economics: capitalism

It’s that time of year when we savage the world with our unbridled consumerism. If it’s not a Black Friday stampede at Target, it’s a news story of a shopper who camped out in front of a Best Buy for over a week to score some discounted gadgets. Everywhere you turn consumers are whipped into a frenzy, children’s eyes are glazed over as they think of what gifts they’ll open, and romantic partners are stressed over what they will give their loved one to demonstrate the depths of their love.

When consumerism is exaggerated, as it is this time of year, it’s easier to see the cultural scripts and rituals that surround it. These cultural scripts tell us:

1. How to feel when we come into a lot of money or even just get a good deal
2. How to act when we receive a gift
3. And how to impute love from inanimate objects.

1. The Rapturous Consumer Windfall

Next to presentations of sex and bad karaoke there is arguably no other scenario played out on television ad nauseam more than the consumer windfall. Turn on your TV right now, and find an advertisement or game show and you will almost certainly see someone falling to their knees, eyes full of tears, as they praise the gods of capitalism for blessing them.  Bob Barker (er, Drew Carey) play the role of Benny Hinn in this consumer revival smashing their open palms on the foreheads of game show contestants as they exclaim, “The. Price. Is. RIGHT!” (Watch at 0:51):*

Television advertising is a wellspring for this type of consumer exaltation. The best example of this consumer rapture is the @ChristmasChamp campaign from Target. Watch the video below and you tell me; is this woman having a consumer-gasm or what?**

Maybe it’s just me, but this ritualized consumer rapture gives me the heebie geebies.

2. The “Show Us What You Got” Photo

Leaning on the arm of your parent’s love, seat slightly sauced, your aunt turns to you and says lovingly, “oh show me what Santa brought you!” After you halfheartedly motion to the pile of loot on the floor she puts her glass down, grabs the family Polaroid and says, “Let’s take a photo to send to [fill in name of absentee relative].”

If we were to flip through your family photo albums I bet we’d find page after page of people cheesing with their unwrapped gifts held head level. This obligatory photo is the classic post gift exchange cultural script. Somehow a gift is only properly received when there is a photo to document it.

From my point of view, it is strange that we take photos of the things we receive during holidays which are tangible and will be around well after the event. But many of us don’t take photos of the moments with our loved ones that won’t linger and fill up our closets.

3. The Hand Dance of Love

Does he love you? Does your hand show it? The holiday season is a time when many will pop the question and boy do advertisers know it. While the issues surrounding jewelry ads are well documented on this site, I’d like to talk about the hand dance women are socialized to do after their love has been verified by an appropriately large shiny rock. After a woman says “yes,” she walks around with one arm sticking out like a zombie for the next few months doing the hand dance. This cultural script dictates that women flaunt their recently acquired diamond ring and then all women in their surround give their requisite “Oh, that is GORGEOUS!” There is a sad sizing up that goes on here, where women are shamed or praised for the size of ring bestowed upon them.

In Conclusion

Most of these cultural scripts and rituals go unnoticed or at the very least unquestioned. These acts are the mechanisms through which we objectify the social world and alienate ourselves from our loved ones. So this year why not participate in Buy Nothing Day and double down on some quality time with your loved ones.

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* We should acknowledge that sometimes the people who are receiving these windfalls are desperate and totally deserving. I don’t want to shame or cast dispersions on anyone in this situation, but these are exceptions to the rule.

** Forgive me for sexualizing this, but I mean come on, that’s an apt description. While we are at it, this ad is chock full of sociology. We have an “empowered woman” who uses her power to consume; it’s the classic redirection of feminist energies into consumer. This woman, who appears to be the epitome of the middle class, white, privileged consumer, is flexing her muscles, exerting her power, and being aggressive enough to make Betty Friedan blush… ’cept she is using her power to purchase consumer goods from a capitalist system that creates and maintains her oppression. Maybe it’s just me, but I think feminist scholars would have a (justified) objection if I called this “champ” a feminist. I dunno.

Nathan Palmer is a faculty member at Georgia Southern University, editor-in-chief of SociologyInFocus.com, and the founder of SociologySource.com.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

In Capital, Karl Marx discusses how the products we buy are separated from any recognition of the people who produced them. If I want to buy a TV, I’m unlikely to be involved in any kind of interaction with the people who made it. I don’t see the factory where they worked, I don’t have any idea what the conditions were like, I have no specific idea where it was made, outside of “Made in  _____” written on the box. Instead, I exchange money for the TV at a store that almost certainly had nothing to do with manufacturing the TV; no one at Best Buy or Wal-Mart could tell me any more about the specific conditions of production than what I can figure out from reading the package.

Marx referred to this as commodity fetishism. The social relations embedded in products — the fact that someone made that TV, under particular conditions, making a certain amount of money for their labor while producing profit for their employer — are obscured and workers become invisible. Instead, we focus on how much we pay for it, and which store charges the least. Marx argues that relationships between workers, employers, and consumers are presented to us simply as relationships between things; we exchange paper money (an abstract measure of our labor) for commodities, and we rarely pause to think about how the price of a TV is determined by the worth placed on workers in a particular place at a particular time.

Social activists concerned with working conditions, environmental impacts, and a range of other concerns often push back against commodity fetishism, attempting to make the social relations of production visible to consumers again. Craig Martin of Religion Bulletin provided an example from South Africa’s Apartheid Museum. This poster, produced during the struggle against apartheid, calls for a boycott on South African fruit (UPDATE: A reader found a larger image so you can see more detail; via):

The visual of workers soldiers superimposed on the fruit, with workers and protesters in the background, and the phrase “Every bite buys a bullet!”, remind consumers that items they buy having meaning for the world around them, and that they aren’t just exchanging money at a grocery store in return for that fruit; they are buying into a system of production that provides profits for a racist government, which uses those profits to buy military supplies used to enforce its brutal, unequal racist policies.

As Martin says,

In Capital Marx says that commodity fetishism presents relations between men as relations between things — and this poster is a powerful example of an attempt to demystify commodities and reveal that they are in fact relations between human beings.

Cross-posted at Bytes of China.

Oh how this Toyota Highlander advertisment is reflective of the new global order.  I saw this picture in Guangzhou’s domestic terminal. A Chinese couple is getting out of their Japanese brand car into what appears to be a private yacht. A white male greets them, taking their travel items and appears to be eager in their service.

This advertisement reflects a new Chinese imaginary — one that is global, expansive, unlimited, and exploratory. It also tells us who has the power to live out this imaginary. Ten years ago or even five years ago, I don’t think this advertisement would’ve existed. But now companies have turned to the Chinese consumer, encouraging them to participate in this lifestyle. The entire global economy right now depends on the Chinese elite and middle-class to spend. But how long can this go on for until we see the next crisis? For how long can each system create “value”?

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Tricia Wang is an ethnographer, sociologist, and researcher. She is on a Fulbright in China observing how digital technologies are mediating new conceptions of information and desire among youth & migrants. She is a student at UC San Diego’s PhD Sociology program.  She blogs at Bytes of China.

Thanks to Benjamin B. for the tip!

Our financial system is dominated by banks considered too big to fail.  And that is a problem for the rest of us.  As Time magazine explains:

“Too big to fail is opposed by the right and the left, though not apparently by the people drafting legislation,” says Simon Johnson, an MIT professor and the author of a recently published book on the subject, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. “The current financial-reform bills are effectively a wash on the issue.”

The question is how large banks ought to be allowed to become. When large banks run into trouble, regulators are often unwilling to let them fail, as bank failures can wipe out individual depositors. What’s more, banks often fund their operations by borrowing from other banks. The bigger the bank, the more likely it is to put other banks at risk if it fails. Mass bank failures, especially of big banks, means people can’t get loans. And no loans, no economy.

That’s why the government decided to bail out most of the nation’s largest banks at the height of the financial crisis. And here’s where the problem potentially gets worse. Once bankers understand that the government will bail out their firms when their loans or other financial bets go bad, they are likely to take riskier and riskier bets. That, of course, leads to more potential bank failures — and more taxpayer-funded bailouts.

Not only have attempts at reform largely failed, government regulators have often tried to paper over financial problems by encouraging our dominant banks to swallow smaller, less stable ones, thereby worsening the problem.

So, who are our ”too big to fail” banks and how did they get so big?  Here is a time line that charts the process and highlights the winners.

Of course there are answers to this “too big to fail” problem.  One is turning our banks into public utilities.  Here is Yves Smith talking about this solution:

The media likes to talk about markets as if they were just a force of nature.  In fact, markets and their outcomes are largely shaped by political power.  In a capitalist system like ours, that power is largely used to advance the interests of those who own and run our dominant corporations.

Thanks to Bloomberg News we have yet another example of this reality.  In brief, as a result of Congressional and media pressure the Federal Reserve was recently forced to reveal its lending activity for the period August 2007 through April 2010.   Bloomberg News examined these Federal Reserve records and found that the Fed secretly provided selected banks, brokerage houses, and even non-financial firms (such as General Electric and Ford) with at least $1.2 trillion in loans, often with minimal collateral required and at below market interest rates.

This money was given through more than a dozen lending programs.  Many firms tapped multiple programs through multiple subsidiaries. Bloomberg arrived at its total by focusing on the seven largest programs, which included the Fed’s discount window and six temporary lending facilities (the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; the Commercial Paper Funding Facility; the Primary Dealer Credit Facility; the Term Auction Facility; the Term Securities Lending Facility; and so-called single- tranche open market operations).

If you like visuals, here is a 5 minute video that provides a good summary of what Bloomberg gleaned from its examination.

UPDATE: Embedding was disabled, but you can watch it here.

Bloomberg also has an interactive site that allows you to chart who got what and over what period.

Some of the highlights are as follows:

The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion . . .

Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG, which got $77.2 billion. . . .

The $1.2 trillion peak on Dec. 5, 2008 — the combined outstanding balance under the seven programs tallied by Bloomberg — was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The Federal Reserve fiercely resisted making its records public, arguing that doing so would stigmatize those institutions that received loans.  A group of the largest commercial banks actually petitioned the Supreme Court in an unsuccessful effort to keep the loan information secret.

Perhaps one reason that the Federal Reserve and the banks were reluctant to have these records made public is that they raise significant questions of conflict of interest.  According to a statement by Vermont Senator Bernie Sanders:

…the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

Another reason may be that the Federal Reserve didn’t want it known that it was deviating from its past practice of requiring borrowers to provide secure collateral, which was normally either Treasuries or corporate bonds with the highest credit rating, and never stocks.  For example:

Morgan Stanley borrowed $61.3 billion from one Fed program in September 2008, pledging a total of $66.5 billion of collateral, according to Fed documents. Securities pledged included $21.5 billion of stocks, $6.68 billion of bonds with a junk credit rating and $19.5 billion of assets with an “unknown rating,” according to the documents. About 25 percent of the collateral was foreign-denominated.

Moreover, as Bloomberg News also reported, many Fed loans were made at below market interest.

On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

These loans were absolutely critical to the survival of our leading companies.  A case in point:

Citigroup was in debt to the Fed on seven out of every 10 days from August 2007 through April 2010, the most frequent U.S. borrower among the 100 biggest publicly traded firms by pre- crisis market valuation. On average, the bank had a daily balance at the Fed of almost $20 billion.

These loans are also a key reason that our post-Great Recession economy remains largely unchanged in structure.  In other words, it was the exercise of political power, rather than so-called market dynamics or efficiencies, that explains the financial industry’s continuing profitability and economic dominance.

Now imagine if we had a state that engaged in transparent planning and was committed to using our significant public resources to reshape our economy in the public interest.  As we have seen, state planning and intervention in economic activity already goes on.  Unfortunately, it happens behind closed doors and for the benefit of a small minority. It doesn’t have to be that way.

In 1922 the American Social Hygiene Association, funded by the American Public Health Service, created a social marketing campaign aimed at American teenagers. While it was predominantly about sexually transmitted infections, it also taught about good health and hygiene in general. And maintaining health, then as now, is not only about health but also about conforming to social norms–especially gender norms.

The posters aimed at boys were titled “Keeping Fit”:

And the girls’ posters were titled “Youth and Life”:

Comparing the boys and girls’ posters, you can see that fitness is not just about physical health; it is also about particular character traits. For boys, those traits are will power, courage, and self-control–traits that are based on a puritan work ethic that we value in a competitive capitalist society.

While courage and endurance were important for both boys and girls, fitness for girls was less about power and self-control, and more about grace, beauty, and friendship.

TEXT:

Paint your cheeks from the inside out. Outdoor exercise, baths, regular meals, and plenty of sleep will help. Most girls could be prettier than they are because most girls could be healthier.

TEXT:

Copy the pose but not the shoes. Correct posture gives attractive figure, straight back, freedom of action for heart and lungs, good muscle tone. Stand tall — chest up, not out — toes straight forward when walking or standing. A well-poised body develops self-respect, and wins the regard of others.

Men were taught how to grow up to be honorable husbands and fathers, while women were taught how to grow up to be good wives and mothers.

For boys:

TEXT:

The youth who achieves self-control can go joyfully and clean into marriage with the one girl he is willing to wait for, and become a husband and father without the danger of causing suffering to wife and child.

For girls:

TEXT:

A woman physician who is also a mother. The girl of today will be the woman of tomorrow. She will need brains, vitality, and sound training, if she is to take her place in the world as a mother and a useful citizen.

It may be tempting to think that we know more now than we did back then and that with progress we make fewer mistakes today than they did in the past. However, controversy surrounding many health topics such as obesity, circumcision, and the way we screen, treat, and fundraise for breast cancer should tell you that we still have many assumptions behind our health recommendations that are based on ideology.

The posters are held at the Social Welfare History Archives at the University of Minnesota Libraries

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Christina Barmon is a doctoral student at Georgia State University studying sociology and gerontology.

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According to the flyer in yesterday’s mail, “Life’s too short to clean your own home.”

Naturally, for the people who work for The Cleaning Authority, life is not to short to clean someone else’s home — and love it, as this woman on the inside flap apparently does:

Maybe she’s happy because she has a job she likes — even though she would be miserable cleaning her own home.

The sociological truth is that it is different to clean someone else’s home. Today’s corporate cleaners are different from an informal cleaning relationship.  Corporatizing housework changes its social nature.  That doesn’t mean it’s not unpleasant work. But cleaning the toilet of an anonymous person may be less degrading than cleaning the toilet of someone you have a personal (subordinate) relationship with. On the other hand, maybe people love cleaning toilets for people they really love.

The rationality of market dynamics ideally also makes gender irrelevant.  In that ideal, not real, marketized world, then, maybe there is no such thing as housework — just work and workers. Would that be better?

A longer version is cross-posted at Montclair SocioBlog.

Long before the Freakonomics guys hit the best seller list by casting their economic net in sociological waters, there was Gary Becker.  If you want to explain why people (some people) commit crimes or get married and have babies, Becker argued, just assume that people are economically rational.  Follow the money and look at the bottom line.  You don’t need concepts like culture or socialization, which in any case are vague and hard to measure.*

Becker wrote no best-sellers, but he did win a Nobel.  His acceptance speech: “The Economic Way of Looking at Behavior.”

In a Wall Street Journal op-ed Friday about the recession, Becker started off Labor Day weekend weighing in on unemployment and the stalled recovery.  His explanation: in a word, uncertainty.

These laws [financial regulation, consumer protection] and the continuing calls for additional regulations and taxes have broadened the uncertainty about the economic environment facing businesses and consumers. This uncertainty decreased the incentives to invest in long-lived producer and consumer goods. Particularly discouraged was the creation of small businesses, which are a major source of new hires.

There’s something curious about this.  Becker pushes uncertainty to the front of the line-up and says not a word about the usual economic suspects – sales, costs, customers, demand.  It’s all about the psychology of those in small business, their perceptions and feelings of uncertainty.  Not only are these vague and hard to measure, but as far as I know, we do not have any real data about them.  Becker provides no references.  The closest thing I could find was a small business survey from last year, and it showed that people in small business were far more worried about too little demand than about too much regulation.

Compared with Regulation, twice as many cited Sales as the number one problem.  (My posts on uncertainty from earlier this summer are here and here.)

In addition, the sectors of the economy that should be most uncertain about regulation – finance, mining and fuel extraction, and medical care – are those where unemployment is lowest.

More, as David Weidner writes in the Wall Street Journal, taxes, interest rates, and regulation at an all-time low.

[The uncertainty-about-taxes-and-regulation argument] would make more sense if, say, taxes were already high and might be going higher or regulatory burdens were heavy and might be getting heavier. But when taxes are at a 60-year low and the regulations are pretty much the same as they were in the 1990s boom, the argument makes no sense at all (Mark Thoma quoting an e-mail from Gary Burtless).

If it’s really uncertainty caused by these things that causes a reluctance to hire, the time to invest and hire should be now.

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* This is an oversimplified version, but it will do for present purposes.