The Leisure Classic
In fact, one might say that Veblen enjoyed it rather too much and succeeded only too well. When he formulated his theory of the leisure class at the turn of the century, ostentation in dress was at its full plumage, not least because new money was desperate to prove that it had made it to high society. Veblen's argument was so simple that it cut like Occam's razor. It has proved so powerful that it has achieved the status of unquestioned truism.
Here is Veblen's argument: As wealth spreads, what drives consumers' behavior is increasingly neither subsistence nor comfort but the attainment of "the esteem and envy of fellow men." Because male wage earners are too circumspect to indulge themselves, they deposit consumption on surrogates, on loved ones. Vicarious ostentation -- the way that plainly dressed Victorian men encouraged their wives and daughters to wear complicated trappings of wealth -- is how this unfolds. Ditto their servants, horses, and even house pets.
In retrospect, Veblen was too successful, too neat, too sharp. Veblen thought that the purpose of acquisition was public consumption of esteem, status anxiety resolved by material display. Not much more. Wealth, he argued, confers honor; it suggests prowess and achievement. But wealth would have no social meaning were it simply consumed or possessed. "In order to gain and to hold the esteem of men," he wrote, "it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence."
Thus the absolute centrality of conspicuous consumption. In what Veblen called "barbarian culture," trophies such as property or slaves were signs of successful aggression. In modern societies luxury is a sign of status and class. It's what we have for harems. But only certain sorts of goods work this magic. There is no rational system. The only constant is that consumers seek the luxurious object for two reasons: to show that they are members of the classes above and to distinguish themselves from those below. Veblen calls the first motive "pecuniary emulation"; the second, "invidious comparison."
From this comes the economic irrationality of the Veblen effect, namely, that the value of a luxury object is in direct proportion to its cost. Raise the price of certain luxe objects and you increase their value. The Veblen effect is why a T-shirt sold at Sears costs less than the same T-shirt at the Gap, which costs less than the same T-shirt at Hugo Boss, and so forth. Could you sell Evian water if it were priced below a generic? What about Ben & Jerry's ice cream? The Robb Report? A Lexus? An Ivy League education? It is not enough for me to know what I paid for opuluxe. You have to know.
Today these products, which are no more (and maybe less) useful than their functional equivalents, are sometimes called "positional goods," goods that are valued not despite their expense but because of it. Indeed, Veblen argued that since the reasons for buying such goods are "pecuniary emulation" and "invidious comparison," their utility rises as their prices go up. With insights like this, Veblen proved himself to be too strong a critic to dismiss. You don't need to have read a word he wrote to know him. He set the tone of modern criticism.
Economic Moralism
The second modern attack on luxury came in the 1950s with John Kenneth Galbraith's The Affluent Society and, to a lesser degree, the popularizing work of Vance Packard in The Hidden Persuaders, The Status Seekers, and The Pyramid Climbers. Veblenism is all over these books. Galbraith had read Veblen, if not wisely, then too well. In fact, he had edited Theory of the Leisure Class with all kinds of approving nods and winks. Packard and his snappy titles went along for the ride. To these critics high-end consumption is against our "better nature"; we are duped into consuming by advertisers; consumers are dolts who should be doing other things; luxury is consumption run amok.
The usual suspects for Galbraith had changed from the captains of industry to the Joneses across the street. Keeping up with them was every bit as dangerous as it had been for a Carnegie to keep up with a Vanderbilt, a Morgan with a Gould. Perhaps even more dangerous because these Joneses now are so numerous. And, as opposed to the robber barons who were outfitting family members, this new solipsistic breed of showoff was outfitting himself.
Veblen's descendants are still at it. Following in the footsteps of Galbraith have been two moralists passing as economists: Juliet Schor, a professor now at Boston College, who has published The Overspent American: Why We Want What We Don't Need, and Robert Frank, a professor at Cornell, who contributed Luxury Fever: Why Money Fails to Satisfy in an Era of Excess. Just read the subtitles.
The modern attack usually centers around a specific object as an exemplum. While Galbraith disliked Cadillac tail fins, Schor disdains granite countertops in the kitchen, and Frank holds up expensive watches as symptomatic of bad habits. On the surface they have such good points: How do those fins help the car move, are those stone countertops better than Formica, does a Lucian Picard keep better time than a Timex?
But here's the problem. The 1958 Cadillac has been featured in the Museum of Modern Art's retrospective show celebrating industrial design as art, and if you now want to buy one in mint condition, you'll pay about 20 times the purchase price. The granite countertop really makes more sense as a cutting surface than as a slab to lay down over the dead body of Uncle Louie, and -- who knows? -- it might even be passed from generation to generation, while the sensible Formica is carted out to the dump. And had Frank invested in Lucian Picard watches at the beginning of the bull market, he would have made more on his watch investment than on the S&P 500. Drats! That this stuff could have increased in value tells us how slippery these slopes can be.
No matter. Critics of consumption love to point out that people with these things are no happier than people without them. Ergo, why buy extra stuff? But people who can't buy unnecessary opuluxe are definitely unhappier for not being let into the cycle; buying this notational stuff and having such stuff are different experiences; consumers move in definite stages, from adolescence, where consumption is central, to middle age, where it ceases to be so important, to old age, where having things is positively a hindrance. Religious fanatics invariably rank highest on happiness scales, irrespective of culture or religion. Let's give happiness a rest. Consumption of the new luxury is about far more interesting sensations.
Whereas Veblen contended that male aggression caused the crazed consumption of deluxe items at the end of his century, these modern critics are more au courant in putting forth their etiology. They medicalize consumption, in large part because the bulk consumers of luxe are now young women. The diagnosis, although they would never use this precise term, is addiction. We are addicted to luxury. That's what causes the fever. That's why we yearn for what we don't want. Diagnosis from the National Public Radio crowd: not just Sudden Wealth Syndrome but the dreaded "affluenza."
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