BY DIMITAR SABEV – From its very beginning marketing enhanced economic growth by provoking and channelling consumption, and in many cases this has been socially beneficial. There is growing evidence that the social and economic system based on the premise of constant and rapid growth has breached its limits. Consumption has to decouple from economic growth and rediscover quality and moderation, which opens new fields for de-marketing.
1. Marketing as a cause and solution to the problem of runaway growth
The assumption that economic growth is rooted in human psychology has been put forward by many scholars. The American economist Barry Eichengreen points out that growth of industrial production and living standards after 1945 was the idea which served the politicians to unify post-war Europe: according to Eichengreen, constant growth was grounded in “psychology” but turned into “obsession”. The Bulgarian-born Nobel Prize laureate Elias Canetti explored the deep layers of the collective soul and in his renowned study “Crowds and Power” he declares: “(The desire of rapid and unlimited expansion) is that trait of the psychological mass which I regard as exceptionally important and clear”. The French economist Serge Latouche criticizes the “addiction to growth” which invokes panic in the society with every economic slowdown. Latouche recalls the famous sarcasm of Marx: “Accumulate, accumulate! That is the Moses and the prophets!”
Although economic growth is grounded in the individual and mass psyche, it has an objective and systemic character in the modern society. The increase of population requires corresponding increase of jobs and consumer goods. Due to the laws of compound interest the credit expansion of the 20th century presupposed constant growth of the created production (Hudson 2012). Business enterprises also treat growth like a holy commandment since global competition requires economies of scale, ever-growing market share and continuous innovation, and the shareholders seek constant and higher returns.
Marketing played a key role in the dawn of exponential growth. It has emerged thanks to growth, but this same growth became possible with the help of marketing. It is not a coincidence that these sales techniques and principles, which were named “marketing” in the beginning of the 20th century, sprouted at the same place and in the same time as mass production technologies and consumer credit proliferation, accompanied with rapid population growth in the USA. After its initial phase of unlimited expansion, the marketing approach has been enriched by experience in the macroeconomics of depression, market saturation, noise overload, consumer multiple identity, globalization, digitalization. In every phase the techniques changed, the functions of marketing were altered, even its self-perception evolved. The only constant thing that remained was growth: the leading although rarely verbalized marketing principle. Marketing aims to increase sales and reaches this goal by product diversity, new forms of consumer credit, geographic expansion, positioning, causes, guerilla and virus tactics and many others. Growth of sales and profits is guaranteed in the future – why else should marketing soak in so many of the corporate funds?
The modern socio-economic system is based on the principle of growth and this explains the negative response to the purely scientific observation that it is impossible to have infinite growth on a planet with finite material resources. “Limits to Growth”, the famous report of 1972, has been heavily criticized, but in the decades that followed its release there was no lack of confirmations for the ruinous trajectory of the current model of production, distribution and consumption. Authors standing on conflicting ideological premises became proponents of the “end of growth” thesis, and the doubt that growth is universally beneficial is impossible to be sidelined again. All this means no less than a drastic paradigm shift and gravely challenges the economic disciplines and departments worldwide. Marketing is no exception, yet at the same time it has some advantages since it is based not on mathematics or abstract theory, but on praxis. The techniques of marketing are deployed increasingly with a negative sign – to deter consumption or to channel it in a socially benign direction. In the post-growth environment, instead of going obsolete, marketing may alter its objectives.
2. Contradictions on the road to prosperity
The critics of the consumer society tend to forget that the “natural condition” of humankind for hundreds and thousands of years was pure misery. The anthropologist Marvin Harris reminds us that some 200 years ago the British factory workers chanted “Bread or Blood!” The distinguished Bulgarian scholar Ivan Hadjiiski tells an influential story: in the end of the 1930s he brought to Sofia a loaf of rustic bread. The capital’s citizens took it for a “piece of parched black mud”. The American economist Robert Gordon recently showed that until 1890-1910, and in the Southern states up until 1940s, the living of the majority of population was marked by diseases, heavy toil and privation. At the beginning of the 20th century the life expectancy of a black man in the South was 33 years (Gordon 2016, 212).
At the same time, it is beyond doubt that the urge to consume has gone too far in modern society. It is true both in absolute and relative terms. A comprehensive study on planetary boundaries carried out by the University of Stockholm recently concluded that two of the nine life supporting systems on Earth are already in the high-risk zone, and another two planetary systems face a growing risk (Steffen at al. 2015). The situation is dire not as much for the climate, but for biogeochemical flows – phosphorus and nitrogen cycles – and for the rapidly decreasing genetic diversity. The boundaries have been breached due to hypertrophy of the anthropogenic sphere, caused simultaneously by the demographic boom and surge of consumption. We live in a new geological epoch, Anthropocene.
Both drivers of economic growth – namely population and its consumption – use their pressure on the planetary systems simultaneously, but geographically they often diverge. The population of the Democratic Republic of Congo increases by 2.5 percent annually in the last years, meanwhile the per capita gross domestic product of this African nation remains merely 1 percent of the USA average – notwithstanding its rich natural resources. The issues of distribution and inequality are inherent in the growth discussion since nowadays the world economy produces more goods than is necessary for an acceptable level of consumption of all people on the Earth, thanks to the technological progress. Keynes observed this key economic feature already in the 1930s, and it became a central theme of “Affluent Society”, the influential book by John Kenneth Galbraith published in 1955. There the author claims that the concept of scarcity which dominated the economic theory during its consolidation, has already become a “zombie idea”, to use the modern term coined by John Quiggin. Overconsumption in the industrialized North causes suffering for the body and soul, while the Global South witnesses the death of millions of people due to the lack of vital goods. These two worlds coexist in the information universe and this creates an inner tension: a sense of injustice and revanche in the South, xenophobia and armament in the North.
Increasingly more growth – this often proposed solution to all global problems, is unrealistic because of a number of reasons: historical, psychological, ecological, geopolitical. In the 1990s the then established economic consensus declared that continuous economic growth is the only tool for overcoming poverty (O’Sullivan 1996, 320). In the next 20 years the GDP of the USA increased by 55 percent: from 10.7 to 16.6 trillion dollars, in constant USD according to the World Bank. At the same time the number of the poor in the USA increased by 6.6 million people. There are also recipes for “sustainable”, “green”, “smart” or „inclusive” growth. The facts speak that the priority of sustainable development – formulated back in the 1980s, did not fulfill its goals. According to the time series of the University of Groningen, the GDP per capita in the already rich Western Europe grew by 46 percent between 1987 and 2007. For the same period this indicator increased by only 21 percent in the lagging behind Africa, while for 18 countries, representing 29 percent of the territory of the “Black Continent”, the living standard actually decreased (calculations based on Maddison Project, 2013). All this leaves the impression that the only sustainable thing in the passing decades is the economic growth of the developed world.
This implies that the question of growth is among the most important for the global civilization but the answer could not be a single one. Different regions, countries, even states and municipalities require specific growth policies. There are three broad types of them:
- long-term decrease in GDP through measures for diminishing the production and consumption, including redistribution and repatriation;
- supporting a constant GDP with focus on human values and satisfactory life;
- increasing economic production through global measures aiming at higher quality of life.
- The possibility of consumption without growth
The contradictions laid out above are even more sophisticated because of the ambivalence of the relations „consumption – standard of living“ and „consumption – growth“. The traditional notion equals the standard of living with the purchasing power: the quantity of goods and services affordable to the individual, on occasions also to the society. There is a whole division in behavioral economics struggling to go beyond this concept. Global surveys on human well-being helped compose a Happiness Index and demonstrated that the population of low income countries may live happier lives in comparison to richer countries (Marks 2011). The declining marginal utility of growing income beyond a certain point was discussed already in the 1970s (Easterlin 1998).
Yet the world continues running on the path of growth. Richard Layard from the London School of Economics explains part of the reason for this: the economic system of the developed world has entered a “status trap”. Like hypnotized people tend to work more and more in order to consume increasingly – but doing so they do not derive pleasure. This is a pattern set in the group psyche: not the personal greed but the social prescription about the “due” level of consumption destroys the nature and the social fabric. To avoid being shamed and to feel themselves secure, people have to constantly compare themselves to others. This ubiquitous comparing causes more consumption, more work, rising credits – thus economic growth (Layard 2005). The author sees the way out of this vicious cycle in a very high level of taxation, which will weaken the stimulus to take more work and in the end will free more time for family, society and the person itself.
Ideas like that contradict the classical and utilitarian economic theories of the 18th and 19th centuries, and they hardly gain ground even in the new Millennium. At the same time new realities such as ecological crisis, scientific progress and advancing robotization put in the center of the political debate concepts that until recently sounded utopian: universal basic income, shortened working week, sovereign money – and the question of de-growth stays in the same line. The need for some kind of a system change is acknowledged broadly: many see the solution in “green growth” and the transformation of the tangible throughputs into information. Others denote this as a palliative measure and seek for answers beyond capitalism (Smith 2016). The German school deserves attention with its proposition of a “climate protection rent” derived from broad investments in a green economic structure, but its implementation is yet to be seen (Flämig and de Maiziere 2016, 217). The approaches to the economic hypertrophy vary and include different combinations of divesting (transferring of financial capital from harmful to “sustainable” businesses and branches), punishing taxes on certain consumption and production, including a carbon tax, centralized systems for planning of material flows, direct prohibitions, and different techniques for mass persuasion, which influence the attitudes of the mass market and provoke a desired consumer behavior.
The latter approach promises a future to the marketing concept since it does not depart from the system of the market economy, and in the same time deploys the techniques of marketing in a new and broad field. Influencing and persuasion were refined during the period of growth and maturity of the marketing concept, they may well serve in its post-growth phase. Or, put shortly, future marketing may promote a mode of consumption that generally avoids growth. Latouche and other authors present a tempting but realistic picture of a society based on zero-waste economy, local producers, local currencies and markets, slow pace of living, etc. (Latouche 2009). This scenario relies on the communal self – organizing, thus for its implementation certain efforts for education or suggestion will be needed. Some marketing elements will become unacceptable, for instance hypermarkets or aggressive mass media advertising, but others will gain political priority.
The pattern of “consumption without growth” contradicts the fundamental principles of the current socio-economic system, yet it has to be evaluated against its alternatives. They may also include the “growth without consumption” model. This is manifested for instance in the USSR and its satellite countries in the 1920-1970s, with considerable share of the national income diverted to public investments: security and army, heavy industry, infrastructure, research and development. The growth without consumption in the 21st century may find its factors in the extreme inequality, expansion of military industry, trespassing planetary boundaries with corresponding catastrophes, robotization and mass destruction of jobs, and many others (Heinberg 2011, Galbraith 2014).
3. Successful marketing of negative consumption
“For many people nowadays spending (the way and size of their consumption) is not a right, but obligation. It is not a question of personal comprehension, personal satisfaction and personal decision, but of supporting of external signs of their social and class position, of their rank”, to cite again the noted Bulgarian social psychologist Hadjiiski. But what today prevents the individual to depart from the norm of the ever growing consumption, tomorrow may force him to shrink that consumption – if this is the new widespread rule.
An example of a successful undesired consumption decrease is the lowering of the smoking tobacco prevalence in the developed world during the last 50 years. Data collected by the Organization of Economic Cooperation and Development show that some 52.5 percent of the men over 15 years in the USA were active smokers in 1966. Their share plummeted to 14 percent in 2014. Similar or even steeper lowering of tobacco consumption is evident in the Netherlands, United Kingdom, Japan and other developed economies. Shrinking consumption of a former mass product impacted the corporate profits, but it led to substantial net economic benefits when considering the costs of tobacco-related illnesses, productivity loss, the burden on household budgets, premature mortality etc. (Eriksen and Chaloupka 2007). Tobacco consumption has been decreased through three main sets of measures: taxes, restrictions of consumption – and “de-marketing”: ban on media advertising, public campaigns, plain packaging, alarming pictures on the packs and other similar measures.
The mass market producers, credit institutions, as well as a huge number of jobs in the broad marketing sphere are directly dependent on the constant growth of consumption. There are multiple proofs that since many decades the principle of achieving the biggest possible growth has a negative social utility. Marketing stands at the root of this problem – and if society manages somehow to organize itself, marketing will also take part in the solution.
DIMITAR SABEV is an economist and journalist at the University of National and World Economy, Bulgaria. His interests lie in the intersection of market, nature and culture.
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