At 15:02 17/12/2003 -0800, you wrote:
Keith,
It is normal for new things on the market to have a high price at first. Then as sales pick up, the price drops. Then others get into the act and the price plummets.
No. I suggest it isn't normal. The vast majority of new consumer goods are usually variants on existing goods or what I call "infills" (e.g. the attempted introduction of the fish-knife in Victorian England). They are priced competitively (cheaply) from the start -- or with a small premium at the very most to pay for intitial introductory costs.
What you're talking about above is what I term a "stratum" good -- which is either a genuine innovation or a brave attempt to create one. These are only a small minority of goods -- maybe only one per generation or one per decade -- which sweep vast swathes of investment before and around them as they work theri downwards through all the social strata. Yes, they start as high as the market will bear. IBM's original mainframes for example. (I appreciate they weren't consumer goods but this example will serve for now.) On the other hand, IBM's first PCs were priced quite reasonably in order to be easily afforded by the intelligentsia (well off but not excessively so).
The characteristic of today (and very recently, too) is that electronic goods (the majority of today's stratum goods, or attempts at them) swoop down very quickly indeed from middle-class prices to working-class prices.
Keith
As I wrote earlier, I have often been a buyer of new things that interest me. However, this is hardly for status (or stratum) reason. Who would I show my statusto?
I hardly think that you would not let others know of your purchase! I have noticed that on this list we are fully apprised of your latest technological acquisition!
Keith
I buy things because they take my fancy, not for status. I suspect a number of others do the same. However, I have been in many houses in which the residents take me around the house showing me what theyve got. I am supposed to make sounds of awe at their collections of ________ .
But, the high price of an initial something, dropping to a lower, then rock-bottom, price is a normal economic event.
However, I havent got a cell-phone (a mobile). Think of the utmost snobbery in this day and age in NOT having a cell-phone.
Harry
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From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of Keith Hudson
Sent: Tuesday, December 16, 2003 12:10 AM
To: [EMAIL PROTECTED]
Subject: [Futurework] From status to stratum
213. From status to stratum
Two articles which Karen Watters Cole has sent to us recently -- the review of Virginia Postrels' book, The Substance of Style and the Washington Post article, "Acquiring Minds" by April Witt, has caused me to think furiously that my term, "status good" doesn't help my case. "Status good" is too easily confused with what we normally term a "status symbol" or what the economist Fred Hirsch calls a "positional good". So I'm now going to call my term, "stratum good".
However, the definition of a "stratum good" is the same as before. It is a consumer product which is initially expensive -- and therefore denotes a fairly high degree of status -- but which is then capable of being mass-produced and, in due course, becomes affordable by all the social strata as it becomes cheaper. When it is affordable by almost everyone, then it loses its former cachet and becomes an ordinary "consumer good". (About ten miles from here there is a pub in which lived the man who invented the first flushing lavatory. No, it was not the Victorian gentleman, Thomas Crapper, but someone long before him whose name I have forgotten. At first, in Tudor times, the flushing lavatory was installed only in stately castles and palaces. Today the former stratum good has become a consumer good. It took a long time but it finally made it!)
I follow with an excerpt from April Witt's article which is really all about status symbols (positional goods). They are bought in an attempt to show that the purchaser has high status and, usually these days, such goods are branded goods, such as Rolex, Gucci or Louis Vuitton which are supposed to be very exclusive. (Of course, because these particular positional goods are so artificially marketed, then they are obviously targets for counterfeiters. "Real" positional goods in the sense that Fred Hirsch meant in his book, Social Limits to Growth, are things like gracious manor houses in beautiful countryside and private sheltered beaches which will always be rare and can't be imitated or counterfeited.)
I'll end my introduction by quoting the historian Gary Cross who, in his book, An All-Consuming Century: Why Commercialism Won in Modern America, writes the following (the brackets are mine):
"This society of goods [of status symbols] is not merely the inevitable consequence of mass production [of ordinary consumer goods] or the manipulation of merchandisers. It is a choice, never consciously made, to define self and community through the ownership of goods."
He's correct, but he's only halfway there, and he hasn't derived the full economic consequence of all this. Yes, the choice of status symbols (and also of stratum goods) is certainly meant to define one's place in the community (though I'm not so sure that it is "never consciously made"). But it's not a modern phenomenon -- as Gary Cross implies in the title of his book -- but something that has happened ever since early man started trading for pigments and gold for personal adornments, and that was at least 75,000 years ago. The use of such status symbols (and also of stratum goods) rests firmly on deep genetic instincts of rank and status which are not only necessary for the organised protection of a small social group against predators but also serve as indicators to young females as to which males are more likely to give them and their children economic security.
The whole of our economic system rests on the ability of our frontal lobes to interpret almost anything that is rare and novel as able to impart status. If it is rare and novel only then it is likely to be a status symbol (positional good). If it is rare and novel and has a degree of usefulness and is able to be mass-produced, then it is a stratum good, able to be afforded by everybody in successive periods of production.
The high profits made from the supply of status symbols (positional goods) is a relatively microscopic part of the total economy, with only a little benefit trickling down to those who were involved in making and marketing them. However, because maximum profits can be made from stratum goods as they successively work their way downwards, then these are the items that produce further investment both downwards and sideways (into other similar goods) that stimulate economic growth. Once stratum goods have reached the lowest socio-economic levels then the profit margin is so very small that they are hardly able to invest in normal maintenance of their production. This is where the car industry finds itself today -- at least in the developed countries -- who are staving off bankruptcy from year to year. (There'll still be vast profits to be made in the "catch-up" countries such as China.)
There is the distinct possibility that the middle class which usually initates the purchase of stratum goods simply doesn't have the time or energy during their normal working week to buy any more. So, therefore, the "consumer society" of modern times may be coming to an end. At the present time, it is quite obvious that politicians, central bankers (suchas Greenspan) and economists are very worried indeed. Although economic growth is supposed to be healthy (in America and the UK -- nowhere else), interest rates are being kept absurdly low because the aforementioned people are frightened what may happen if they are raised. Unconsciously I think they are recognising that the end is nigh.
That is, the end to rampant consumerism. But if consumerism is really and essentially about status then we don't need to keep on making more and more consumer goods in order to find that magic bullet -- the next stratum good. If we could re-arrange the ways in which we live and work so that we can re-create community, then there'll be more than enough status -- and social inclusion -- for everybody.
Keith Hudson
<<<<
ACQUIRING MINDS
Inside America's All-Consuming Passion
April Witt
A blonde with a perfect blow-dry flips through the pages of Us magazine on the morning shuttle to New York. She's not interested in reading about celebrities; she just wants to check out what they're wearing. "I have this dress," she says, pointing to a photograph of actress Jada Pinkett Smith wearing a $2,300 bronze-toned satin Gucci cocktail dress with a wide belt shaped like a corset.
The fall shopping season is almost over, and Jamie Gavigan, a colorist at a Georgetown hair salon, is heading to New York City on one last fashion mission. She wants to find a killer cocktail dress and satisfy her special footwear urges at the Manolo Blahnik shoe salon.
Jamie shops in Washington, too, at Neiman Marcus and Saks Fifth Avenue and some pricey boutiques. But two or three times a year, the 36-year-old single mother flies to New York to more fully indulge her fashion passions. It's her reward for standing on her feet nine hours a day, mixing chemicals and working straight through lunch to earn the six-figure income that makes these shopping expeditions possible.
When the shuttle lands at La Guardia, Jamie hops into a cab and heads to her favorite department store, Barneys, at 61st and Madison, one of the culture's new cathedrals, where the affluent bring their soaring aspirations for better living through luxury shopping. "It's all good here," she says. "It's disturbing, isn't it? I like everything they have."
On her feet, she's wearing $750 Manolo Blahnik black suede boots with four-inch-high stiletto heels. On her arm, she's carrying a blue Birkin tote bag by Hermes de Paris. If you could buy one, which now you can't, prices for the Birkin would start at $5,000 for plain leather and climb to more than $70,000 for crocodile renditions with diamond-encrusted hardware. Swamped in recent years by demand for the bag, Hermes had been asking would-be customers to put their names on a waiting list. Jamie waited two years for her Birkin to arrive. Last year, Hermes stopped adding names to the list.
In Barneys's airy, light-filled fine jewelry section, Jamie bends over a display case and draws in her breath, the sound of sudden desire. Her long hair spills forward, and her Hermes handbag thuds softly against the jewelry case as she gazes upon a brilliant diamond brooch shaped like a starburst. At its glinting center lies a round glass compartment filled with dozens of tiny, loose diamonds. It looks like a profane rendition of a monstrance, the Roman Catholic vessel in which the consecrated Host is displayed on the altar for the adoration of the people.
Jamie wonders what the loose diamonds would sound like if she could shake them like so many flakes in a snow globe. But at $30,000, this bauble is beyond her reach.
"I bet it sounds good," Jamie says, smiling wistfully and adjusting her pale blue pashmina shawl. "I have a feeling it sounds really good."
Deny it, outraged, if you will. Rail against unchecked materialism like some puritanical scold. Pray for the soul of a nation wandering lost in the malls, more likely to shop than to vote, volunteer, join a civic organization or place a weekly donation in the collection plate of a local house of worship.
Consumerism was the triumphant winner of the ideological wars of the 20th century, beating out both religion and politics as the path millions of Americans follow to find purpose, meaning, order and transcendent exaltation in their lives. Liberty in this market democracy has, for many, come to mean freedom to buy as much as you can of whatever you wish, endlessly reinventing and telegraphing your sense of self with each new purchase. Over the course of the century the culture of consumption and American life became "so closely intertwined that it is difficult for Americans to see consumerism as an ideology or to consider any serious alternatives or modifications to it," historian Gary Cross writes in An All-Consuming Century: Why Commercialism Won in Modern America. "This society of goods is not merely the inevitable consequence of mass production or the manipulation of merchandisers. It is a choice, never consciously made, to define self and community through the ownership of goods."
Washington Post -- 14 December 2003
Keith Hudson, Bath, England, <www.evolutionary-economics.org>
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