Ethical Consumption

Despite the problems I described in Consumers in Capitalism,

wages are the focus for all pro-market localist schemes. If consumers buy locally-sourced goods from ethical sellers, it is claimed, they’ll shrink the economy to a more rational sustainable level.

It’s true that the West consumes too much; people buy what they don’t need or too much of what they do need. Businesses spend vast amounts of money to convince people that their lives are incomplete without the latest gadget. People who reject this oftentimes get drawn into their own form of elitism, paying huge sums for the coffee and gadgets that define their counter-cultural cachet.

Localists frame this by aggregating individual consumption choices. It’s assumed that we’ve all chosen, on our own, to consume too much, and this individualism marks localist thinking. Individual choices, it’s said, put together, will change the system. Making numerous small choices will add up to changing big ones. Consumers can change not only their spending habits but entire industries. Michael Shuman names ten different areas shoppers could buy locally, imagining a consumer-led panacea of local business, finance and technology to bring the community together “to envision a better economic future for all of its members.”

But capitalism does a lot more than offer different products for people to buy. The market coordinates production globally, which makes it very hard to reproduce in miniature. For example, localists acknowledge that the quality of local food isn’t consistent. It’s hard to get and often costs more, both because of economies of scale and because its production and distribution aren’t subsidized. Consumers are supposed to compensate for this by paying more.

The problem is that the capitalist economy is too complex for individuals to change at a micro level. But rather than democratically plan the economy, allowing social need and not profit to dictate what gets made and how, consumers are supposed to refuse to “give in” and cope individually with market anarchy.

If ethical consumption relies on consumer preferences, then consumers can equally choose not to participate. In a system where consumers are workers with nothing to sell except their labor power, it’s rational to buy goods as cheaply as possible. And this is what happens when capitalism goes into crisis.

Still, ethical consumption remains popular: after all, it’s a way to feel you’re changing the world by spending a little extra. But the question is whether it’s actually changing the production and distribution circuits of capital. At what point will the number of ethical consumers peak, when those with no disposable income can’t participate? And, since it can’t change the global drive to reduce costs below the average global price, what distinguishes ethical consumption from charity, a way to salve the consciences of the well-to-do, leaving the structures creating inequality intact and growing?

The assumption behind consumer activism is that we’re limited to shopping to express our discontent. This is effectively saying the neoclassical economists are correct: the economy runs on consumer preferences, not exploitation. This shifts blame onto individual consumers for the failings of the system: if there’s alienation and environmental misery, it’s your fault for buying the wrong things. Yet consumers are also workers who must sell their labor power or lose their livelihoods. They buy what makes their wages stretch further.

In fact, the vast majority of people in the world need to consume more; capitalism isn’t meeting their needs. Billions of people live on less than $2 a day. In this context, calling for people to consume less misses the point. Real ethical consumption is collective. Capitalism makes it impossible for most people to meet their needs on their own, but as a society, we could provide houses, hospitals and schools for everyone. Obviously, this implies a vast change in the structure of ownership and consumption, but it’s a far more positive vision than localism’s individualism.

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Greg Sharzer, No Local: Why Small-Scale Alternatives Won’t Change The World (Winchester, UK: Zero Books, 2012), 33-38.

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Consumers in Capitalism

Before I address the issue of “ethical consumption” in my next post, I need to take on the topic of consumption itself.

According to neoclassical economics, a consumer is an informed individual, making rational decisions in the marketplace to maximize his/her self-interest. There’s no surplus, growth is an accident of production, and capital comes from investors beating the odds for a while. Workers and owners are just temporary categories; we’re really just individuals who come to market to meet our infinite needs, and some of us are lucky enough have extra cash on hand to sell goods to others. By demonstrating a preference for particular goods, consumers can change the way those goods are produced and distributed.

In reality, this doesn’t describe most people, who consume according to standard patterns, socialized through culture and family. However, it does describe capitalists, who come to the market as a purchaser (consumer) of labor power.

Neoclassical economics focuses on consumers, but this reflects reality only for the capitalist. Any economic theory beginning with consumers, consumption, or exchange adopts the capitalist’s point of view. This is flawed in two ways:

  1. Wages don’t create all demand: they’re just one way for capitalists to realize the capital invested in commodities. There are three other circuits that supply public and private goods at all stages of production. Most people encounter the market when they shop, so it seems natural to think that capitalism exists to satisfy their consumer needs. But while the market in consumer goods is constantly on display, exploitation is hidden. Workers matter only as providers of labor power, the source of surplus value: they’re only able to receive and spend a wage if their employer makes a profit first. Moreover, capitalists also create commodities (the means of production), that only other capitalists buy. For example: steel producers buy coal to make steel; manufacturers of coal-mining equipment buy steel to produce mining equipment; mine owners buy mining equipment to mine coal, that they then sell to steel producers. There are enormous areas of the economy where workers’ spending power has no impact at all.
  2. Money capital funds every circuit: it not only provides start-up capital but helps workers’ wages circulate by providing personal credit, increasing capital through banks and corporate self-financing. New forms of credit continue to spawn, both because industries self-finance, and because speculators can suck up surplus value that can’t be reinvested profitably. To influence this process, consumers would have to find some way of controlling investment decisions at all stages of capital circulation, including private investment and state purchase of goods. Otherwise, capitalists would pull investment dollars from the more expensive, less technically-developed, ethical local industries.

Consumer spending is a form of distribution, it represents the reproduction of workers’ own labor power, not control over the entire process. The idea that workers could control the circuit of capital repeats Ricardo’s error by assuming workers receive the full value of their labor, rather than the value of their labor power in production. Even if localist advocates convinced all workers that local consumption could change the world, workers could, at best, change the conditions of production for their own housing and durable goods, a small portion of the overall capital circuit.