Juliet Schor has a new book out this week, Plenitude: The New Economics of True Wealth. The first part of the book expands on issues she discussed in a 2008 Illahee talk: the evolving discipline of economics, the psychology of consumption and happiness, and our rapidly increasing demand for “things” even as our economy stagnates. The second part of the book is Schor’s prescription, which she calls Plenitude, for these ailments. Here in Portland we’re already familiar with much of this: down-scaling, DIY, community-gardening, trading time for wages. What’s novel about Schor’s new book is that she provides a framework for a new economy, one that is emerging out of choice and necessity all around the country. Here we recap her Portland talk from 2008.
Juliet Schor began her talk in Portland on Thursday 28 February 2008 with an apology for sociology being a discipline that explains things we think we already know. Or as the great evolutionary biologist Ernst Mayr used to say about ecology, “the elucidation of the obvious for the ignorant.” Mayr was wrong, of course, and so are people who dismiss sociologists like Schor.
Dr. Schor doesn’t explain the obvious. Instead she questions assumptions, and often finds them unwarranted. On this night she lead us through some unexamined assumptions of neoclassical economics and consumption. Current economics works on the Homo economicus model, assuming the methodological individual, isolated from other humans with no interdependent preferences. It assumes no regrets; preferences stay the same. It assumes more is always better. It assumes higher consumption yields higher welfare.
But does consuming yield happiness? Well we know that a lack of money leads to unhappiness. But once basic needs are met, our level of happiness tends to flatten out. In fact the percentage of very happy people in the U.S. peaked in 1957, even though our income has tripled. Japan has had a five-fold increase in income since WWII, but no increase in happiness. You see a similar pattern in around the world. Why? Why doesn’t increased income lead to much more happiness, after a certain level (around U.S. $20,000 to $30,000)?
Schor suggests several reasons: Benefits are relative (the “keeping up with the Joneses” effect). We adapt to increased income. Historically, we’ve had to put in more hours of work for our increased income. Consumerism fosters dissatisfaction. Income growth impedes other sources of happiness. And finally, we can now see that increased consumption is damaging our planet and our future.
How can economics deal with these issues? Schor argues that we need a new, more realistic model: Homo socialus. Methodological individualism is in decline, and social group dynamics is key to understanding our economic behavior and global future.
For example, we now know through ultimatum games, like the prisoner’s dilemma, that people aren’t little maximum benefits calculators. Fairness is important to us, even when it decreases our individual benefits. Furthermore, we are influenced by our social network. Hang out with fat people, smokers, drinkers, and guess what? You’re more likely to gain weight, smoke more and hit the bottle. Even if it’s just on MySpace or FaceBook. We all sense this intuitively, which is why we worry about our kids hanging out with “the wrong crowd.”
Social dynamics influences consumption. The worse off you are with respect to your peers, the more you’ll spend and the less you’ll save. This is not a good thing. And it scales up to societies. More unequal societies have bigger spend / save gaps and lower overall well being.
Juliet covered three concepts in the remainder of her talk: Relativity, the work – spend cycle, and her current work on the social death of things. Which situation would you prefer? An income of $50,000 in a country with an average income of $25,000? Or an income of $100,000 in a country with an average of $250,000. Most people chose the former. We’d rather be wealthy relative to those around us, even if our absolute income is lower. This happens because consumption is social communication. Its symbolic value is high compared to its utilitarian value. That’s why advertisers market more than just stuff; they market feelings and status. (When the Illahee audience loudly rejected the status symbol of the large McMansion compared to the PDX bungalow, Juliet remarked, “OK, but you have your own status symbols in Portland.”) This works because status is more flexible now; you don’t have to inherit a lot of land or a title to achieve high status. You can work your way up the ladder. Or so we’re told. But because of global media, our reference group is larger, and more unrealistic. Our friends are now Phoebe and Ross from “Friends.” Life Styles of the Rich and Famous makes most of us feel poor and small.
Why are we consuming more than we used to? Because we can. (And if we can’t, we borrow.) And we can mostly because we’re working more, and more of us are working (the two income family is now the norm). This is a reversal in a long term trend that saw the work day decease from 12 hours to 10 to 8 from 1850 to 1950. One big post WWII concern among economists was too much leisure. But since 1967 the hours worked per year has increased from about 1700 to around 2000, while per capita income has increased from about $10,000 to $30,000. So we’re working more hours, leading to more stress and time pressure, and more spending (because we can), but more debt (to keep up with the Gates and the Hiltons) and the end result is life on a treadmill. Add in the double whammy of television, further increasing time pressure (time watching TV is time lost) and spending, (commercials, Lifestyles of the…), and what have you got? A fat, over-consuming, unhappy country. No wonder The Biggest Loser is such a hit.
What happens when we consume more and more? Obviously we buy more stuff per unit time, and the fashion cycle has to speed up (from an average of 30 apparel items per year in 1998 to about 54 items in 2006). Schor sees the year 2003 as a significant milestone; it was the year that Americans, on average, achieved the dubious distinction of buying more than one item of clothing per week. It’s not just increased income that allows us to do this. Middle class wages have been fairly stagnant since 1998. They certainly haven’t gone up by (54 –30)/30 or eighty percent. Instead, imports have gotten cheaper, thanks to sweated labor, cheap energy, global transport and the high dollar (the latter three of which are coming to an end). That and our increased work hours and tolerance for debt.
And the unexpected consequences? In 1991 Americans discarded 100 million kilograms of apparel, most of it going to the rest of the world. By 2004 the rest of the world was getting 500 million kg of our used polos, chinos, blouses and bags. Lucky them. Or maybe not, since “the rest of the world” is where all this stuff was made in the first place. Ah, the circle of life. Or as Schor would call it, the social death of things. More social death: In 1998 we bought 3 billion kg of clothes; now it’s 5 billion (so we’re tossing out one kg for every ten we buy). It’s much the same for furniture, from 5 billion to 12 billion kg in less than ten years. Sadly, the gross weight of books sold has barely increased at all (maybe we’re reading shorter books?).
So what. We’re buying more stuff. The problem is the planet can’t keep supplying all that stuff. Indeed, we went into resource overshoot more than twenty years ago. We’re borrowing on an account we can’t pay back. Schor brought up Holdren and Ehrlich’s classic equation I=PAT (Impact = Population x Affluence x Technology). We know where population is going, we’ve got promising soft technologies – e.g., wind, solar, conservation – ready to go, but we haven’t addressed consumption in a systematic way. Schor believes that changes in consumption will come through new cultural norms via social networks. The old political / economic structure is crumbling. A new social paradigm is emerging. And none to soon.