Define and explain the theory of marginal utility and link it to the demand curve
The theory of marginal utility is an economic concept that explains how individuals make decisions regarding the consumption of goods and services. It is based on the principle that as individuals consume additional units of a good or service, the additional satisfaction or utility derived from each additional unit tends to diminish.
Here's an explanation of the theory of marginal utility and its connection to the demand curve:
Marginal Utility: Marginal utility refers to the additional satisfaction or utility gained from consuming one more unit of a good or service. The theory of marginal utility suggests that as individuals consume more of a good, the additional satisfaction they derive from each additional unit decreases. This is known as the law of diminishing marginal utility.
Diminishing Marginal Utility: The law of diminishing marginal utility states that the more units of a good or service an individual consumes, the smaller the incremental increase in satisfaction for each additional unit. For example, the first slice of pizza consumed may provide a high level of satisfaction, but as more slices are consumed, the marginal utility of each additional slice decreases.
Consumer Decision-Making: The theory of marginal utility plays a crucial role in understanding consumer decision-making. Consumers seek to maximize their total utility or satisfaction from the goods and services they consume, given their limited resources and budget constraints. To do so, consumers allocate their resources in a way that balances the marginal utility gained from each unit of a good with its price.
Demand Curve: The link between the theory of marginal utility and the demand curve lies in the willingness of consumers to purchase a good at different prices. As the price of a good decreases, consumers are willing to purchase more of it because the marginal utility per dollar spent increases. This is because the lower price allows consumers to obtain a greater quantity of the good for the same expenditure, resulting in higher overall satisfaction.
The demand curve represents the relationship between the price of a good and the quantity demanded by consumers. It slopes downward because, according to the theory of marginal utility, as the price decreases, the marginal utility per dollar increases, leading to a higher quantity demanded.
The theory of marginal utility also explains why the demand curve is typically downward-sloping but not perfectly elastic. As individuals consume more of a good, the diminishing marginal utility implies that they are willing to pay a lower price for each additional unit, resulting in a lower quantity demanded at higher prices.
In summary, the theory of marginal utility explains how individuals make consumption decisions based on the diminishing marginal utility of goods and services. It links to the demand curve by demonstrating how changes in price affect the quantity demanded, as consumers consider the marginal utility per dollar spent when making their purchasing decisions.
Explain the assumption of a rational actor. Do consumers or firms live up to this assumption?
The assumption of a rational actor, also known as the rationality assumption, is a foundational principle in economics. It posits that individuals, consumers, or firms make decisions based on rational behavior to maximize their self-interest and achieve their objectives.
According to the rational actor assumption:
Consistent Preferences: Rational actors have well-defined and consistent preferences. They have a clear understanding of their needs and desires and can rank different options or outcomes based on their preferences.
Cost-Benefit Analysis: Rational actors engage in cost-benefit analysis when making decisions. They assess the costs and benefits associated with various choices and select the option that maximizes their overall satisfaction or utility.
Optimization: Rational actors strive to optimize their decision-making. They make choices that provide the highest possible benefit or utility given their available resources and constraints.
While the assumption of a rational actor provides a useful framework for economic analysis, it is important to recognize that in real-world situations, individuals and firms may not always perfectly adhere to the assumptions of rationality.
In the case of consumers, there are several factors that can influence their decision-making and deviate from perfect rationality:
Limited Information: Consumers may have limited information or imperfect knowledge about products, prices, or market conditions, leading to decisions that are not fully rational or optimized.
Behavioral Biases: Consumers can be influenced by behavioral biases, such as heuristics, social norms, emotions, or cognitive biases, which may lead to decisions that deviate from strict rationality.
Time Constraints: Consumers may face time constraints or cognitive limitations, making it difficult to thoroughly analyze all available options and make fully rational choices.
Regarding firms, while they are often assumed to be profit-maximizing rational actors, their decision-making can also deviate from perfect rationality due to various factors:
Managerial Discretion: Firms may be influenced by managerial discretion, where managers' personal goals, biases, or organizational constraints can affect decision-making, potentially deviating from strict profit maximization.
Incomplete Information: Firms may have incomplete information about market conditions, competitor behavior, or future uncertainties, leading to decisions that are based on imperfect knowledge rather than perfect rationality.
Organizational Considerations: Firms may also consider factors beyond profit maximization, such as corporate social responsibility, ethical considerations, or long-term sustainability, which may influence decision-making and deviate from strict rationality.
In summary, while the assumption of a rational actor provides a useful framework for economic analysis, individuals, consumers, and firms may not always fully live up to the assumption of perfect rationality. Factors such as limited information, behavioral biases, time constraints, managerial discretion, and organizational considerations can influence decision-making and lead to deviations from strict rationality in real-world economic behavior.
Economic agents are individuals, groups, or entities that participate in economic activities and have an impact on the economy. They play various roles and functions within the economic system. Let's explore the different types of economic agents and their objectives:
Individuals/Consumers: Individuals are economic agents who act as consumers, seeking to fulfill their needs and wants through the consumption of goods and services. Their objectives include maximizing utility or satisfaction by allocating their limited resources, such as income and savings, to obtain goods and services that provide the highest level of satisfaction.
Firms/Producers: Firms are economic agents engaged in the production of goods and services. Their primary objective is to maximize profits. Firms aim to optimize production, manage resources efficiently, and make strategic decisions that yield the highest financial returns. Profit maximization involves increasing revenue by selling goods or services at the highest possible price while minimizing costs.
Workers/Laborers: Workers are economic agents who provide their labor in exchange for wages or salaries. Their primary objective is to maximize their income or earnings. Workers seek employment opportunities that offer competitive wages, good working conditions, job security, and opportunities for career growth. They may also pursue personal development and job satisfaction in addition to maximizing their income.
Government: The government is an economic agent that influences the economy through policy-making and implementation. Its objectives can vary depending on the economic and social context. Common government objectives include:
Economic Stability: Governments aim to maintain stable economic conditions, such as low inflation, low unemployment rates, and steady economic growth, to ensure the well-being and stability of the overall economy.
Redistribution of Income and Wealth: Governments often seek to reduce income inequality by implementing policies that redistribute wealth and provide social welfare programs to support disadvantaged groups and ensure social equity.
Provision of Public Goods and Services: Governments are responsible for providing public goods and services, such as infrastructure, healthcare, education, defense, and environmental protection, to meet the collective needs of society.
Promotion of Economic Development: Governments often strive to promote economic development by attracting investments, fostering entrepreneurship, implementing supportive policies, and encouraging innovation and research and development.
Financial Institutions: Financial institutions, such as banks and investment firms, are economic agents operating in the financial sector. Their objectives typically include:
Profitability: Financial institutions aim to generate profits by providing various financial services, including lending, investments, and fee-based services, while managing risks effectively.
Risk Management: Financial institutions focus on managing risks associated with lending, investments, liquidity, and market fluctuations to safeguard their stability and protect the interests of depositors and shareholders.
Intermediation: Financial institutions facilitate the flow of funds between savers and borrowers, supporting economic activities and capital allocation.
These are general objectives associated with different economic agents. It's important to note that individual economic agents may have additional goals or objectives that align with their specific circumstances, values, and external factors. Economic agents' objectives are influenced by factors such as individual preferences, market dynamics, regulatory frameworks, and societal needs.
Explain how rules of thumb and irrationality can affect consumers’ demand for goods and
services.
Rules of thumb and irrationality can have a significant impact on consumers' demand for goods and services. Here are some examples:
Anchoring Bias: Consumers often rely on initial pieces of information as reference points when making decisions. For example, a consumer may see a product with a higher original price marked down to a lower sale price. The consumer's perception of value may be influenced by the initial higher price, leading them to believe they are getting a better deal than they actually are. This can affect their demand for the product.
Loss Aversion: Consumers tend to experience the pain of losses more intensely than the pleasure of gains. For instance, a consumer may be reluctant to purchase a product even at a discounted price if they feel it would entail a loss of money or regret in the future. This bias can impact their demand for goods and services, as they may avoid certain purchases due to a fear of potential losses.
Availability Heuristic: Consumers often rely on immediate examples or information that is readily available to make judgments or decisions. For instance, a consumer may base their perception of the quality of a product on the ease with which they can recall positive reviews or personal experiences with similar products. This heuristic can influence their demand for goods and services, as they may prefer products with readily available positive associations.
Social Proof: Consumers are often influenced by the actions and behaviors of others. For example, if a product or service is highly popular or endorsed by influential individuals, consumers may be more inclined to demand it based on the perception that it is desirable or of higher quality. This can create demand trends and drive consumer behavior even if the actual value of the product may not justify the demand.
Status and Conspicuous Consumption: Consumers may make purchasing decisions based on the desire to display social status or to signal their wealth and success. For example, consumers may choose luxury brands or high-end goods to project a certain image or to align with societal norms. This can affect their demand for specific products and services that are associated with prestige or exclusivity.
These examples illustrate how rules of thumb and irrationality can influence consumers' demand for goods and services. Consumers' decision-making processes are not always rational or based solely on objective evaluations of value. Instead, psychological biases and heuristics play a role in shaping their preferences and behaviors, leading to deviations from traditional economic models of rational decision-making.
Explain how the imposition of a tax on a good or service affects both consumer surplus
and producer surplus.
Consumer Surplus: Consumer surplus is the economic benefit or gain that consumers receive when they are able to purchase a good or service at a price lower than the maximum price they are willing to pay. It represents the difference between the price consumers are willing to pay and the actual price they pay in the market.
Producer Surplus: Producer surplus refers to the economic benefit or gain that producers receive when they are able to sell a good or service at a price higher than the minimum price they are willing to accept. It represents the difference between the price producers receive and the actual cost of production.
The imposition of a tax on a good or service affects both consumer surplus and producer surplus. Here's how:
Consumer Surplus: When a tax is imposed on a good or service, the price paid by consumers increases. As a result, consumer surplus decreases. This is because consumers are now paying a higher price than before the tax, reducing the difference between the maximum price they are willing to pay and the actual price they pay. Some consumers may even choose to no longer purchase the good or service at the higher price, leading to a further reduction in consumer surplus.
Producer Surplus: On the producer side, the imposition of a tax increases the cost of production for producers. This reduces the producer surplus as they are now receiving a lower price for their product after deducting the tax. If the tax burden is significant, it may even lead to some producers exiting the market if they find it no longer profitable to produce the good or service.
It's important to note that the impact of the tax on consumer surplus and producer surplus may not be equal. The actual distribution of the tax burden between consumers and producers depends on the relative price elasticities of demand and supply. If the demand for the good or service is relatively inelastic (less responsive to price changes), consumers may bear a larger share of the tax burden, resulting in a greater reduction in consumer surplus. Conversely, if the supply is relatively inelastic, producers may bear a larger share of the tax burden, leading to a greater reduction in producer surplus.
Overall, the imposition of a tax on a good or service reduces both consumer surplus and producer surplus. The extent of the reduction depends on the magnitude of the tax, the price elasticities of demand and supply, and the ability of consumers and producers to adjust their behavior in response to the tax.
Taxpayers lost out, and consumers have paid through the nose ever since. This failed regime is long past its sell-by date writes Jonathan Portes in The Guardian
“You could be an H2Owner.” That was the slogan, to the sound of Handel’s Water Music, of the 1989 campaign to sell shares in the 10 water and sewage companies of England and Wales – not quite as memorable as British Gas’s earlier “Tell Sid” campaign, but almost as successful. Although water privatisation was extremely unpopular, with every poll showing that a substantial majority of people were opposed to the policy, that didn’t stop more than 2.5 million people applying for shares. The offer was nearly six times oversubscribed.
The only surprise is that it wasn’t much more. Long before anyone talked about “magic money trees”, the Thatcher government offered one: this was free money to anyone who filled in the application form. The average gain to investors on the first day of trading was 40%, and over the next two decades the privatised water companies paid more than £57bn in dividends, at the same time as running up large amounts of debt, the interest on which is effectively paid for by customers.
So how did we get it so wrong? I mean me, not you. I was a very junior Treasury official working on the water privatisation project, responsible for securing value for money for taxpayers and water consumers. In retrospect, we utterly failed on both counts: the shares were sold well below their value so taxpayers lost out, and consumers have paid through the nose ever since. But this is not just hindsight. We knew what was going on, because water privatisation was never really about efficiency. In the short term, the overriding political priority was a “successful” sale – one where demand for shares was high – and where those who applied and who had, from previous privatisations, already come to expect a large premium, were not disappointed.
That meant that the Treasury’s position, when arguing for a higher share price or for tighter regulation to restrain bills in the future, was exceptionally weak. The National Audit Office report on the sale details how the forecast proceeds fell by more than a third over just three months, costing taxpayers £6bn or so in today’s money, as the Treasury was steamrollered by the combined forces of the water companies’ management, the Department of the Environment, No 10 and a huge army of investment bankers, accountants and PR consultants.
In our (partial) defence, we hoped that this was a one-off transfer of wealth from taxpayers and consumers to shareholders, and that over the longer term, if we got the regulatory structure right, shareholder returns would return to something more like “normal”, as the Office of Water Regulation (Ofwat) found its feet and sought to defend the interest of consumers. But as we now know, we were wrong. Just this morning, the hapless chief executive of Ofwat, David Black, was on the Today programme, claiming that Thames Water was penalised for excessive leaks. It was left to the indefatigable Feargal Sharkey to put the numbers in perspective.
Paradoxically, while the underpricing of the water and sewage companies helped fulfil Thatcher’s short-term goal of a successful sale that was lucrative for those who bought shares, it fatally undermined her long-term goal, which was to create a “shareholding democracy” that would parallel the way right-to-buy created a “property-owning democracy”. The problem was that few small shareholders could resist the temptation to cash out their large profits.
So, as they sold their shares, the companies were bought up, mostly by private equity, institutional investors and large infrastructure firms from abroad. These investors spotted the combination of large investment programmes, effectively guaranteed returns, and a supine and underpowered regulator that lacked access to high-powered economic consultants and lawyers. The result is that companies have been loaded with debt that has permitted huge returns for shareholders. Meanwhile, regulators have allowed returns that have been high or higher than an average risky private company, yet investors have been exposed to no more risk than government bonds. As the Financial Times puts it, 30 years on, “water privatisation looks like little more than an organised rip-off”.
Where next? Here it’s worth engaging with an interesting but deeply self-contradictory defence of the sector by the head of the Centre for Policy Studies, Robert Colvile. He acknowledges upfront that the “water companies are essentially contractors. They are running the water network on behalf of the state, in a fashion agreed with the state, to targets laid down by the state.”
Indeed – so why should directors get million-pound salaries and bonuses? Why should shareholders and bondholders get returns far in excess of those we offer to investors in government debt? His answer to this is that the “single greatest justification for privatisation is competition for capital”; by which he means that if water companies were in the public sector, their investment would be in competition with other priorities, from HS2 to hospitals, and the result, inevitably, would be underinvestment.
This is helpful for two reasons. First, it’s more credible than other defences of privatisation. It doesn’t claim some mythical gains from the magic of competitive markets. Nor is it an economic argument. From a rational perspective, there’s no reason why the government can’t invest as much as is justified by the underlying economics. Instead, Colvile’s argument is political. It implies that governments, especially but not only Conservative ones, pursue stupid, self-defeating policies for short-term political reasons, so it’s worth consumers massively overpaying the private sector to secure the level of investment that is required, even if the public sector could, in theory, do it more cheaply.
Second, this points to a potential way forward that could avoid both the upheaval of renationalisation and the continued reliance on a failed regulatory regime. At the moment, the water companies are simply permanent regulated monopolies. But if those operating the water companies are contractors delivering a public service, why not, as regulatory expert Dieter Helm suggests, treat them as such, and force them to bid competitively for the right to operate? One thing we know for sure is that the current model, where companies face public sector levels of competition and risk, and get private sector levels of profits and return, has long past its sell-by date.
Consumerism, or the preoccupation of society with the acquisition of consumer goods, largely emerged from the 19th century onwards. It began to really take off from the early 20th century, when the idea of mass production of consumer goods fully materialised. Consumer goods are often those that are not exactly a necessity. They are acquired for ‘superficial’ purposes. It is, therefore, not a coincidence that the birth of modern-day advertising and/or marketing ploys, too, began to evolve more rapidly during this period. Their aim was to describe consumer goods as a necessity without which one could not become an identifiable member of society.
In 2018, I went through decades of ‘consumer demographic’ data of some of the world’s leading marketing and advertising firms (between the 1950s and early 2000s). These included advertising firms in Pakistan and India as well. The data shows that most makers of consumer goods and services have continued to ‘target’ the middle-classes, or the ‘aspirational classes.’ These have remained prominent buyers of consumer goods. They are also the most prominent classes in the social and economic spaces of major cities.
However, this is not the case when it comes to politics. The middle-classes may be a part of the electorate, but in most regions, their presence is minimal in the actual corridors of power. The middle-classes have often expressed frustration after feeling that their path towards holding the levers of political power is being blocked by members of the political elite who were born into their status instead of climbing their way up as the middle-classes want to.
1789: An emerging middle-class in France rebels against the King and Church
Modern mainstream politics is the result of certain revolutionary 17th-, 18th- and 19th-century upheavals in Europe which saw the emergence and expansion of the middle-classes. They gradually pushed out the old political elites (the monarchs, the Church, landed gentries, etc.), and replaced these with themselves at the top. The politics that evolved during this process was a product of modernity as defined by the so-called ‘Age of Enlightenment.’
Inch by inch, religion was demystified and relegated to the private sphere; newly formed polities began to be defined as nations that were linked to integrated economies; and the ‘pre-modern’ past was denounced as a realm ravaged by wars, plagues, brutal rulers, widespread poverty, religious persecution and exploitation, superstition, and short lifespans.
The political system which the expanding middle-classes adopted and evolved was democracy. Initially, they trod the ‘Aristotelian’ path which posited that a large, prosperous middle class may mediate between rich and poor, creating the structural foundation upon which democratic political processes may operate (J. Glassman, The Middle Class and Democracy in Socio-Historical Perspective, 1995).
Middle-class prosperity and growth were dependent on modern economic activity which functioned outside the old agrarian structures, and took place in the expanding urban spaces. These spaces attracted labour from rural areas who transformed in to becoming the working-class (the proletariat). During the upward-mobility of the middle-classes, they engineered a democracy that was to constitutionally protect their properties and newfound power and wealth. But as the size of the working-classes grew, it became necessary to create room for them in the political system, if social and political upheavals were to be avoided.
Traditionally, working-class interests in democracies leaned left or towards socialist or welfare policies. As a reaction, the middle-classes moved to the right (F. Wunderlich in The Antioch Review, Spring 1945). The middle-classes therefore, became more invested in curbing, or at least lessening, the electoral influence of the working-classes by voting for conservative parties which treated social-democratic ideas as Trojan horses through which communism would invade and usurp all political and economic power of the ‘hard-working middle-classes.’ However, from within the post-19th-century political elites (in industrialised countries) also emerged parties that evolved into becoming the parties of the working-classes. The growing number of blue-collared voters in the cities necessitated this.
This created a fissure within the middle-classes. A large section of them was now willing to undermine democracy, or a system that it had crafted itself. This section began to view it as a threat to its economic interests. Here is where we see the growth of authoritarian and fascist ideas permeating middle-class political discourses in Europe, and the emergence of demagogues such as Hitler, Mussolini, Franco, etc. The aforementioned section’s radical move to the (anti-democracy) right can be understood as an emotional decision born from the fear of being swallowed by the classes below (the ‘masses’).
1900: The founding of the Labour Party in Britain
When the American president F.D. Roosevelt stated that “the only thing we need to fear was fear itself,” he was trying to address just that. He understood that fear was capable of pushing reasonable folk into authoritarian/totalitarian/populist camps.
After the defeat of German and Italian fascisms, social-democratic policies thrived in the democratic West.
They succeeded in largely pacifying middle-class fears. The middle-classes now stood on the left and the right, yet within the mainstream democratic system which continued to safeguard and police their economic interests, and, at the same time, facilitate the interests of the working-classes as well.
But from the mid-1970s, as the nature of capitalism began to change, and the industrialised countries entered the ‘post-industrial stage,’ things flipped. Between the two World Wars, sections of Western middle-classes had largely moved to the right and far-right, whereas the working-classes had moved to the left. But when the service sector began to produce more wealth than the industrial sector, positions switched.
The service sector has always been dominated by the middle-classes. A gradual decrease in industrial activity and/or with this activity shifting to developing countries (due to cheap labour, etc.), the working-classes were left stranded and feeling bitter. They began to break away from mainstream democratic paradigms and embrace a populism which preyed on the fears of this class as it struggled to cope with the drastic economic shift that was eroding blue-collar economic interests.
So, whereas, during the first half of the 20th century, a large number from the middle-class milieu, fearing that they were about to be overwhelmed by the working-classes, had exited the mainstream democratic paradigm, and had embraced authoritarian ideas and regimes, in the second half of the 21st century, it was the working-classes who did the same by supporting the rise of right-wing nationalism and populism.
Post-industrial decay: American manufacturers moved production to cheaper locations to cut costs, leaving unemployment in their wake
The South Asian flip: politics of consumption
In developing countries such as India and Pakistan, right-wing nationalism and populism are still very much the domain of the middle-classes. This is understandable because the process of industrialisation was slow and late in these regions, and so was the expansion of the middle-classes. The economies of both the countries during their first few decades were overwhelmingly agrarian. Industrialisation did not begin in earnest till over a decade after their formation.
This meant a large rural population and a steadily growing urban proletariat. Therefore, democracy in this case, though controlled by an elite, was (for electoral purposes) driven to address the interests of the peasants, small farmers and the working-classes. It was social-democratic in nature. This did not sit well with the middle-classes. They were squeezed between a ruling elite and the classes below. They constantly feared being relegated or overwhelmed by the ‘masses’ because the ruling elite in control of political parties were talking to the masses more than they did to the middle-classes. The elite were, of course, courting sections that had larger number of votes.
Till the early 2000s, middle-class economic and political interests in Pakistan were mostly stimulated by military dictators (S. Akbar Zaidi, Issues in Pakistan’s Economy: A Political Economy Perspective, 2nd Edition, 2005). This is why the middle-classes in Pakistan are more receptive to non-democratic forces and currents, even though they were only provided a semblance of political power by the dictatorships. But the size of this class is growing and so is its economic influence. It feels blocked by the electoral political elites from complimenting its economic influence with political power.
Whereas in Pakistan the middle-classes have felt more secure during dictatorships, in India, they have managed to break into the realm of India’s political elites by riding on the wave of a right-wing political party. In 2018, large sections of Pakistan’s urban middle-classes believed that they too had done the same by voting to power Imran Khan’s populist bandwagon, the Pakistan Tehreek-e-Insaf (PTI). But their nascent experience of democracy imploded when Khan’s regime was ousted by a no-confidence vote. This class is now back to viewing democracy as a corrupt system – engineered to serve an elite that is geared to address the issues of the classes with the most votes.
But the fact is, as the middle-classes in Europe had done between the two World Wars, the middle-classes in India and Pakistan too, consciously or unconsciously, are destroying the very idea and system that was originally crafted to serve their interests the most. This brings us to consumerism.
Between the two World Wars when large sections of the urban middle-classes in various European countries began to fear that the classes below (the ‘masses’) would use democracy to undermine middle-class interests, the middle-classes became antagonistic towards democracy — an ideology and system of government that they had themselves created. They then went on to facilitate the rise of anti-democracy forces that barged in and overthrew the political elites who were engaging with the masses through electoral politics.
In consumer societies, the language of politics becomes a caricature of advertising language. For example, a young man or woman is more likely to come across the word ‘Revolution’ in an advertisement than in politics. Advertisements and political rhetoric both exchange words which may end up meaning nothing
The middle-classes in South Asia have been in a dilemma of being squeezed between two forces (the electoral elite and the working-classes/peasants). So, these middle-classes have failed to fully carve out a place and identity for themselves as a political entity within a political system that is largely informed by the engagement between the aforementioned forces. According to the historian Markus Daechsel, this saw the South Asian middle-classes indulge in what Daechsel calls “politics of self-expression” (Daechsel, The Politics of Self-Expression: The Urdu Middleclass Milieu in Mid-Twentieth Century India and Pakistan, 2009).
This form of politics is a rebellion against the dynamics of mainstream politics, which the middle-class milieu dismisses as being ‘corrupt.’ This corruption is not only denounced in material terms, but is also censured for contaminating or enslaving a community’s or individual’s inner self that needs to be liberated. Instruments such as the constitution, and institutions such the parliament, are seen as restraints that were stopping people from seeking liberation. Liberation from what? This is never convincingly explained.
The aim of the politics of self-expression is not exactly a way to find a place in mainstream societal politics. Instead, it is a flight into an alternative ideological universe where all societal constraints that plague the middle-class self would cease to exist (Daechsel, ibid). In fact, Daechsel explains the politics of self-expression as a product of the consumer society. According to Colin Campbell, a new ethics of romanticism driven by emotional introspection, a hunger for stimulation and arousal and a penchant for daydreaming, helped to give birth to a consumer society that alone could sustain the onward march of capitalism (C. Campbell, The Romantic Ethic and the Spirit of Modern Consumerism, 1987).
Established political instruments and democratic norms are being attacked by the middle-classes through the creation of spectacles that are being beamed by the new media universe
To Daechsel, this drove people to develop an obsession with identities. The middle-classes remain to be at the core of consumerism. A consumer society has been defined as one in which there is no societal reality other than the relationship between consumers and branded commodity. People are entirely what they consume; no immediate relationships of political power, economic exchange or cultural capital matter anymore (J. Baudrillard, The Consumer Society: Myths and Structures, 1970).
According Daechsel, the middle-class milieu (in South Asia) was, by virtue of its material culture, persuaded to use consumption as an outlet for its frustrated socio-political ambitions. The fact that consumer identities have something ‘hollow’ about them, that they substitute a fetishistic relationship with consumer goods for ‘real’ societal relations, was precisely what made them so attractive. A constituency that could not otherwise exist as a class, due to the constraints imposed by a mainstream political economy that they became suspicious of, found in consumption a space where it could establish some form of a unified cultural consciousness.
Daechsel then adds that the trouble with consumer identities is that consumer goods are believed to reflect a person’s innermost being, but at the same time rely on the garish and the mundane to produce identities. Consumption is not about great deeds in world history, but about the choice of toothpaste and cigarettes. Yet, consumer goods through the manner in which they are marketed, provide the stuff to form identities. Marlboro smokers were rugged individualists, Coca Cola drinkers value the happiness of being part of a wholesome family, iPhone users are savvy folk who are ‘creative’ and ‘fun-loving,’ etc.
The politics of self-expression is an attempt to make consumer identities secure and ‘serious’ by dressing up consumption activity as politics. The language of politics thus becomes a caricature of advertising language; it retains all the hyperbole. For example, the word ‘liberation’ in such nature of politics is as ‘serious’ as it is when used in ads of male or female undergarments! But in politics of expression, it replaces advertising’s playfulness and self-irony with the certainty of assumed prophetic airs (Daechsel, ibid).
In consumer societies the language of politics becomes a caricature of advertising language. For example, a young man or woman is more likely to come across the word Revolution in an advertisement than in politics. Advertisements and political rhetoric both exchange words which may end up meaning nothing.
The consumer middle-class could well turn out as the destroyer of the world that gave birth to it
The middle-classes in India and Pakistan have gone to war with conventional politics, which they still fear is pitched against them. But even in India, where these classes have succeeded to somewhat break into and disturb the once impenetrable fortress of the country’s ‘rational’ political elites, they have no convincing alternatives. Or the alternatives are creating unprecedented social and political turmoil because they are emerging from the politics of self-expression.
According to Daechsel, the methodology in this context is a direct reflection of the logic of a consumer society. Both in Pakistan and India, ‘rational’ political instruments and democratic norms are being attacked by the middle-classes through the creation of spectacles that are being beamed by the new media universe. They are like marketing stunts.
Events such as openly undermining the constitution, beating up and humiliating foes, burning passports and flags, etc., have turned the perpetrators into political brands that are immediately and often quite literally ‘consumed’. Daechsel views all this as a suicide mission (of the South Asian middle-classes). It is an ultimate extension of the self-expressionist longing for intoxication, a self-indulgent form of ‘political’ activity that is supposedly based on a supreme ideology, but in reality gives the person involved a taste of the ultimate power trip. Just like an expensive brand of car or watch would.
Established political instruments and democratic norms are being attacked by the middle-classes through the creation of spectacles that are being beamed by the new media universe.
Daechsel writes, “If there is a final conclusion to be drawn from this exposition of the politics of self-expressionism in India and Pakistan, it has to be the following: the development of a middle-class through an expansion of the social role of consumption offers no guarantee for a better political culture. Persistent contradictions between a consumer society and other forms of societal organisations will stimulate forms of self-expressionist radicalism that may be very hard to control. Far from being the historical carrier of the voice of reason and modernity, the consumer middle-class could well turn out as the destroyer of the world that gave birth to it.”
This is quite apparent in the ways many middle-class men and women in South Asia have willingly drowned the notion that their acts in this context could be undermining their own political and, especially, economic interests. They seem to have readily gone blind to this fact in their bid to devour politics like they would a consumer brand, but one which is marketed as a product to give them instant bursts of liberation, empowerment and greatness.
