Consumption and country project: the concealed

Why do we consume? Is it to cover basic needs, longings, or cravings? More, less, better or worse consumption. Who consumes and who provides what is consumed? Which inherent social, economic, political and environmental consequences each type of consumption generates and how does it influence the desired country project?

Consumption is a concept that entails a diversity of implications and interrogations. This is because there is not just one type of consumption, of consumers or suppliers and many of their consequences concealed. When presenting the variable “consumption” as if it were a homogeneous field, we are not making explicit that, in truth, it constitutes an enormous and heterogeneous universe.

Consumption in the economic system

A first difference refers to the type of consumption depending on who is consuming. It is known that sectors that concentrate wealth devote a smaller proportion of their income to satisfying basic needs than middle and popular sectors. Most of their income is devoted to hoard or invest and the rest, due to cravings or longings, is oriented towards acquiring goods and services well beyond basic needs, consumption that allows them to show their social position and differentiate themselves from the rest of society. Instead, popular sectors are forced to use their meager income to cover fundamentally their basic needs with little room for other allocations. On their part, middle sectors cover their basic needs and allocate the rest of their income to savings and satisfying consumptions induced by commercial marketing.

Before going further, it is worth to explicit some issues. One refers to the displacement of what is considered basic need. As societies develop and living levels grow, the scope of basic needs expands and, thus, so does having more goods and services that might act as satisfiers. The opposite occurs in societies that fragment and suffer a setback in their life levels. That is, basic needs are not a fixed variable but rather it moves and transforms with time.

Another very important issue refers to a critical reproductive condition inherent to any economic system and to capitalism, in particular, the need to count on a demand that accompanies, consume, the goods and services that the system produces. This is, productive offer must be absorbed by a demand in constant expansion or, at least, that does not decrease. Otherwise, tensions and eventual crises might emerge because enterprises cutback their production or go bankrupt generating a loss in employment and drop in income levels.

How is consumption sustained in contemporary economic systems? In principle, through awakening the permanent desire of consuming well beyond basic needs. That is, the system aims at generating a constant dissatisfaction, a quest for consuming even the superfluous and unnecessary. A state of buyer anxiety is generated that is cooled down with acquisitions but it is never eliminated and is incessantly reproduced through the publicity machine that penetrates subliminally and alienates individual and social reason. A structural insatiability is installed.

This is complemented by the system moving away from producing durable goods and services and, rather, generating a programed obsolescence. It is a productive strategy associated with the permanent renovation of the purchasing cravings. It is exactly the opposite of producing recyclable goods accompanied by a network of recovering and in-use services.

Now, there is another critical aspect of contemporary economic systems, income is needed for buying. Genuine income that allows for acquiring a group of goods and services that are considered basic, above poverty level, should be obtained through the work each one does, that is, salaries, fees, and small rents. This applies for the totality of middle and popular sectors, that is, the large population majorities. However, not always, let say few times, consumption is secured just with genuine income. In the first place, because the unbridled process of concentration of wealth and income that prevails almost everywhere in the world materializes at the expense of an economic equality that is evaporating. What would be genuine incomes of majorities are reduced insomuch as they are appropriated by dominant interests. So? Well, if there is no enough genuine income and we are not willing to eliminate the concentration process, we would need to reach for substitute income. The main of which is credit that allows for expanding purchasing power beyond what own income permits. Simple in appearance, but with demolishing results. If credit were to substitute a temporal shortage of genuine income, then it could be cancelled when such scarcity is overcome (that is, when enough income reappear for keep on consuming and repaying debts). However, concentration does not cease, on the contrary, it is intensified and accelerated thus the gap between income and consumption is installed as permanent. This implies that people are not able to cancel debts and, as long as it is feasible, they must be refinanced at rates that are more burdensome. The outcome is the impossibility of paying that leads to losing family assets, judicial extortions, falling into poverty or indigence.

Other substitute incomes (those further from altering the concentrating accumulation pattern) are a diversity of subsidies orientated towards assisting vulnerable sectors, in particular poor and indigent. This help is essential for solving serious social emergencies and it depends on the prevailing tax situation and the political orientation of those who control the States. It could be an assistance measure that endures in time although the magnitude of scarcities of affected sectors is not in line with the resources that finance those subsidies. It would be better to transform the concentrating process, by redistributing assets and establishing normative that creates the chances for a permanent and sustainable flow of legitimate incomes.

In any case, while the consumption capabilities of large majorities get narrower, at the same time, a market is developed where the allocation of resources is decoupled from the existence of consumption. That is the case of the aggressive financial markets, where values and papers are transacted, allegedly guaranteed by an intangible wealth. What happens is that instead of investing resources in productive activities of the real economy, capitals that do not find there high-yield niches, are allocated as a herd in financial markets. Today, these financial markets move transactions several times larger than those moved by the real economy, and their sustainability based on the fact the capital owners want to keep on “investing” in financial papers. Opportunity niches created due to the ability of those who operate in those frequently ethereal markets appear and disappear, with a very dangerous consequence: high risks can lead to huge profits but also sudden losses that irradiate quickly. Thus, the feared recurrent speculative bubbles are formed; they appear and explode unexpectedly taking by surprise those who are not familiar with what conceals its fragile foundation. From there to provoking very serious systemic crises, there is only one-step.

Those who supply the consumption

Now, let us consider who supply the consumption and the diverse environmental, economic, and political impacts that those different suppliers generate.

It is worth remembering that the ordering criterion of contemporary economic activity is maximizing profit. The principle that guides investment and production does not consider as relevant the effects it produces in society and the environment, such as the permanent wage restraint (sterilizes sources of legitimate incomes for large majorities) and the constant destruction of the environment. Owners and managers of large and middle corporations conceive these terrible effects as “negative externalities” (unwanted but clearly foreseeable) and they ignore whatever responsibility they might have. They say that they have to produce and obtain profits and that the States are the ones responsible for safeguarding the environment and securing distribution equality. However, they are not neutral when regulations are being introduced to avoid those “collateral effects.” Large corporations as well as medium enterprises and some small ones oppose those regulations and resist their approval. Furthermore, if in the end if whatever forms that restrict concentration were to be approved, they know how to circumvent them with a diversity of complicities and the weakened police power of States structured by dominant interests.

Let us move forward. When suppliers of consumed goods and services are existent large establishments, monopolies and oligopolies that control main value chains, the result is the reproduction of the concentration process. With an aggravating factor: large enterprises can react differently in front of consumption increases, always looking to maximize their profits. The first reaction is abusing their market power by imposing higher prices and harsher commercialization conditions. In this way, they generate serious inflationary tensions that affect middle and popular sectors but manage to increase their profits without devoting resources to enlarge their production and employment. Another option would be to accompany the increase in demand with an increase in production. This would not affect prices and would imply a larger investment that generates multiplying effects in terms of new jobs, provision of supplies, equipment, and capital goods.

Anyway, they would have us believe that there is no other way of effectively suppling consumers than by favoring large corporations and this is not true. What happens is that there are small local ventures that with an adequate assistance and strengthened could activate themselves.

This happens in many sectors of the economy; to exemplify we will mention a few. In the provision of food, it is well known the role that family agriculture can play if given support by favoring their access to land, promoting cooperatives or other associations to manage stockpiling, transport, processing and commercialization of their products. In relation to health services, there is great need for expanding local centers for primary care articulated with referral networks for complex cases. In the field of construction, being housing, plots with utilities, infrastructures for energy distribution, communications, and sewer services, among many others, it is possible and advisable to promote small local ventures backed up by technical agencies, local universities, and national system of science and technology. The impact of this democratizing strategy for the national economic system is social and territorially highly favorable. By promoting the emergence of other suppliers, the State is in better conditions for containing inflationary pressures and, at the same time, favoring regional economies. This option influences on the distribution of income (with better prices for consumers and suppliers) as well as enhancing the distribution of productive assets and, thus, of the patrimonial structure of society.

The political impact of these different options is of strategic importance. Consumption of high and medium-high income sectors, with their purchases favors certain large enterprises, which are the ones that later finance electorally like-minded political sectors. Something similar happens when a decision is made to supply popular consumption with existent concentrated productive apparatus. In these options, transforming political sectors must face much better financed rivals. Instead, choosing the option of democratizing the universe of suppliers, new smaller productive actors would tend to support political sectors that assist and protect them from the market abuse done by leading enterprises. In this way, conditions for building social coalitions capable of changing prevailing correlation of forces could be strengthened.

Final reflection

We see how dangerous it is to deal with issues such as “consumption” without making explicit the diversity of implications and consequences generally concealed. Each type of consumption, each type of supplier, each type of normative and regulatory context give way, favor or harm different country projects. What happens with “consumption” also happens with all other economic variables. Dominant interests know how to conceal what they need to remain unknown, and even less understood. Otherwise, the affected, clarified population majorities would confront the privileges and subduing mechanisms that make them possible.

This is particularly critical when the exit of the double pandemic, sanitary and the economic produced by neoliberalism is at stake. It is clear that there is not just one type of exit and that each option brings us closer to or farther from the country project that humanity and the planet need. What is more serious, humiliating, and despicable is when dominant interests camouflage themselves and try to perpetuate the dynamic that led to the present crossroads of concentration, unmerciful inequalities, and recurrent instability. Each decision should indicate who it is favoring and who it is harming while making explicit the political, social, environmental and cultural consequences that it generates. It is not worth one day’s bread; it is about establishing a sustainable and inclusive country, no more, no less than a society that cares for all and the environment.

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