Economic Historian Says Spend To Save The Economy (And Your Soul)

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Author James Livingston. (Bruce E. Williams)
Author James Livingston. (Bruce E. Williams)

James Livingston has been listening to the debate over the economy with an historian's ears.

He says that while there seems to be a deep divide, politicians and economists on the left and the right are actually pushing the same idea – that business holds the key to growth. But Livingston says history tells a different story-- consumers actually do.

He says the numbers show that since about 1910, "business investment has not been the driver of the economy, consumer spending has."

That's in part because of technological change, which makes it much cheaper for businesses to increase productivity. Businesses and the wealthy cannot possibly re-invest all the extra money they have into growth, because that would make more products than any society could possibly use.

Livingston says policies that encourage savings and higher business profits have created large pots of money with nowhere to go, so businesses and the rich plow them into the financial markets, creating the cycles of bubbles and market crashes we've seen since 1929.

"Once upon a time, saving for a rainy day served the purpose of building character, and the economy," he told Here & Now's Robin Young. "That's no longer true."

Livingston argues against policies that encourage private saving and for policies that take money from corporate profits and put it into the hands of consumers.

Book Excerpt: Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul

By: James Livingston

We’re the most affluent people on the planet, us Americans—our choices among foods, ideas, clothes, schools, and destinations are almost without limit—and we love to shop. But we also know that con­sumer culture is bad for us. How come?

In a word: excess. We’re afraid that we consume too many resources, that we save too little of our incomes, and that meanwhile we produce almost nothing of real value.We’re afraid that we can’t observe any limits on our consumption of goods, so that every substance, even food, begins to feel addictive, and every urge, even sex, begins to feel compulsive. When armed with credit cards, it seems, we’re unwilling to defer the im­mediate gratification of our desires, and we’re thus unable to “save for a rainy day.” We’re also afraid that we’re mere cattle—herded by corpo­rations and “branded” by their admen. We’re especially afraid that con­sumer culture is making us fat.

So, yes, we love to shop, most avidly between Thanksgiving and Christmas. Still, we know that in the long run, consumer culture is bad for the economy, the environment, and our souls.We sometimes express this split in our personalities by complaining about the “commercializa­tion” of Christmas, typically when we’re fighting crowds of last-minute shoppers. More often we apologize to ourselves, among others, for buying things we didn’t really need, or for indulging a child’s ad-induced desire for a molded plastic toy that will never decompose. Complaining or apologizing, we’re divided by very different orders of feeling. On the one hand, we experience the pleasure of buying, using, and giving away the things on the shopping list. On the other, we know without thinking that the same things already contain a barbaric history of exploitation— “Made in China,” the label says—and foretell an ugly future of moun­tainous landfills.

In this book, I make the case for consumer culture: why it’s actually good for the economy, the environment, and our souls, among other things. In this sense, I’m trying to heal the split in our personalities by demonstrating that less work, less thrift, more leisure, and more spending are the cures for what ails us.

So I make two basic arguments: one about the economy and the other about the culture, using a strategy that keeps me coming back to the historical record.

First, sustainable economic growth doesn’t require more saving by households and more investment by CEOs, bankers, traders, and fund managers. In other words, more consumption is the key to balanced growth in the future. That’s right: we need to save less and spend more. Just to begin with, a much larger dose of consumer spending is absolutely necessary to prevent the kind of economic catastrophe that still racks the domestic and international economies. That new dosage requires a redistribution of national income away from profits, which don’t always get invested, toward wages, which almost always get spent. This new course of treatment does more than invert the supply-side cure for our economic ailments—cut taxes on profits, let private enterprise prevail!— because it assumes, in view of the historical record, that profits won’t be productively invested. That’s right: higher profits almost never lead to more investment, more jobs, and more growth. In fact, there’s no demon­strable link between private investment and economic growth, so cutting taxes on corporate profits is pointless at best and destructive at worst. We might as well stop pretending that there is such a link.

Second, consuming goods is as morally complex and significant as producing goods. Making things—the work that requires tools and skills and time—is no more meaningful than buying and using things. In fact, work as such is less important than, say, buying and driving a car, or choosing and wearing that little black dress. (It turns out, in any event, that the kind of work we typically imagine as the obvious alternative to The Mall is what we do at our leisure, after hours: it’s already taken up residence in the neighborhood of consumer culture, where you don’t get paid for what you produce.) As part of this polemic against work— against alienated labor—I demonstrate in Chapters 5 and 6 that con­sumer culture doesn’t siphon political energies and fragment social movements by “privatizing” experience: instead it grounds a new politics by animating both new solidarities and new individualities. In the same spirit, I show in Chapters 7 and 8 that advertising—the headquarters of consumer culture—speaks the last utopian idiom of our time because it urges us to create identities unbound by work.

Copyright 2011 by James Livingston


  • James Livingston, professor of history at Rutgers University and author of "Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul."

This segment aired on December 13, 2011.


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