Capitalism and consumerism

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Capitalism: ‘The possession of capital or wealth; a system in which private capital or wealth is used in the production or distribution of goods; the dominance of private owners of capital and of production for profit.’

Consumerism: a preoccupation of people with goods and acquiring them
Historical Background
The advances in science in the seventeenth century and the ideas of the ‘Enlightenment’ in the eighteenth century led to a view that human history is a history of the gradual realisation of human freedom from nature. In the physical sciences, this was characterised by the power over nature man gained through a ‘true’ knowledge of the natural world, enabling mankind to harness the power of nature to drive a technological revolution. This, in turn, was reflected in the growth of a capitalist society in Europe and its colonies, whereby the creation of wealth was seen as a drive to overcome human beings’ dependence on the natural world.
Adam Smith
Smith’s view of history, which he shared with many of his contemporaries, was of a passage of men from savage simplicity to the modern world of private property and unequal social classes. The motor of this history was the interaction between the division of labour, the creation of surplus, the emergence of new needs, the foundation of private property and the unequal distribution of surplus among classes of people.

This ‘progression toward inequality’ was justified, according to Smith, because it alone delivers men from natural scarcity and enlarges human freedom.

Smith’s Argument
To understand why Smith accepts the inequalities of the capitalist system as a fact (but a fact in a moral sense to be regretted), it must be viewed as a response to Smith’s contemporary Jean-Jacques Rousseau; for “if it is said that Smith is capitalism’s most penetrating theorist, then Rousseau is capitalism’s most perceptive critic” (Michael Ignatieff, The Needs of Strangers).

In March 1756, Smith, at the time a 33 year old professor at the University of Glasgow, wrote in The Edinburgh Review, a review of Rousseau’s work on the ‘inequality amongst mankind’.

Rousseau looked back to the time of ‘savage simplicity’ when there was no distinction between people’s needs and their desires (wants); for as long as men “undertook only what a single person could accomplish, and confined themselves to such arts as did not require the joint labour of several hands, they lived free, honest and happy lives.” In other words, in a society in which no one creates more than they need (no surplus), no one lacks anything (there is no scarcity); without surplus, need and desire coincide (need is the limit of desire), and no one desires more than others. Anthropologists now tell us that this is a description of many ‘hunter-gatherer’ societies.

Smith countered Rousseau’s suggestion that men should not seek to co-operate with others as long as they could satisfy their own needs by saying that co-operation in production and exchange is entirely natural, it is, says Smith, a “necessary consequence of the faculties of reason and speech”; for “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.”

With exchange of goods came specialization and the division of labour. As tasks became specialised, people began to generate more than was needed (a surplus). Through exchange people grew in wealth (in surplus). This freed people’s desire from their needs and they could begin to buy what they wanted - with surplus came private property.

Smith and Rousseau were entirely at one in seeing the progression of capitalism as a history of human economic inequality, but whereas Rousseau saw this as scandalous, asserting “the privileged few … gorge themselves with superfluities, while the starving multitude are in want of the bare necessities of life, Smith, paradoxically, saw human desire for more and more as necessary to the benefit of all. Smith believed that men’s potentially vicious desire to have more than they need was the means of providing for those who haven’t enough. Smith argued in his book the Wealth of Nations that in the “savage nations of hunters and fishers, every individual who is able to work, is more or less employed in useful labour”, while in “civilised and thriving nations, a great number of people do not labour at all”; yet the former are frequently “so miserably poor, that, from mere want, they are frequently reduced … to destroying their infants, their old people and those afflicted with lingering diseases, to perish with hunger.” In a civilised society, on the other hand, the “produce of the whole labour of society is so great” that the labouring poor are able to support the huge burden of non-productive labourers and still enjoy “a greater share of the necessities and conveniences of life than it is possible for any savage to acquire.”

In other words, whereas relative to a rich merchant a poor labourer was poor, in comparison with someone in a ‘primitive’ society the poor labourer’s standard of living exceeded that of “many an African king, the absolute master of the lives and liberties of ten thousand naked savages”.

To this day Smith’s argument provides modern capitalism with its most basic defence: only a system of private property offers the incentives for technical innovation and economic progress. While the regime of private property is unequal, the growth that private property makes possible enables even the poorest to live decently.

Yet what Rousseau so clearly saw was that the very processes which freed men from their enslavement to meeting the basic needs of life in turn enslaved them to their own desire for surplus – for more and more. The very private-property regime that makes mastery of nature possible creates social inequalities which set off the rat race of competition. In societies without surplus – societies that create only what people need – Rousseau believed envy towards others is absent. But with the creation of surplus, men’s desire becomes free from the pursuit of basic need and a person’s identity, their sense of self, comes from comparison with others. Rousseau writes:

The savage lives in himself; the man of society always out of himself; cannot live but in opinion of others, and it is, if I may say so, from their judgement alone that he derives the sentiment of his own existence.
According to Rousseau, men in capitalist society are not really free, since the poor have no desires but those of the rich. Furthermore, while capitalist society separates need from desire, it, at the same time, converts desire into need. For if the capitalist system of production and exchange is to keep expanding, people must believe that they need what they desire – this is the root of consumerism as we understand it today, and the marketing and advertising that goes with it.

Rousseau believed that because of the inbuilt inequalities of the capitalist system it should be constrained by taxes on the rich and legislation by government. However, Adam Smith believed in an inevitably expanding free market economy that taxation and legislation would be unable to constrain (Mrs. Thatcher’s comment ‘You can’t buck the market’). The only thing that excessive taxation and legislation would do was harm production where it was practised and reduce the wealth of that country or region.

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