A Pessimist's Simplistic Historical Perspective on the Fourth Wave of Consumer Protection

Article excerpt

The current severe economic downturn, coupled with scandals of business misfeasance and malfeasance, raises expectations for another surge in the U.S. consumer protections. Because it happened three times before, the human temptation to seek historical parallels readily fuels either optimistic hopes or the paranoid ravings of fact-free commentators on a broadcast news network. A simplified historical perspective brings an odd mix of hopeful optimism and reluctant pessimism.


Four decades ago, "consumerism" became a broadly accepted term for the political and social movements seeking to protect consumers by requiring businesses to provide nondeceptive advertising, product guarantees, honest packaging and improved safety standards. But over the decades, the most common uses of the term morphed back to Thorstein Veblin's 19th century criticisms of consumption itself, what he described as the modern world's economic order based on the systematic creation and development of widespread desires to purchase mass-produced products in ever greater amounts. In this sense, consumerism becomes synonymous with the excessive shopping which is periodically referenced as the true religion of the modern secular world. In a third definition found in modern business usage, consumerism became a positive marketing term, focusing on what consumers want to buy and a managerial determination to make it available.

At the founding of JCA, academic research on consumer affairs referenced studies of the consumers' interests in the marketplace, research conducted from the customer point of view. Yet today, in publications dedicated to business management, consumer studies become market segmentation, the analysis of what interests groups of present or potential customers, even though research of what interests groups of consumers is not necessarily studies of the consumers' interests.

This changing variety of meanings indicate the different ways a consumer interest can be defined. And so it was through time. A simplistic shorthand perspective of past consumer movements tells an evolving tale of how businesses are seen in relation to their customers. Each prior wave of consumerism is noted in textbooks for a precipitating scandal during a concurrent economic recession or depression that resulted in eventual political reactions. The nature of those political or legal remedies was rooted in the views of the times, but a mini-review of those past movements provides an understanding of hopes for a new consumer movement or pessimism for its limitations.

Most regular readers of JCA are probably familiar with the detailed history of past consumer movements. But to make the point, a retelling is necessary. I will try to be brief.

In the first period of consumer protection in the early twentieth century, the focus was not on protecting consumers per se, but protecting the system of competition, or rather, an idealized view of "perfect" competition. Because the industrial world was becoming increasingly complicated, consumer education was part of these early movements. Educated and informed consumers were necessary for the economic system to work, so consumer literacy as a shopping skill enabled people to act on a somewhat more equal footing with product sellers.

This meant that the first wave's laws and regulatory agencies that many decades later became the focus of consumer protection activism were originally established to help protect the marketplace, not people. Businesses were getting too big, so anti-trust laws sought to make them smaller, or at least to deter companies' ability to acquire some form of monopolistic power. Advertisers desired truth in advertising laws, as proposed by the trade publication Printers' Ink Model Statute in 1911, because the most egregious false advertising of the time by patent medicines harmed the credibility of all messages. Despite courtroom claims that no one believes inflated advertised claims of product superiority, advertisers want their messages to be believed (Preston 1975, 1994). …