The changing household consumption bundle

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In any given time period, an average member of Australia’s employed population buys such-and-such amount of food, clothing, shelter, TVs, Hollywood movies, football matches, medical care etc.

Has this consumption vector changed much over recent decades?

The figures below show the proportion of household expenditure accounted for by various categories of goods and services, and how these proportions changed between 1984 and 2004.

What we see is contrary to the popular, media-fuelled view of affluenza and luxury fever.

The largest relative growth came in categories of spending like household services and operation (phone calls, childcare, housekeeping, cleaning, gardening), housing costs (rent, interest repayments, rates, etc.) and miscellaneous (mostly education fees).

Most new spending was not on items like household furnishings, recreation or personal care (toiletries and cosmetics).

But this is a bit deceptive. It says more about changes in relative prices than the physical volume of items purchased.

The relative price of “goods” to “services” (a crude distinction, it’s true) has fallen over the past 30 years.

Medical practitioners’ fees, for example, increased far more during the period under consideration than did most durable goods. The per-unit cost of components found in electronic equipment (TVs, mobile phones, personal computers) declined due to technical advances.

And of course the average Australian household did not buy fewer shirts, dresses or shoes than it had twenty years earlier. But prices in the textiles and clothing industry barely increased in this time.

Hence the grain of truth in the otherwise fantastic claims of Clive Hamilton, prominent “public intellectual” and one-time Greens candidate:

Average households today are filled with big-screen TVs and DVDs… [We] see backyards dotted with swimming pools. It is nothing for an average parent to spend $1000 on a present for a child or to buy them a personal mobile phone. Ordinary families happily shell out $40,000 for a four-wheel drive play-thing and gamble away a few thousand dollars each year merely for entertainment.

But this is not because, as Hamilton claims, “modern consumers no longer consume the ‘utility’ of goods and services: they consume their symbolic meanings.”

Instead it’s simple technological innovation, working through the substitution effect, that increases demand for certain goods, transforming them “from luxuries to necessities“.

Productivity gains reduce the number of labour hours required to produce many items, lowering their unit price. They can thus be bought at higher volumes and in larger sizes. (Service products are, arguably, less susceptible to technical advances, which may help to explain the recent movement in relative prices.)

Consider some of the major consumer goods (CD, CD-ROM, DVD, MiniDisk, Blu-ray) developed over the past 35 years. These are some of Hamilton’s prime examples of “items that have been transformed from luxuries to necessities in most Australian homes.”

But such products were not developed in response to consumer demand, let alone “ever-rising aspirations in pursuit of lifestyles that would give us an identity.” Consumers didn’t grow tired of the gramophone record and demand something new.

On the contrary, consumer demand was created by Philips, Sony, Pioneer and MCA to meet a technology – Laserdisc – that had been developed in the late 1970s for another purpose: home video. Of course, VHS cassettes proved more successful. To recoup their investment in Laserdisc, these companies created another mass market for the technology: “compact disc”.

This meant placing long-term orders for disc-pressing machinery, laser diodes, and all the intermediate inputs necessary for different stages of production; agreements with record companies to ensure that audio recordings would be released in the right format; and finally the advertising and distribution networks to ensure the product would be bought once it had been launched.

From this beginning followed successive innovations in the production of optical-disc products, similar to those in computing, which increased storage capacity to the extent that a single disc can now hold more than a terabyte of data.

This tendency for technical innovation to allow more efficient delivery of basic needs is a  200-year old feature of industrial capitalism. If the product contributes to the employed population’s consumption bundle, it makes labour cheaper to employ (after nineteenth-century cotton mills made workers’ clothing cheaper, the same real wage, in all industries, could henceforth be met with less money).

It also generates, as Hamilton isn’t the first to point out, the profusion of “non-basic needs”, a “failure to distinguish between what we want and what we need”. (Even though, last anyone heard, Hamilton had declared that the Great Recession meant “the era of affluenza is over”, aggregate demand is in fact sustained more than ever by growth in household debt).

The cause of this cornucopia isn’t the spiritually empty “materialism” of the working population,  and its solution isn’t “downshifting” (“rejecting the values of consumer society”).

The culprit is both mundane and more formidable. It is an invariant structural feature of capitalism: improvements in labour productivity, driven by competition and the search for innovator profit.

As Hamilton makes clear, “growth fetishism”, and its consequent effect on the consumption bundle of the working population, has us on a path to biospheric disaster. But the solution to this social problem isn’t the taking of thought, any more than a remedy for capitalism’s ecocidal, grow-or-die dynamic is the election of Greens members to parliament, or Australia’s “easing back the immigration tap“.

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2 Responses to “The changing household consumption bundle”

  1. Why a jobless recovery? « Churls Gone Wild Says:

    […] But health and education are essential for the material reproduction of society and of the capacity to work of the employed population. On most reasonable definitions and typologies of productive versus unproductive sectors, such as […]

  2. The demands of war « Churls Gone Wild Says:

    […] persist over time or enter into future rounds of production). They do not enter into the consumption bundle of the working populationand its dependents (i.e. they don’t make up part of the real wage). Suppose that, due to some […]

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