The Pathological Pursuit of Profit and Power - Case Study Example

?Introduction The traditional economics put consumers at the forefront of the modern society and all economic activity surrounds around consumers. The traditional view therefore holds that the consumers have wants which are met by the businesses without significantly affecting their purchasing behavior. This view is based upon the notion that consumers are fully rational and therefore his judgment or decision making ability cannot be affected by the businesses. Post World War 2 society is a society which is not suited to the traditional view of the society taken by the classical economists. The redefining of the means of production as well as the production of luxury goods, the overall orientation of the society has changed a lot. Traditionally economics measures the society’s well being through GDP however, it also ignores the personal and social well beings of the individuals. The alternative views however do suggest that economies rather than serving the consumers are actually serving the large corporations. Corporations are not just the entities which fulfill the needs of the consumers but rather the wants of the consumers are created by the corporations so that they can profit from them. By limiting the brands available to the public, corporations however limit the choices available to the consumers hence forcing them to consume their products. This paper will basically argue and debate two opposing views of whether consumers are in control while making their choices or their choices can be reshaped through advertising and other channels which can ultimately create a culture which force consumers to spend. Markets and Consumers Traditional economics focuses on the consumers as a rational individual capable of making decisions based upon rationality. This view therefore also outlines that the choices of the consumers are independent and cannot be influenced. As such corporations as well as advertising can only help the consumers to make better choices. This view therefore outlines that the demands and choices of the consumers are internally generated and the markets can only support the consumers and firms to interact with each other to fulfill these internally generated needs and wants of the consumers. In a market based economy, consumer is considered as a king and based upon the notion of consumer sovereignty the decisions on production are made. As such this view therefore outlines that the demands and supply for the goods and services is primarily driven by the consumer choices with little role or influence from the external actors such as firms and advertising. The role of the firms therefore is just limited to providing what a well informed and rational consumer wants. JK Galbraith in his phenomenal book, The Affluent Society however maintained that it is not always the case that the consumer choices or demands are internally generated. Galbraith therefore believes that these demands and wants have been created through the advertising and what he called machinery for consumer demand creation. Galbraith therefore went on to such suggest that such extravagant spending by the consumers whose choices are largely driven by the advertising put burden on the public spending and investment. (Galbraith, 1998)  How corporations affects our choices Galbraith’s analysis suggested that the consumer choices may not be necessarily internally generated as the Post War US economy progressed in a manner which gave enormous power to the corporations. He also argued that the mechanics of consumer demand and supply are not just driven by the consumers but by the long term planning by the large corporations also. According to him, large as well as small firms do not just work as instruments to provide what well informed consumers want but rather through advertising they can create the demands.( Galbraith, 1971)  This view is radically different from the conventional wisdom in economics because it exposes the vulnerabilities of the assumption of perfect markets. Market based economics works on the basis of the assumption that the markets are perfect with each participant having perfect information about the market. However, this may not always be the case large corporations can easily manipulate the consumer choices and help create a culture where consumers are compelled to buy certain goods and services out of their impulsive instincts shaped by such advertisements. Not only corporations use advertisement but they also use vertical integration as a tool to ensure monopoly over the supply and demand mechanics. The vertical integration allows the firms to become more obtrusive in defining the overall demands for the consumers according to the capabilities of the firms. They are than being fulfilled by these organizations once they are reshaped through advertisement as well as vertical integration. In Economics and the Public Purpose Galbraith further expanded his arguments to suggest that in order to reduce the power of corporations to have an impact on the choices made by the consumers, it is better if they are nationalized. The socialization of the strong as well as weak corporations therefore has been proposed by Galbraith to have an effective check over the power of large corporations to shape the consumer choices and demands. (Galbraith, 1973)  The change in the way market has become sophisticated over the period of time has further allowed the marketers to become innovative in their approach. It is argued that the increasing complexity of the marketplace has allowed advertising to take a central place in the market based consumerism. As the corporations became large and strong enough they created a culture where consumers started to view themselves within the advertisements rather than as a separate individual. Marxist views are also based upon the assumption that the firms create consumer needs in order to make them purchase the goods produced by them. Marxist critique also outlines that the adverts actually force the consumers to make buying decisions against their class interests because consumers often fail to escape from the false meanings attached to them through careful advertising. This line of thinking therefore directly point figures over the ability of the large as well as small corporations to actually reshape the decision making ability of the consumers to buy goods and services. (Bakan, 2004)  There is also an argument that the advertisement actually pushes the consumers to consider consumption as an end itself. The consumption is therefore advocated as a way of life and advertisement can actually compel consumers to go into a vicious cycle where they have to consume in order to give meanings to their life. Consumers therefore purchase more and more and live with the promise of wanting to want more regardless of the fact that whether their consumption patterns corresponds to their lifestyles. It has also been argued that the modern consumer is not free because he has been pre-conditioned to make only those choices which have been presented to him. Advertisement therefore has been considered as the tool to convert a classic consumer who is rational and well informed to a consumer who is pleasure seeker. Pleasure seeking consumers therefore can be easily manipulated through the advertisement and marketers can easily use different techniques to provide them further sources of pleasure. As such consumption therefore is considered as a pleasure seeking activity which is an end in itself. (Klein, 2002)  This argument therefore further validates that the corporations actually shape the purchasing decisions of the consumers through effective advertisement. Consumers are no longer the masters of their fate and don’t serve as the rational individuals with all available information to make an informed decision. Corporations through advertisement as well as other means therefore can easily divert their attention towards the pleasure seeking through hyper-consumption activity. Conclusion Traditional economics ideas as given by the classical economists suggest that the consumer is the king and a complete rational individual. In a perfect market therefore a consumer has all the information and knowledge and his decision to whether buy or not cannot be influenced by the external forces. In such a market scheme, large as well as small corporations just serve as the instruments to provide what is required by the consumers. Firms therefore work only as the means to fulfill the needs and wants of the consumers and in no manner they can influence the outcomes of the consumers. It is however, important to note that this is not always the case as many argue that the modern society as it emerged after Second World War is a different society. In that society the changing industrial and production methods and the relationship between consumer and the firm has changed. Large corporations now can easily influence the decision making ability of the consumers and limit their choices. Advertising has been extensively used by the corporations to have an impact on the choices of the customers and a culture has been created where consumer choices are not determined by them but by these large organizations. Consumption has therefore become an end itself and advertisement has provided the necessary vehicle through which consumers can actually visualize themselves and associate themselves with such consumption patterns. Consumption therefore has now become a pleasure seeking activity which is largely influenced by the large corporations with the help of innovative advertisements. References 1. Bakan, J. (2004) The Corporation: The Pathological Pursuit of Profit and Power , New York: Free Press . 2. Galbraith, , J. (1971) The new industrial state,2nd ed. New York: Houghton-Mifflin. 3. Galbraith, J. (1973) Economics and the Public Purpose , New York: Houghton Mifflin. 4. Galbraith, J. (1998) The Affluent Society" ,20th ed. New York: Houghton Mifflin Company:, p.100-109. 5. Klein, N. (2002) No Logo: No Space, No Choice, No Jobs , Toronto: Picador. Read More