Saturday, August 15, 2015

Market Fragmentation and Social Fragmentation

The massive upheavals of two world wars and the Great Depression generated a need for cohesion within societies.  For a moment societies assumed that “we are all in this together” and if we stick together we can avoid a repetition of the fear, danger, and destruction from which we have just emerged.  In the immediate postwar years economies thrived as all that destroyed capital had to be rebuilt.  All classes benefited as income inequality plummeted.  However, that economic bounty would begin to dissipate in the 1970s and a period of great change would ensue.

Daniel T. Rodgers, in The Age of Fracture (2011), described the last quarter of the twentieth century as a period of disaggregation when the ties that bound society together unraveled.

“Across the multiple fronts of ideational battle, from the speeches of presidents to books of social and cultural theory, conceptions of human nature that in the post-World War II era had been thick with context, social circumstance, institutions, and history gave way to conceptions of human nature that stressed choice, agency, performance, and desire.  Strong metaphors of society were supplanted by weaker ones.  Imagined collectivities shrank; notions of structure and power thinned out.  Viewed by its acts of mind, the last quarter of the century was an era of disaggregation, a great age of fracture.”

Rodgers points to changes in economic thought as the initiator of this disaggregation.  It was a time of neoliberal ascendency that brought the concept of undirected markets driven by self-interested individuals to the fore.

“It stood for a way of thinking about society with a myriad of self-generated actions for its engine and optimization as its natural and spontaneous outcome.  It was….a disaggregation of society and its troubling collective presence and demands into an array of consenting, voluntarily acting individual pieces.”

Rodgers was onto something with his focus on economic changes, but changing attitudes and actions of tens of millions of citizens are difficult to relate to “ideational battle” between academics and politicians.  There may have been something much more direct occurring.

Brink Lindsey provides an interesting way in which to view changes that have occurred in the economy in an article for The American Interest: Frontier Economics.  Lindsey claims that for a long time economies were concerned with providing products that filled the well-defined needs of food, clothing, shelter and transportation.  He claims that it was inevitable that markets for such products would eventually stagnate in terms of growth.  If dynamic new markets were to be developed they would have to focus on providing goods and services that people desired rather than needed.  And if the desire was not to be found, marketing would have to create it.  Lindsey views this phase as one where companies and markets could come and go quickly and there is no clear picture of where progress might take us. Hence he uses the term “frontier economics.”

Mass market products that required large capitalization would be augmented by smaller, quicker companies that used new technologies to profitably target smaller segments of society.

“….that’s the direction advanced capitalism has followed ever since (except that it’s not a single direction, of course, but countless variations on a theme). As product varieties proliferated to suit every taste and social identity, what was being produced and consumed also changed. The richer we get, the more discretionary our purchases become.”

An economy that produces products “to suit every taste and social identity” could become the engine that drives the disaggregation of society.  To the degree that consumption becomes personalized, the sharing of common goals and desires may become proportionately weakened.

Paul Roberts worries about this issue in an article for The American Scholar: Instant Gratification.  He worries that the ability to learn so much about us allows companies to market products to us before we even realize that we will desire them.  This leads to an inner focus on individual goals.  And the speed with which these products can appear and be delivered spoils us by generating the instant gratification that provides the title of his piece.

The development of a consumer-focused economy has begun to change how we view ourselves within society.

“Sophisticated, large-scale industrial systems assumed the task of making many of the things we needed, and also began to focus on the things we wanted. As the consumer economy matured, an ever-larger share of economic activity came from discretionary consumption, driven not by need but by desire, and thus by the intangible criteria of people’s inner worlds: their aspirations and hopes, identities and secret cravings, anxieties and ennui. As these inner worlds came to play a larger role in the economy—and, in particular, as companies’ profits and workers’ wages came to depend increasingly on the gratification of ephemeral (but conveniently endless) appetites—the entire marketplace became more attuned to the mechanics of the self. Bit by bit, product by product, the marketplace drew closer to the self.”

We now have the ability to construct the life we wish to lead rather than deal with the one the world would otherwise provide us.

“….the entire edifice of the consumer economy, digital and actual, has reoriented itself around our own agendas, self-images, and inner fantasies. In North America and the United Kingdom, and to a lesser degree in Europe and Japan, it is now entirely normal to demand a personally customized life. We fine-tune our moods with pharmaceuticals and Spotify. We craft our meals around our allergies and ideologies. We can choose a vehicle to express our hipness or hostility. We can move to a neighborhood that matches our social values, find a news outlet that mirrors our politics, and create a social network that ‘likes’ everything we say or post. With each transaction and upgrade, each choice and click, life moves closer to us, and the world becomes our world.”

This tendency to create a physical and social (often virtual) environment that satisfies our personal desires weakens our need to find satisfaction through interaction with the larger social environment.

“It’s as if the quest for constant, seamless self-expression has become so deeply embedded that, according to social scientists like Robert Putnam, it is undermining the essential structures of everyday life. In everything from relationships to politics to business, the emerging norms and expectations of our self-centered culture are making it steadily harder to behave in thoughtful, civic, social ways. We struggle to make lasting commitments. We’re uncomfortable with people or ideas that don’t relate directly and immediately to us. Empathy weakens, and with it, our confidence in the idea, essential to a working democracy, that we have anything in common.”

“Community and family are undermined by our consumer culture of individual gratification. Worse, our political system, the traditional arbiter between public and private interests, has been colonized by the same bottom-line impulse. Political parties boil their philosophies down into extreme brands designed to provoke target audiences and score quick wins. Voters are encouraged to see politics as another venue for personalized consumption. We’ve lost the idea that politics is the means to build consensus and an opportunity to participate in something larger than ourselves.”

Steven Quartz and Annette Asp provide a different perspective on what a focus on personal consumption has done to us and affected how we relate to others in society as a whole.  They produced an article for the New York Times titled Unequal, Yet Happy. They attempt to explain why the first Gilded Age produced social unrest and political activism while the current Gilded Age has been a relatively sedate affair.

“Despite soaring inequality, worsened by the Great Recession, and recent grumbling about the 1 percent, Americans remain fairly happy. All of the wage gains since the downturn ended in 2009 have essentially gone to the top 1 percent, yet the proportion of Americans who say they are “thriving” has actually increased. So-called happiness inequality — the proportion of Americans who are either especially miserable or especially joyful — hit a 40-year low in 2010 by some measures. Men have historically been less happy than women, but that gap has disappeared. Whites have historically been happier than nonwhites, but that gap has narrowed, too.”

“In fact, American happiness has not only stayed steady, but converged, since wages began stagnating in the mid-1970s. This is puzzling. It does not conform with economic theories that compare happiness to envy, and emphasize the impact of relative income for happiness — how we compare with the Joneses.”

The assumption that status brings happiness and lack of status breeds discontent seems to no longer hold true.  The explanation the authors provide is based on the claim that consumerism has driven us to create our own groups and “tribes” within which we can strive for status rather than striving within society as a whole.

“A new generation of ethnographers has discovered an explosion of consumer lifestyles and product diversification in recent decades. From evangelical Christian Harley-Davidson owners, who huddle together around a motorcycle’s radio listening to a service on Sunday mornings, to lifestyles organized around musical tastes, from the solidarity of punk rockers to yoga gatherings, from meditation retreats to book clubs, we use products to create and experience community. These communities often represent a consumer micro-culture, a “brand community,” or tribe, with its own values and norms about status.”

The authors concur with Roberts that this is a disturbing trend.  Income inequality that was intolerable a hundred years ago seems of no great importance today, despite the noise made by the Occupy Movement.

“In a 2013 poll asking Americans to name the most important problems facing the country, only 5 percent cited income inequality or concerns about the poor or middle class (though a recent Gallup poll did find that 67 percent of Americans were dissatisfied with the current income distribution).”

Consumerism has likely contributed to the fragmentation (disaggregation) of society in the manner these various authors describe, but something else had to precede it.  The mid 1970s would be about the time those who had experienced the wars and economic devastation that generated the need for social cohesion began to settle into insignificance.  The next generation, one that had no such experience, would seek to flex its muscles and provide its own way forward. 

Tony Judt has commented often on the sadness of watching nations that believed “we are all in this together” and created great and just societies based on that principle slowly sink into the nastiness inherent in neoliberal economics.  In his book Ill Fares the Land he provided this assessment of where we stand today.

“We no longer have political movements.  While thousands of us may come together for a rally or a march, we are bound together on such occasions by a single shared interest.  Any effort to convert such interests into collective goals is usually undermined by the fragmented individualism of our concerns.  Laudable goals—fighting climate change, opposing war, advocating public healthcare or penalizing bankers—are united by nothing more than the expression of emotion.  In our political, as in our economic lives, we have become consumers: choosing from a broad gamut of competing objectives, we find it hard to imagine ways or reasons to combine these into a coherent whole.  We must do better than this.”

Social cohesion is unimportant—until it becomes absolutely necessary.

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