The term consumerism may be understood using four distinct interpretations. These interpretations are as follows: (1) the movement within society and government to protect consumers from defective or otherwise unsafe products; (2) the demand-side economic theory (usually associated with Keynesian economics), which states that increasing consumption of consumer goods drives economic growth as opposed to encouraging higher rates of saving as a national economic policy; (3) a societal state in which happiness or success is somehow equated with increased consumption and a concomitant creation of limitless demand; and (4) a combination of the second and third meanings in which an emphasis of advertising and marketing is concentrated on the creation of consumers within a culture that embody limitless demand. Each of these meanings of consumerism has specific and important application in the understanding of business and society and, ultimately, in our collective ability to pursue sustainability.
The first meaning of consumerism can be traced to the Latin maxim caveat emptor (buyer beware). In the United States, government and societal actions to protect consumers predate the creation of a consumer protection agency within the Department of Agriculture in 1862. As more citizens became dependent on others for food and essential materials for daily life, consumers of these products began to demand standards of quality and a mechanism for the assurance of the safety and wholesomeness of these products. It was not until 1906 that legislation was passed to create the first version of the Food and Drug Administration (FDA). This government agency has grown in importance and purview as the variety of products and dependence on commercial sources for these products has increased. However, the FDA covers a bounded spectrum of consumer goods; in 1914, the Federal Trade Commission was created to regulate other types of goods and services. Still, for many, the true start of modern consumerism dates to the 1960s when consumer activists such as Ralph Nader began to influence public perception, culminating in legislation of, for example, the Consumer Products Safety Act of 1972 and the earlier Motor Safety Act of 1966. Since that time, there have been many other actions to protect consumer interests; for example, producers and service providers have lobbied Congress to reduce restrictions and liability standards on the grounds that it reduces competition and it restricts consumer choice.
The second way that the word consumerism is used is to express the idea that increasing consumer demand can be the engine that drives a healthy national economy. While this is an oversimplification of one element of Keynesian economic theory, it is sufficient for our purpose of understanding this usage of consumerism. The important contrast of this usage of the term consumerism with the first usage is that there is a shift away from saving money in banks as a national priority, which is an important element of capital formation in early capitalism, to an emphasis on consumer spending as a means of economic stimulus and continued economic growth. This manifestation of consumerism as put into national policy is exemplified by the exhortation of President George W. Bush for consumers/citizens to spend the tax surplus that he rebated and/or cut for some taxpayers. The idea was to spend our way out of an economic slowdown after the revaluation of stocks and resultant portfolio deflation of 2000 and in the wake of national trauma in 2001.
The third way that the word consumerism is used expresses the idea that increasing material consumption increases personal and societal well-being. As with the first meaning, this definition reframes an ageold debate stretching back to early Buddhism and Christianity. In both these traditions, material wealth is presented as an obstacle to true happiness and contentedness. In contemporary society, we are confronted with a confluence of issues as we are encouraged to tie happiness and status to ownership of material goods thus creating the pressure for cheap consumer goods. As a result, contemporary societies can experience internal conflict, as, for example, when premium priced goods are marketed to populations that often exist below or at the poverty line. Societies that experience this conflict are then forced to consider the consequences of the demand for cheap and abundant consumer goods in terms of the need for sustainable practices and fair hourly wage rates. The consumer society in the United States of America is confronted with declining employment in the manufacturing sector, including substantial losses of market share in entire industries, such as textiles and consumer electronics, and huge workforce reductions by major companies in the automotive sector (once a bellwether for the health of the entire U.S. economy).
In addition, there is a growing national trade imbalance with foreign trading partners, most notably China. Finally, in terms of national and global sustainability, some would argue that any practice that advocates unexamined consumption of goods and services renders the concept of sustainability unattainable. The fourth way that the word consumerism is used embodies the combined mechanism to achieve both the economic goal of fueling growth by ever-increasing demand as well as the cultural state of equating selfworth and happiness with consumption. For some believers of this type of consumerism, sometimes presented as an implied state of grace, goodness is tied to limitless consumption and the ability to practice this behavior. Advertising and marketing executives are assigned the task of quantifying and qualifying the desires of target markets and packaging consumer goods in ways that fit those needs. However, after generations of improved marketing and advertising techniques, some scholars would argue that demand is being created for consumer goods and not actually serving real needs. In this fourth understanding of consumerism, it has been suggested that creating unlimited and diverse demand through media campaigns has made the act of consumption the product, instead of providing knowledge about items people need.