Love it or loathe it, we live in a world of consumerism and it influences our choices and ultimately decisions. You may think that you’re in control of everything you choose and buy from the market, but the marketers and advertisers make decisions. Today, we’ll discuss what is consumerism; conspicuous consumerism, its impact, importance, and pros, and cons.
What is Consumerism?
The focus and goal of consumerism are to increase the sale and consumption of products and services. The idea behind it is that the happiness and wellbeing of a person rely on acquiring and possessing material and consumer goods. From the economic and Keynesian point of view, the main driving force of an economy is to encourage consumers to increase their spending. That’s why it has a positive influence in fueling the country’s economic growth. In short, we can say;
- The gist of the consumerism theory is that people would be happy when you utilize more products/services
- Economists suggest that more spending fuel the economic growth and production rate
- Many have criticized the impact of consumerism in terms of psychological, environmental, social, and economic reasons.
In the capitalist economy, people live a high materialist lifestyle and that comprises conspicuous over-consuming, reflexive, and wastefulness of products/services. Consumerism refers to this state of being that people should live this type of lifestyle.
Many critics perceive that it is destroying the natural way of life and traditional values within society. They further say that big companies are exploiting consumers and resulting in the form of bad psychological impacts and environmental degradation.
After the great depression and WWII, consumerism helped the US economy to get back on its feet again. That’s why the term had positive connotations attached to it in the mid of 20th century. Its focus was on the benefits that the capitalist economy was offering like;
- Developing such economic policies that are focusing on the interests of customers
- Improving the standards of living
Economists said that when consumers increase their spending, then it is beneficial for both parties. Like it helps companies to increase their profit, revenue, and sales; and consumers derive benefits from utilizing the product/service. For instance, the auto manufacturer would enjoy profitability by the increase in the sale of vehicles. The sale of relevant businesses would also increase like tires, steel, and accessories. That’s how consumer spending offers a lot of benefits to the consumers and the economy.
Some other economists say that it’s a difficult goal for companies to establish and maintain economic growth by increased spending and consumption. It’s irrelevant to its benefits to society and consumers as a whole.
Thorstein Veblen came up with the concept and floated the term conspicuous consumption. It’s when consumers buy, utilize, or possess a certain product/service, then they not only derive direct-use-value but also send a signal of economic and social status.
The standard of living of people has increased significantly since the industrial revolution, so has conspicuous consumption. Its high price usually falls under the category of negative or wasteful zero activity, because it consumes real resources not to produce really useful products rather than the image they represent.
It’s such a form of consumerism that imposes a lot of cost on the country’s economy. Here it consumes real resources for the sake of commercial benefits and social status. However, it results in the form of destroying the market for consumers and other products and services.
Impact of Consumerism
Keynesians macroeconomists say that the main target policymakers in an economy are consumer spending via monetary and fiscal policy. High spending creates a major share in the country’s GDP (gross domestic product) and aggregate demand. Therefore, the government sees the best way to improve the country’s economic growth by amplifying the spending of consumers.
It perceives consumers as the target cash cows and economic policy of businesses and companies, and it believes that more spending fuels economic growth. Savings lower consumer spending and it’s harmful to the economy.
Many business operations and functions happen due to consumerism. It helps you to develop better products and displace the competition by making certain products/services in a planned way. Most importantly, it creates the demand of the product/service in consumers by marketing and advertising rather than using marketing only to inform customers.
Importance of Consumerism
Consumerism plays a significant role in the economy. It makes sure that the people would be willing to spend, and the money would circulate in the country and won’t stick in the few hands. However, if spending decreases, then it would suggest problems like high-interest rates, higher unemployment rates, etc. One factor, consumption tells the overall health of the economy.
Pros & Cons of Consumerism
Some of the main advantages and disadvantages of consumerism are as follows;
Advantages of Consumerism
- Higher spending causes more production of products/services
- The country’s GDP would increase
- Higher consumer demand is a sign of their confidence in the US
- More consumption and sale benefit both owners and employees either directly or indirectly
Disadvantages of Consumerism
- It has developed a materialistic culture and society that focuses on high quantity and costly goods rather than quality and traditional way of production
- It promotes globalization and trade of global brands which undermine the production of local indigenous products, and incompatible high consumption cause debt, recession, and financial crisis
- Many of the environmental problems occur because of the high production, spending, and consumption; and it results in the form of wastage of resources, ultimately more pollution
- It has made the mindset of people status-conscious, and often it causes stress and anxiety by keeping up with the social status
- Studies have shown that people exposed to consumerist culture, have a mindset of possessing materialistic things, status quo, and wealth conscious
Conclusion: What is Consumerism? Impact, Importance, Pros & Cons
After an in-depth study of what is consumerism; conspicuous consumption, its impact, importance, and advantages and disadvantages; we’ve realized that consumption plays a significant role in the country’s economic growth. The criticism is also worth considering, therefore, a middle ground would be better.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.