Academic journal article Review of Social Economy

Fashion Dynamics and the Economic Theory of Clubs

Academic journal article Review of Social Economy

Fashion Dynamics and the Economic Theory of Clubs

Article excerpt

Casual observation of expenditure patterns makes it obvious that many people buy things in order to be "in fashion." At the same time, it is equally obvious that fashions are frequently changing. On the surface, there appears to be a contradiction between these two phenomena. The desire to be "in fashion" is clearly emulative behavior. Fashion-conscious individuals select clothing (or cars, mustard, music, soap, etc.) on the basis of what others are wearing (or driving, eating, etc.). This implies that individual tastes are shaped, at least to some extent, by a desire to be like others. To put it differently, the satisfaction that individuals derive from purchasing fashionable items stems, at least in part, from being able to be a part of the group. However, fashion changes are self-evident not examples of emulative behavior. Creating a new fashion is an attempt to be different, to set one's self apart from other people. Thus, one is led to the conclusion that fashions exist because people want to "fit in" and be like other people while fashions change because of a desire to be different from other people.

In The Theory of the Leisure Class, Thorstein Veblen resolved this apparent paradox and showed how these two phenomena can coexist. To state his position briefly, Veblen argued that the "usual basis of self-respect is the respect accorded by one's neighbors" (1899, p. 38). In this context, invidious comparisons are commonplace, and purchases are made with an eye toward "living up to the accredited standard of taste and reputability" (Veblen, 1899, p. 119). Given that the "accredited standard of taste" is what is acceptable to the community, purchases are made with an eye toward emulation.

However, there is more. Being able to "keep up with the Joneses" is good, but, for some consumers, being ahead of the Joneses is better. This is because "the end sought by accumulation is to rank high in comparison with the rest of the community in point of pecuniary strength" (Veblen, 1899, p. 39). Moreover, accumulation by itself is not enough: "In order to gain and hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence" (Veblen, 1899, p. 42). As a consequence, the practice of conspicuous consumption arises. Some of those who can afford it attempt to separate themselves from the bulk of the population by (conspicuously) consuming new and different commodities. Meanwhile, many of the people "left behind" will strive to keep up with the newly established standards of taste. However, this emulation by the masses means that the new fashions will no longer serve the purpose for which they were created (i.e., separating the "trend-setters" from the rest of the population). Thus, still newer fashions will emerge, and the cycle will continue.

This interpretation of Veblen's ideas is not new (see, for example, Rutherford, 1987). Unfortunately, orthodox economists have virtually ignored the arguments of Veblen. The reasons for this are complex and include factors such as differences in ideology. However, the central reason has to do with differences in methodology. Veblen's historical, narrative, common-sense approach was simply incompatible with the axiomatic, mathematical style of modern mainstream economics. Indeed, there is still a wide methodological gap between social economists, who are concerned (as was Veblen) with the role of the social milieu in value creation, and orthodox economists, who are content to take consumer tastes and preferences as "givens." As Dugger has pointed out, questions such as, "Where do values come from?" are "the meant and drink of social economics" (1989, p. 135). Nevertheless, mainstream economists are still content to assume that individual "utility functions" are exogenous. It is no surprise, therefore, that mainstream economics has no theory of fashion changes. In other words, an economic phenomenon which involves untold billions of dollars in expenditures and countless hours of peoples' time annually is deliberately put beyond the scope of mainstream economics because the problem has not been tractable using the accepted methodology. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.