advertise are incentives for growth.” Such thinking still dominates our economy.

How different this type of emphasis is to that of E. F. Schumacher, who once wrote that advertising and marketing encouraged a “frenzy of greed and . . . an orgy of envy,” and that “the cultivation and expansion of needs is the antithesis of wisdom.” As an economist and environmentalist, Schumacher was way ahead of his time, and I have already written several LA Progressive pieces on him (see, e.g. this link).

But last month I had the opportunity to see just how alive and influential his thinking continues to be, especially among some Europeans. The occasion was a conference in Antwerp on “Responsibility in Economics and Business: The Legacy of E. F. Schumacher (1911-1977).”  Following the undogmatic example of Schumacher, my fellow speakers were not suggesting any easy answers from how we transition from our present economy to a more humane, just, environmentally-friendly one without wreaking economic havoc. When I asked Stewart Wallis, head of London’s New Economics Foundation and former International Director of Oxfam, how we could accomplish such a goal, he admitted that it was a central problem.

In his talk he stated that he believed “that much of economics, as it is now taught and practiced, is both intellectually and morally bankrupt,” and that our “fundamental problem is . . . overconsumption.”  What he thought we needed was “an economy which has, as its main goal, to improve human needs, not wants. This economy needs to create and support sufficient good jobs and good work, and to do so in a way that is much more equitable–both between peoples alive now and between current and future generations. It needs to be an economy that recognises that it is but a subset of the ecosystem and which therefore works within planetary limits. Perhaps above all though, it needs to be an economy constructed with a bio-centric view of the world, not an anthropocentric one. We need to move from being consumers to stewards. Such an economy must also factor in the spiritual, the aesthetic and the symbolic.”

He recognized that exactly how we manage this “great transition” is still an open question, but that we need to “start to live differently; to buy differently, and above all, demand that our politicians change the ‘rules of the game’ and the incentive structures.” We need, he continued, to start “to measure, at the national level, the real goals of society, such as “national well-being.” The transition “means radically changing incentive systems, regulation and taxation systems. It means governments starting to ensure that markets are our servants, not our masters. It means reforming the financial and banking systems to ones that are stable, fair and socially useful. It means stopping the creation of money by commercial banks for non-productive and speculative purposes. It means Governments ensuring much greater equity within societies and much fairer distribution of not just incomes, but wealth, land, natural resources and time. It means companies moving from a prime purpose to make money for shareholders to ones which have a wider social purpose benefiting a wider group of stakeholders and which need to make more money to achieve this. It means much greater devolution of economic power and activity to the local level and many of us becoming food growers and renewable energy producers, whether individually or communally.”

After returning home, I read his organization’s The Great Transition, which offered more thought-provoking suggestions. Although written with Great Britain chiefly in mind, the work contains much that could be useful for Americans to ponder, and it recognizes the global nature of our present economic crisis. In the United States, the New Economics Institute, formerly the E. F. Schumacher Society, carries on work similar to that of London’s New Economics Foundation, and the Institute’s education director, Susan Witt, also spoke at the conference.

Besides Wallis several other speakers from England (including Schumacher’s daughter Barbara Wood) reflected Schumacher’s continuing influence. Simon Trace spoke on “Responsibility in Technology.” He is the Chief Executive of the England-based international development NGO Practical Action, which was formerly known as the Intermediate Technology Development Group and was founded by Schumacher in 1966 “with a mission to help poor people in the developing world use technology to fight poverty and transform their lives.” Today this organization works “across 10 countries in South Asia, Sub Saharan Africa and Latin America helping people improve food production, establish sustainable livelihoods and gain access to basic services such as water, sanitation, energy, housing and transport.”

Another speaker from England was Philip Bruce, CEO of the Scott Bader Company, who has attempted to remain true to the vision of its founder, Ernest Bader.  In the 1950s and 1960s he had transformed his employees into partners who could not be fired except for “gross personal misconduct.” The company had the power to “confirm or withdraw the appointment of directors and also to agree to their level of remuneration.” And its members agreed that pay levels should “not vary, as between the lowest paid and the highest paid, irrespective of age, sex, function or experience, beyond a range of 1:7, before tax.” Schumacher sat on the Board of Directors of the company and praised it in his best-selling book Small Is Beautiful (1973), where he pointed out that “Bader set out to make ‘revolutionary changes’ in his firm, but ‘to do this by ways and means that could be generally acceptable to the private sector of industry.’ His revolution has been bloodless; no one has come to grief, not even Mr. Bader or his family; with plenty of strikes all around them, the Scott Bader people can proudly claim: ‘We have no strikes.’”

Schumacher thought that “in small-scale enterprise, private ownership is natural, fruitful, and just,” but in medium and large enterprises such ownership was more complex and often unjust. He believed the Bader Commonwealth was an example of a just medium-size enterprise, and he quoted the Quaker Bader, who stated that “the experience gained during many years of effort to establish the Christian way of life in our business has been a great encouragement; it has brought us good results in our relations with one another as well as in the quality and quantity of our production.”

E.F. Schumacher

E.F. Schumacher

Three other speakers at the conference, professors Luk Bouckaert (Catholic University of Leuven), Hendrik Opdebeeck (University of Antwerp), and Laszlo Zsolnai (Corvinus University of Budapest) have done much, as Schumacher had, to stress the necessity of spiritual values in economics and business. In 2004, they were among the founders of the European SPES [SPirituality in Economics and Society] Forum, which sponsored the 2011 Antwerp Schumacher conference. The Forum’s mission is “to make spirituality accessible as a public good to as many people as possible. It focuses on experience based spirituality that succeeds in making a connection between day-to-day activities and the inner quest for meaning.” But “Spirituality is deliberately defined in broad and pluralistic terms so that the Forum may bring together people from different spiritual backgrounds and traditions. The Forum defines spirituality as people’s multiform search for meaning interconnecting them with all living beings and to God or Ultimate Reality. Within this definition there is room for differing views, for spiritualities with and without God and for an ethics of dialogue.”

Thus, what the Forum encourages is not some narrow, dogmatic approach to spirituality, but the broadest method possible, yet one that recognizes the centrality of values to economics and life itself. One of the European SPES Forum founders, Zsolnai (who in 1990-91 studied at the University of California, Berkeley), has followed the example of Schumacher and written on Buddhist economics.

He has also joined with Bouckaert and Opdebeeck in editing the book Frugality. They start off their book with two quotes from unlikely sources, Adam Smith and Time. Smith wrote, “Every prodigal appears to be a public enemy, and every frugal man a public benefactor.” And Time (April 9, 2007): “There is an older path to reducing our impact on the planet that will feel familiar to Evangelical Christians and Buddhists alike. Live simply. Meditate. Consume less. Think more. Get to know your neighbors. Borrow when you need to and lend when asked.” The three editors then define “frugality as an ideal and an art de vivre, which implies low material consumption and a simple lifestyle, to open the mind for spiritual goods as inner freedom, social peace and justice or the quest for God or ‘ultimate reality.’ Frugality as a conception of the good life has deep philosophical and religious roots in the East and the West.”

Later on in their first chapter, they conclude: “The present unsustainable lifestyle of mankind requires drastic changes. Western-style consumer capitalism has failed. It has resulted

in global climate change, dramatic ecosystem degradation and biodiversity loss. Also, it has caused unhappiness and emptiness in rich countries and social disintegration worldwide.”

But, you might ask, would not such frugality if widely practiced subvert our consumer economy and if mishandled create economic chaos. Yes, as Hamlet said–in a different context–“there’s the rub.” And yet, as the poet, Wordsworth, wrote:

The world is too much with us; late and soon,
Getting and spending, we lay waste our powers;
Little we see in Nature that is ours;
We have given our hearts away, a sordid boon!

During the depths of the Great Depression, some people spoke of capitalism being outdated, but President Roosevelt and World War II revived it. Following the collapse of communist regimes in Eastern Europe and the USSR from 1989 to 1991, other people saw that collapse as marking the triumph of capitalism.  Meanwhile, our environmental problems, including climate change, continue to worsen.  Our present economic crisis and national malaise, coupled with governments and peoples puzzled about which steps to take, suggest we need bold new thinking, not just tired old nostrums. We need a transition fitting for a new century.

In his talk at the Antwerp Schumacher Conference, Stewart Willis suggested that such a transition from an economy of consumption to one of sustainability will begin to “happen if enough of us start to live differently; to buy differently, and above all, demand that our politicians change the ‘rules of the game’ and the incentive structures.” But to accomplish this in a democracy, enough of us have to want to wean ourselves from the infantile habit of always wanting more—from a consumer culture constantly encouraging the  “cultivation and expansion of needs” in Schumacher’s words. In the final words of his Epilogue to Small Is Beautiful he wrote: “Everywhere people ask: ‘What can I actually do?’ The answer is as simple as it is disconcerting: we can, each one of us, work to put our own inner house in order. The guidance we need for this work cannot be found in science or technology, the value of which utterly depends on the ends they serve; but it can still be found in the traditional wisdom of mankind.”

Schumacher is correct that we need to emphasize wisdom more, that we need to rethink how our economy can best enable us to live happy lives in ways that will sustain our planet for future generations. But to reject an economic system and consumer culture that we have all become accustomed to will not be easy, either for ourselves or others.  Resistance to meaningful change will be great, and the consumer capitalism of the 1960s and 1970s displayed enough adaptability to co-opt much of the countercultural movement of the times and then continue on its path of ever-increasing production.

The participants in the Occupy Wall Street movement that has now spread to so many cities are sometimes accused of lacking a clear focus. Perhaps that is because they know something is wrong with the present economic system, but offering concrete workable solutions to fixing it is terribly complex—and how many of the protesters really want fundamental changes to our economic system and not just a bigger share of the consumer capitalism pie? The days of believing in simplistic solutions like communism or state socialism are over, or at least should be, as Schumacher correctly perceived already in the 1970s. What label we pin on any newly emerging economic system is not as important as its ingredients. The problem with our present consumer capitalism is not the name. Critics do not desire an anti-consumer capitalism, just one that does not overemphasize consumption. Prior to the Civil War, we had capitalism, but also an emphasis on frugality. Consumer capitalism that emphasizes increasing consumption is not the only possible type of capitalism.

The only way forward is by open-minded trial and error. In democratic countries this can be messy and frustrating. Stewart Wallis told us that “he is pro-markets . . . pro-profits and pro-companies, but they “need to be managed . . . . for the wider good.” Steve Jobs, who contributed perhaps as much as any single individual to our consumer economy, was married in 1991 by a

Zen Buddhist monk and is quoted on the Spirituality in Economics and Society “Words of Wisdom” page. If consumer capitalism is indeed replaced by a new economic structure, many capitalist bricks may still be needed for any new construction. Whether we choose to attempt new building or just apply a little patching here or there is up to us. Wallis stated that “if we fail to get our voices heard and the necessary changes made then the world is heading for disaster of one kind or another. Perhaps those disasters will bring people to their senses, but they could equally do the opposite.”

walter mossSchumacher greatly admired Gandhi, and Gandhi’s central concept was Satyagraha, sometimes thought of as non-violent resistance but more literally rendered as “soul force” or “truth force.” The great Indian leader thought that truth could be a powerful force. Perhaps the best we can do in our present period of malaise is to seek the truth and wisely attempt to bring our lives and societies more in keeping with it. For myself, I am grateful to all the colleagues I met in Antwerp and to the resources they have provided to continue the search for a more humane economic system.

Walter G. Moss

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Comments

  1. Ray Bishop says

    Ryder,
    You are mistaken. It is not the government that is corrupt it is the electoral system and the fact that the wealthy have figured out how to manipulate the government. It is the government that must regulate these people and must also provide for an order in our society. This includes protection against those greedy corporate persons who pay what amounts to bribes for favors.
    This is what needs to be fixed and it will be done by the power of the people not the power of the cash.

  2. Ray Bishop says

    Ryder has presented the question: So my question for you is, since size doesn’t matter, in buildings/employees/or bank accounts… then WHERE EXACTLY DOES THIS POWER COME FROM?

    The power in our case political, is derived from an accumulation of wealth and availability of cash.
    But more than that it is the willingness and ability to use this cash to influence legislation and political influence by elected officials for a mutual benefit.

    Today more and more elected officials are beholden to the cash contributions that elected them. As Jessie Unruh said, “money is the mothers milk of politics.” The persons gain more power by obtaining favorable tax benefits, subsidies, regulations that are written to allow them to exercise an advantage in business, and government contracting and purchasing opportunities.

    All of this creates a system that rewards the accumulation of money by creating opportunities for more money while denying those who are unable to compete an opportunity.

    There is a saying that holds true, “It Takes Money To Make Money”. That is power. Further, the problem in today’s world it is more likely to be for the benefit of greed rather than altruism or for an interest in a better life on the planet. This is why we are in a downward spiral to destroy the environment and create a class system of the wealthy and the poor. Just imagine that 1% living in luxury in 1% of the space on the planet while the rest of the 99% live as slaves in a toxic wasteland.

    That is why no one individual such as our President with good intentions can do very little about it. The only thing I can see that we can do is to not give up on those with the right intentions and to work to bring in more. This is why we as Considered Human Beings and Democrats must hold the Presidency and the Senate and take the House with the right leaders as a first step.

    • Ryder says

      BIngo.

      *precisely* what I needed you to say.

      This, ladies and gentlemen, is ******exactly***** why the Federal Government is designed to be very limited. The power comes from CRONYISM… the use of money to gain position power through politics.

      This is *not* capitalism… free trade and competition… cronyism is the opposite, using power *accumulated* in government to one’s advantage.

      In other words, the power you stand against, Ray, comes from powerful government… which it uses itself, *or* sells to the highest bidder.

      The solution is limited government. You can’t buy something that’s not there. Period.

      The power is the power of *force*, wielded by government over the people. This power, extended into every facet of life, from what you are taught, what you eat, what you drive, how you live, where you live, what you own… etc. all becomes “one stop shopping” for those that seek power.

      In the end, you by all appearances, Ray, want a massively powerful government that has it’s hands in everything from jobs and wages, to retirement and medicine, and a host of things in between.

      Such a government is RIPE for corruption. Such a government has many fruits of power, waiting to be picked.

      You are helping to create this government, yet complain about the corruption and the power it transfers to those with $$$ to spend…

      Real capitalists do it the hard way. They try to sell something of true value to people… one person at a time… and that’s hard to do.

      Those in construction in California know that BUILDING CODE specifies a specific manufacturer of part to be used in all construction, for example… or the formation of “State boards” that regulate everything from hair cuts to taxi service… and erect expensive licencing to protect those already in the business, from those that wish to be, and on and on… all the way up to the biggest banks, or defense contractors.

      And if you will forgive the generalization….

      This is government purchased at all levels, because the government has “the power”, and the people no longer do.

      Because of you.

  3. Ryder says

    This article states:
    “The only way forward is by open-minded trial and error.”

    But do we learn from history? If open-mindedness means blinders applied to our past, then that would be the most foolish thing of all.

    Do people ever wonder WHY we call ourselves the United *STATES*?

    Do people ever wonder WHY we have a tenth amendment to the Constitution that says:
    “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” ?

    Understanding these basic ideas tells you something important.

    The Constitution was designed, very, very, very ,very specifically to limit the hell out of the federal government… leaving the power to the states and the people, and said so with astoundingly plain language.

    The reason for this, is so that the individual States can run things *differently* from one another.

    With different groups of people trying different things (the more enlightened among us might call such a thing “diversity”)… then you would see some states that choose bad paths on the one hand, and then others choose excellent paths!

    This is the genius of the founders… and answers this authors claim that “The only way forward is by open-minded trial and error.”

    Fifty states (or was that 57?), all doing their own trials… watching other states, adjusting their own, developing, growing, adapting… all very Darwinian I’d say… is the KEY to success. It works in nature, and it works in the United States *as long as* we follow the lead of the brilliant men that founded this nation.

    For most progressives, they want a very powerful, singular federal government to solve everything… environmental issues, fix the schools, provide healthcare for all, control the markets, and the list goes on and on and on.

    This is precisely the opposite of diversity… of open mindedness… of trial and error. It’s single-mindedness… and failure on the Federal level means total failure across the nation.

    Do you believe in your Constitutionally protected rights? Well, do yourself a favor, and learn the rest of the document as well… and you *must* read the Federalist Papers, which are the single best key to understanding the Constitution (and by far the most enjoyable), and in the end, you will see how far we have strayed.

    • Ray Bishop says

      Ryder makes some good points, but I don’t think most Progressives think that the federal government should solve everything. The problem is more complex today than it was at the time the Constitution was written. For one we did not envision that the vast wealth of a very few would control government at almost every level. We somehow had the notion that the people as a majority would made the decisions affecting their lives not the one to ten percent who control the wealth.

      The control of the wealthy has the rest of us paying while they have managed not to pay and in addition have been able to steer lucrative government contracts to themselves, DE-regulate their companies so that they could steal from the people legally, all while holding no allegiance to the United States while taking advantage of cheap labor in other countries and depositing cash outside of the US to avoid paying taxes on the amount remaining after taking lucrative rebates and deductions.

      So how much of this can people take? The quality of life on the planet deserves to be better. Those who in the name of God find instant forgiveness in the grace of God and in redemption. How convenient. To believe in God would seem to mean that you would have a respect and love for all that God is including our planet and our people.

      Their is no good in a system that has allowed us to be less than what we could be a civilized world.

      • Ryder says

        Well, than what issues that progressives focus on, do they NOT want the government to address nationally?

        Hunger?
        Poverty?
        Homelessness?
        Jobs?
        Healthcare?
        Education?
        Retirement?
        The economy?
        Pollution?
        Energy?
        Abortion rights?
        Endangered species?
        Global warming?
        Gun violence?
        Product safety?
        Wages?
        Hiring practices?
        New energy technology?

        I mean really… shall I continue? I could go on forever….

        Government control or oversight of:

        rents
        views expressed on the airwaves
        the distribution of wealth
        equality (in outcomes)
        Social work
        labor
        natural resources
        transportation
        Disaster response
        Banking
        The temperature of coffee!!!

        I mean, it never ends…

        Nobody *literally* want’s the feds to solve everything… like what to make for dinner tonight… but I was hoping that sensible people would understand a well placed exaggeration to make the point.

        I was speaking of issues, not meal choices… and progressives, by reflex, look to government for that. This probably defines progressives more than any other single thing.

        • David says

          Of course all of those situations require government oversight with the exception of “the temperature of coffee (I’m pretty sure that was sarcasm) and “views expressed on the airwaves”. In a civilized society it is the responsibility of those elected to represent us to promote and facilitate the well being and pursuit of happiness of the people. After all, corporations are by nature only interested in making profit for the stockholders or owners of business. Unfortunately, because of corporate greed, it is necessary that we have a government to monitor the interests of ALL Americans not just business. If it were up to most businesses we wouldn’t have OSHA, minimum wage, child labor laws, environmental regulations, etc. I prefer to live in a civilized society free from the helter skelter of an unregulated populace.

          • Ryder says

            Ahhh… no. Not even close. Almost none of that requires government oversight, and as simple proof, almost none of it has had government oversight over the recorded history of mankind.

            No requirement what so ever.

            And sadly, no, the temperature of coffee was real.

            That progressives automatically assume all of those things and more require government involvement was the point.

            • Ray Bishop says

              David thanks for presenting a logical statement.
              The size and vast wealth and power of today’s corporations and wealthy individuals is more than the States or Individuals could handle.
              The federal government has the resources to regulate the huge corporations of today.
              The problem has been that they have failed to do so and those on the far right have been effective in reducing protective regulations.
              We only have our Life. We are a part of all that is in God or Nature.
              That is the earth, water, sun, that give life. What have we done in the name of Capitalism in a continuing spiral of consumption and waste of our resources while we kill the very being that we are as a part of our planet the earth. Our quest for more is a quest for less in the long run unless people and the resources of the earth are protected. Even now we are facing world conflict as we have depleted and damaged our natural resources that provide us with essentials of life such as water, food, energy and shelter.
              Add in the destruction of our system that provides health care, education, economic well being, and peace and what are we left with?

            • Ryder says

              Ray,

              Let me ask you something.

              The “Size” of corporations is meaningless… Are they in a 10,000 square foot building, or a 850,000 square foot building? Doesn’t matter.

              Do they have 10,000 employees, or 850,000 employees? Again, doesn’t matter.

              Do they have 10 Million in the bank, or 850 Million in the bank. If it’s sitting in a bank, it doesn’t matter.

              So my question for you is, since size doesn’t matter, in buildings/employees/or bank accounts… then WHERE EXACTLY DOES THIS POWER COME FROM?

              I am not disputing that large entities can have, and sometimes do have/exercise plenty of power, but what I want you to do, is tell everyone precisely what this “power source” is! If you can describe the nature of the power in a simple way, then people will understand what you mean… because I, for one, don’t.

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