Juliet Schor’s provocative and thoughtful call for a new politics of consumption raises important issues about why Americans are obsessed by private consumption and how this affection for commodities is adversely affecting our lives. I agree with much of her analysis, including her indictment of modern economic thinking about consumption. Where I part company is with her claim that the problems of consumption are more urgent now because materialistic pressures have increased over earlier periods. Though this claim about growing pressures is not necessary for her critique of consumerism, it may lead her to underestimate the difficulty of creating an effective politics of consumption.
The “positional treadmill” that Schor describes is a major force behind our obsession with private consumption. But my research on American standards of living does not show an accelerating treadmill. It indicates instead that working families dramatically increased their spending on status consumption as a proportion of their budgets between 1950 and 1973, but increased it only slightly between 1973 and 1988.1 I categorized families as laborers (unskilled and service), wage earners (semi-skilled and skilled), and salaried (professional and managerial not self-employed). I found that laborer families increased the proportion spent on status from 2 percent of their budget in 1950 to 15 percent in 1973, and then to 21 percent in 1988. The story with salaried families was similar: they increased their status consumption from 18 percent of their budget in 1950 to 27 percent in 1973, and then to 31 percent in 1988. Wage earners’ families increased the proportion spent on status from 10 percent of their budget in 1950 to 19 percent in 1973, and then to 22 percent in 1988. Expenditures for variety or comfort consumption remained fairly constant over this period: roughly 10 percent of the budget for laborer families and 25 percent for wage earner and salaried families.
Two important intellectual shifts over the 1950-1988 period reinforced the emphasis on private consumption. In consumption theory, Milton Friedman’s permanent income hypothesis-that family consumption is a constant portion of expected lifetime income-displaced James Duesenberry’s relative income hypothesis-that consumption depends in part on income relative to other families-as a way of understanding a family’s economic position. Lifetime income, which is an absolute measure, determined a family’s position; relative income (and differences across families) no longer mattered. Second, the emphasis on performance pay in the 1980s and 1990s-the idea that compensation should reflect measured individual performance-focused attention on individual contributions and served as the justification for rising inequality, even though the “quality” differences across individuals remained unobservable. Together, permanent consumption and performance pay meant that economic outcomes reflected individual choice and value-added. Ideas about economic opportunity-about access to good and bad jobs-or about bargaining power and rent sharing tended to drop from sight. And if your income reflects your choices and contributions, rather than your inherited advantages or your bargaining power, then conspicuous consumption is a way to show your value to society.
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But even if Schor is wrong in her claim that social pressures to consume have increased, she is right that the problem of consumption has become more urgent, and for the reasons she states: increasingly detrimental outcomes to our environment and our communities, and the need to improve living standards in the developing world. Any movement to restore a balanced use of resources globally and to improve the quality of life in the United States must challenge the lifestyles of working and middle class families, in addition to the rich. We may in the end decide that the typical “meager livelihoods” of working families are not inadequate in an egalitarian society that has more public goods, leisure time, and security.
Let me put this point about adequacy in perspective. In 1988, typical working families with incomes between $30,000 and $50,000 (in 1998 dollars)2 owned their homes, had air conditioning, owned at least one car, spent a quarter of their food budget away from home, and went on 1.5 vacations annually that cost $655 each (out of $3,535 spent on leisure activities). If we look more closely, we find that they spent $1,140 yearly on a variety of household furnishings such as sofas, refrigerators, and decorative items, and another $1,635 on household operations including telephone service, gardening, and cleaning supplies. At the same time, they were eating too much sugar, fat, protein, and salt as they consumed junk food and sodas and too few vitamins.3 From a world viewpoint or a historical viewpoint, these families were not living a meager life style; yet in modern-day America, thoughtful commentators find it lacking.
Socially defining a comfortable life style is extremely controversial across the political spectrum. Reversing the obsession for higher incomes so families can buy more is an unpopular proposition that goes against the heart of American culture. In this regard, the 1990s does not deviate at all from previous decades: In the 1920s, the Lynds’ study of Middletown lamented, “Why did they work so hard?”
The crucial issue is: what constitutes the quality of life? Schor is correct to pull us back to a discussion about what absolute level of private consumption provides the resource basis for a meaningful life, so that we can focus on improving the quality of life globally. Judging by our history, affluence, and inequality, I predict it will be a rancorous discussion.
2 This includes families with less than 10 percent of the average income for laborers to more than 10 percent of average income for wage earners. The 1988 median household income was $37,500. Approximately 37 percent of families fell above and below this range. All dollar amounts are inflated to 1998 dollars. (ibid., pp. 370-371)
3 Ibid., Chapter 7.