The Consumption of Status and Signs

      A radical shift occurs in market orientated production when the primary cause for the production of goods is no longer to attend needs, but desires.  For Jean Buadrillard, this represents more than a shift.  It is a mutation.  We have left the “capitalist” mode of production to arrive in the competitive era in manipulation of signs.  [1]

       In all the advanced economies of the world, persons live in a world of objects laden with symbolic meaning.  Corporate logos form the most obvious and tactical aspect of object signification that acts in various ways.  It is readable and accessible to everyone.  It is a fact a code and it is closest thing we have to a universal language.

     These signs, which may conform to any object, form a field of complex social relations that replace social codes formerly proscribed to caste, class, kinship, race and gender.   But these signs, insofar as they do not correspond to needs, cannot create satisfaction. 

      Yet it is through this confusion of wants and needs as well as the creation of a social hierarchy based on signs that our system itself creates an almost unstoppable advance.  Each of us, as individuals, is engaged in a positional arms race in the field of consumable objects and signs.   In this way, for some, gadgets and “brands” may become more powerful motivational forces than even food and shelter.

     This passage from needs to signs puts the classical economist in a conundrum.  Both economic and politics alike are increasingly helpless at solving our problems through traditional means.  Because now so many problems may no longer be so easily isolated within the simple interaction of pricing and supply and demand.   Like currencies no longer backed by gold, objects themselves have lost there referents to use and function while the pricing of status objects have lost there reference to labor and cost of production.  Status objects are a subset of the larger construct of signification.

     Classical economic theory is lost when the shift of production no longer responds to needs but is a response to artificially induced desires.  The system now has a different infrastructural element.  MacMansions, obesity, walk in closets full of things we don’t need, monster trucks and tummy tucks are just a few examples of excessive consumption that follows of desires that cannot be satisfied.    

    Baudrillard contends our system of consumption based on desire does not create satisfaction, as it is “the rationalization of a process whose end lies elsewhere.”   It is a chaotic system that Baudrillard describes as a generalized hysteria based on lack. [2]

      There are many persons whose identity is absorbed within these codes, enabling them to confuse themselves with the products they own and desire.   To purchase anything less than name brands like Prada, Gucci, a Bentley or BMW, or vacation in The Hamptons every year, well, they say, “That wouldn’t be me.”   This may sound foolish, yet we all have brands that we identify personally with, some having a stronger attachment on us than others.  Problems arise when our bonds with brands and objects become stronger than the bonds between fellow human beings and become more important than our concern and commitment to the natural environment. 

      Throughout history, persons that are regarded as our greatest teachers have universally condemned the overvaluation of material life and possessions.  This theme is consistent across continents, cultures and centuries.  Religious profits such as Lau Tzu, Buddha, Christ, and Mohammed, to philosophers such as Plato, Hegel and Nietzsche, to modern era humanitarian leaders such as Gandhi, Martin Luther King and Mandela, provide a familiar refrain:  persons should be judged by their spirit, their concern for others, their capacity for works, and their character. 

     Just forty years ago, this critique was expressed eloquently by Martin Luther King in his famous, “I have a dream speech,”

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”  

     Forty years later, as race has declined as a discriminatory marker, signification as a discriminating mark has entered as a powerful force.  Devotion to brands as markers of distinction has become a form of psychological servitude that grips all of us, regardless of race, sex, or income.   Codes of consumption are the unwritten rules of interpreting signs.  A refusal to play along with the game can save a lot of money, but it does not relieve you from being subjected to its rules. 

 

     In the last decade, the term “bling” (or bling-bling) entered the lexicon of inner city African Americans to describe new, ultra conspicuous mode of signification.  Primarily driven by rap artists wearing large pieces of diamond studded jewelry and other accouterments, “bling” has been more recently appropriated by mainstream culture in the United States and Europe to describe nouveau riche attitudes and conspicuous consumption.    

    The purchase and gauche displays of these diamond crusted jewelry pieces have been linked to civil unrest and violence in Africa, prompting persons to call them “blood” or “conflict diamonds.”

    Bling crudely but correctly expresses the operative logic of signs exhibited across all social classes in the developed world.  It is only the latest permutation in signification, base, literal and intense, as much invidious (to inspire envy) as conspicuous.  Our current consumption paradigm is also a humanitarian and social crisis.  A new system of social signifiers is needed to better enable producers and consumers to communicate social values, challenging the existing code. 

     Until recently, corporations believed branding to be secondary to the production of goods.  In the mid 1980’s, this view was modified when management theorists suggested that corporations primarily produce brands as opposed to products.  This shift may be viewed as a natural outcome of a world where mass production created the means to produce goods that were virtually indistinguishable from one another.  As a result, effective branding became necessary to keep mass produced items from becoming commoditized as the commoditization of production was the surest means to destroy pricing power and profit levels.  Branding is the best defense to keep companies from competing on price and quality alone. 

     Phil Knight, founder and CEO of Nike Corporation has been widely seen as a leader building a global, brand based business.  Knight believed that their core focus was marketing and product development and believed that manufacturing had become incidental to the process of the production of goods.  Who made a product was no longer important.  The important part of a product was the presentation, packaging, marketing and sales.  In the mid 1980’s and 1990’s, no one was better at packaging and presenting their product than Nike.

     As more companies shifted their focus to the production of brands and not products, outsourcing production to contractors in low wage countries was rapidly accomplished.  The shift toward low wage production facilities combined with an increased emphasis on marketing and brand management.  This coupling enabled traditional markups between the cost of factory production and retail prices to soar.  Labor in countries like China, Vietnam, and Indonesia were so low they become almost a non factor in the total retail price of the product.  The lower cost of labor allowed for more money to be spent on advertising, brand management, and celebrity endorsements, elevating the power and reach of brands.

     Advertising and marketing budgets exploded, enabling sports apparel companies like Nike to pay increasingly large sums to highly visible professional athletes to endorse their products.  In 1992, Nike made headlines when it was revealed that the $20 million paid to Michael Jordan to endorse their trainers was more than the entire work-force of 30,000 persons employed by its subcontractors in Indonesia to produce them.  News of this became a public relations problem for Nike, who by then was one of the most successful global brands and top selling athletic apparel maker. [3]

     Against rising criticism, Nike made adjustments, raising wages in Indonesia by 25 to 30% and eventually moving all production to Vietnam.  Nonetheless, the Nike model has both endured and proliferated, with nearly all major brands moving production to Asia or Latin America.  During this process, social activists were quick to bemoan the disparate wages paid to factory workers in the developing world, overlooking the fact that wages paid to sales and customer service personnel at big box retailers faired hardly better.  At just above minimum wage, their income failed to provide a living wage for them as well.

     Still economists and management theorists alike came to defend the concept of branding goods as a way to solve “information asymmetries.”  Meantime, some savvy consumers began to observe something different.  They understood that most mass produced goods now came from factories in the developing world, primarily represented by China.  As a result, whether it is a Mattel Toy from Wal-Mart, a Nike shoe from Footlocker or a Moen faucet at Home Depot, these brands, in the minds of smart consumers, don’t command the edge that the used to.   In the new world of offshore outsourcing of production, the real information asymmetry was no longer solved by brands but is further confused by them. 

     In this new paradigm branded objects increasingly are not what they purport themselves to be.  For example, the label of a famous Italian designer may in fact be more the result of the hard work of Chinese seamstress or carpenter than the vision of the cultured craftsman from Italy.  Made in China and in other low wage countries by subcontractors, these brands, through powerful ad campaigns that often include sponsorships, celebrity endorsements, and slick New York ad agencies have distanced themselves from the material reality of labor and production.  Truthfully, to know the product, I need to know more about the factory floor and not the advertisement. 

    Again, scandals have erupted, with tainted food production found in name brand packages originating from China and lead based paint found in toys sold by Mattel.  These asymmetries underscore a new crisis within the production of branded items coming from contractors that are not controlled by the corporations that employ them.

     Nevertheless, renewed controversies over brands may modify conditions but will not overthrow the conceptual power.  To be sure, generic and private label products will continue to have their place and likely fair better in recessions than in growth periods.  But branded products will remain and thrive because, when effective, they solve not only information asymmetries but provide a social currency and powerful referent between consumers that interact with each other.   

     In 2004, James Allen and James Root of Bain and Company had an article published in the Wall Street journal, complaining of a “brand tax” being placed in large, global companies. 

      For famous-brand companies it must feel like few of their good deeds count.  Over the years, they've met demands for increased social and environmental responsibility within their operations. Now, activists say they're also responsible for what occurs outside -- everything from how independent contractors treat employees to the way suppliers extract raw materials.   For CEO's of household-name companies, this starts to look like an added cost of doing business -- a brand tax, holding renowned firms accountable for links in their value chains that they don't control.

      Yet as major corporations cry foul regarding excessive accountability, consider the premiums that recognizable brands can command in the marketplace.  In "low margin" food production, brand names command up to a 40% premium to store brands and a 10% premium to number two brands in a number of product categories.   This is stunning when one considers the fact many of the store brands are actually made by the very same name-brand manufacturers.  In many cases, house brands are simply re-labeling products with the same exact ingredients as the household brand name.

     Over the years, Consumer Reports has discovered some big names behind store brands by walking the aisles at an industry trade show, checking the displays, and reading through program guides that name-brand manufacturers use to promote their services to stores.  Recently, the results of a double-blind nationwide taste test released by Meyers Research found that participants overall preferred the taste of private-label products over better-known national brands by 51 percent to 49 percent.

     If they knew the that they were paying more for the exact same product offered by the store brand, many more consumers would likely choose store brands.  Others, meantime, despite knowing that the store brand is the same exact product as the brand name, would still pay more for the brand name product, simply because they like the social connotations associated with the store brands or generics.  They would be embarrassed to be seen buying them or embarrassed if friends or guests were to find store brands in their cabinets at home. 

    Store brands are beneath them in the same way persons of lower caste were in the past, proving social discrimination has not ended; it has only shifted from persons to things.