Depression Modern

[8 January 2009]

By Rob Horning

It was thought to be impossible, as impossible as house prices falling simultaneously nationwide, but the American consumer has stopped spending. Even when the savings rate went negative in the midst of the housing bubble, many economists took to the op-ed pages to proclaim this perfectly rational and nothing to fear. People were saving through appreciating asset prices, we were assured. Consumer-led recessions were things of the past; we’ll never run out of money.

Now asset prices are falling across the board. And with retail spending recording a record drop in October, the economy has officially begun to contract, with GDP shrinking in the third quarter of 2008.

In the past, it was presumed that we could spend our way out of recessions, this one is different. Economist Nouriel Roubini has compiled an exhaustive list of 20 reasons, but they basically boil down to what Morgan Stanley analyst Stephen Roach argued in a New York Times editorial on Black Friday: “In an era of open-ended house price appreciation and extremely cheap credit, few doubted the wisdom of borrowing against one’s home. But in today’s climate of falling home prices, frozen credit markets, mounting layoffs and weakening incomes, that approach has backfired. It should hardly be surprising that consumption has faltered so sharply.”

We are becoming poorer and probably feel poorer than we are, judging by consumer confidence figures. Even Best Buy’s CEO declared recently that “rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen.” Former financial analyst and tech-bubble booster Henry Blodget concurs in this post:

For 30 years, we piled on debt and then spent almost every new penny we got. This borrowing spree was made possible by a smorgasbord of no-money-down lending products and ever-appreciating asset prices. Unfortunately, the situation has now changed. The lenders who created those products have now been demolished, and asset prices are falling fast. And this is leaving American consumers with no choice but to cut back.

Not long ago, it seemed as though nothing could make us give up consumerism voluntarily—not impending global warming, not our awareness of the futility of quickening our pace on the hedonic treadmill, not the tech crash, not the blight of hipsterism, not the forced nostalgia, not the hypermediation and reification of every aspect of life, not anything. So what happens now that the impossible has become reality?  How will American consumers change their behavior, now that it appears that they have no choice? And should we be pleased about these apparently inescapable changes?

Certainly mainstream economists aren’t happy. The consensus is that demand must be stimulated as fast as possible to fight what John Maynard Keynes called the paradox of thrift. If consumers respond to difficult economic times by prudently trying to save more, collectively they will assure demand will remain low and thereby deepen the downturn. Responding to news that retail sales were hurting, the Economist‘s Free Exchange blog, offered this analysis:

It doesn’t make sense that everyone else is cutting back. Yes, many people have lost their jobs. Some other have founds themselves with enormous debt burdens they’re struggling to meet. But many households, maybe even most households, aren’t facing seriously different circumstances than they were six months ago. And yet their behavior is changing, and those behavioral changes will themselves generate reductions in spending, investment, and ultimately employment. Good labor will find itself idled because folks like me are nervous, and for no other reason.

The disappointment is palpable—all these silly consumers letting mere news reports throw them off their shopping game—but nonetheless the analysis is a bit baffling. Poor risk management has led to a crisis, therefore we need to throw more caution to the wind and find ways to spend more money, whether or not we actually have it? It’s odd that we would be encouraged to spend at the very moment that we are being forced to accept the painful reality that our consumption level was unsustainable. With more “recovery packages” on the horizon, the government wants encourage us to continue the infamous Bush program of patriotic shopping: For the good of country, we must consume. Otherwise we let the economy down. 

Beyond the mixed messages, such analysis reduces us unpleasantly to our social roles as consumers. Contemplating the paradox of thrift, it’s hard to escape the conclusion that frivolous consumption alone has assured the growth that made us all more well off. Though there has been much recent talk about the housing and credit bubbles, the past few decades have been dominated by a consumer-spending bubble, in which Americans systematically spent more than they earned. We’ve proven all too willing to be led into status-consumption trends that are as profitable for manufacturers as they are conspicuously wasteful and inefficient in use—SUVs are the most conspicuous example.

Such behavior may have helped keep our economy growing, but along the way we adopted a new ideology toward consumer goods. We had to convince ourselves (or let ourselves be convinced) that we need to consume all sorts of products and media as a fundamental way of expressing our identities. To this end, every consumer good has been stylized and branded, and made easy to consume quickly and throw away. Convenience has become an end in itself, as it allows us to more expediently consume more. Hyperdesigned, low-cost goods are hailed as a magnificent social achievement, since they give us all affordable access to pretty things to make us feel special. As a result of these gradual adjustments, consumerism has become the way to secure social approval and communicate our sense of self to others, and maybe even to discover for ourselves who we want to be.

This is not simply because owning stuff makes us feel good. Because of our fluid social structure and our unshakable belief in our chances of upward mobility, our shopping may be less a matter of pleasure and optimism than fear, as economist Jon Wisman suggests in a paper called “Household Saving, Class Identitiy, and Conspicuous Consumption.” Drawing on surveys that show that Americans believe that they forge their own status, Wisman argues that they consequently experience enormous pressure to display it through goods in order to authenticate it. The standards of consumption achievement are set by advertising and entertainment, which converge to make luxury life seem customary, virtually obligatory. What might pass innocently as celebrity gossip or useful consumer tips is actually our indoctrination into the nuts and bolts of status anxiety. Compelled to groom our collections of consumer goods to prove we are keeping up, we lose sight of other methods for securing social recognition, and these begin to wither away.

In fact, with this long training in the pleasures of shopping, we have developed a corresponding skepticism toward the alternatives for garnering social recognition, regarding other sorts of identities as peculiar, if not dangerous. I think of the near-instinctual visceral contempt I sometimes feel for people who brag about being above fashion or watching TV or eating sugar or whatever. Oh, aren’t they so special. If you reject the design revolution, you are obviously some sort of spoil-sport elitist who detests the democratization of fashion. Next, you’ll be calling for bureaucrats to tell everyone what they must wear.

Echoes of this sentiment are detectable in reporting on consumer confidence. What gives us the right to find other things to do besides shopping? Have we lost our minds? Why can’t we be more compliant and “optimistic”? Of course, optimistic is meant as a compliment, as opposed to being used to suggest that you are a useful idiot or a rube. For example, in a 12 November New York Times article David Leonhardt quotes Andrew Kohut, president of the Pew Research Center,  who assures us that “what the American economy has going for it is the innate optimism of the public. Americans get optimistic at the drop of a hat.” We don’t need a reason. We’re just like dogs in that way—our masters will put something good in the bowl; we just know it.

But why should shopping rather than saving be seen as an expression of optimism? “I am feeling very positive, I’m going to go buy a TV set”? A determination to buy now seems to express no optimistic faith in the future. And if you read consumer confidence measures as a kind of proxy for “confidence in the consumer way of life,” high levels suggest a vote of no confidence in the alternatives to shopping as the meaning of life: the possibility of meaningful work, or in finding joy in making and doing rather than spending and getting. Thus, when consumer confidence falls, it’s tempting to assume that people suddenly enjoy consumption less. Falling consumer confidence seems like it should mean rising personal confidence. But that’s not what the consumer confidence surveys are designed to capture. Instead, they reveal that consumers just aren’t confident about having a healthy enough cash flow to support the spending they’ve been dreaming about.

But now those dreams must be put on hold as we all brace ourselves for what has been labeled the New Frugality. In August, Merrill Lynch analyst David Rosenberg argued “that fashions are going to change… We’re going to be living in smaller houses, driving smaller cars and living more frugally.” And since hitching our collective identities to the vagaries of affordable luxury is not looking so good right now, the Financial Times‘s Lex column wondered on 13 November whether “conspicuous asceticism” might become the “new ostentation,” producing “structurally lower levels of demand across all areas of discretionary spending.”

Some are very excited by this prospect. An unlikely alliance of conservative commentators, financial analysts, environmentalists, and consumer-culture skeptics have all expressed hope that the strong medicine of economic recession will last long enough to effect real change in consumer behavior, something that no amount of anti-consumerist blog posts seems likely to have accomplished. Back on 10 June, the New York Times‘s David Brooks argued that the US needed to “shift values. Franklin made it prestigious to embrace certain bourgeois virtues. Now it’s socially acceptable to undermine those virtues. It’s considered normal to play the debt game and imagine that decisions made today will have no consequences for the future.”

In Le Monde, French philosopher Alain Badiou was arguing something strangely similar, that the financial crisis has prompted a “return to the real” from a collapsing economic system that “presupposes that people be transformed into spoiled children, eternal adolescents, whose existence merely consists in changing toys.”

In a Washington Post article (reposted here) Joel Kotkin celebrated the possibilities for a “new localism” in the coming recession. In a 25 November blog post, Wall Street Journal reporter Jason Zweig wrote, “After a long and lazy boom, America has become a society that squanders just about everything, including money. If this crisis ends up changing that, we will be a better nation for it.” With the long national nightmare of prosperity over, we can become a nation of prudent savers again and be a bunch of close-knit and conscientious Ben Franklins and Abe Lincolns once more.

Photo (partial) of Aldi district manager by Xiaomei Chen from

If recession is such a great thing, maybe we should have initiated a financial conflagration a lot sooner, right? A few firings and foreclosures to get the virtuous ball rolling—any volunteers?

Preaching the silver lining of austerity seems more than a little dubious, a matter of letting nostalgia for a fictitious golden age blind us to real pain of deprivation. Prosperity is not the problem with consumerist societies, and there’s nothing wrong with a high level of consumption. The problem with consumerism is its marketing-supported ideology, which leads to environmental abuse, intensified stress, political inertia, and isolated individuals who are perpetually unsatisfied. But these problems won’t be cured by our all being denied the potential to consume.

In a post at the American Scene, Matt Frost calls this the Nothing But Flowers fallacy (after the Talking Heads song): “the tendency to count on economic disruption to bring about salutary social change.” Rather than open a space for us to be more involved with the community, sudden changes in our standard of living will probably introduce more anxiety and friction into everyday life. On his blog, Gary Becker summarized some of the psychological effects of recession: “Surveys of reported happiness find that workers who become unemployed are less happy than they were, and persons whose incomes have fallen reported a decline in their happiness, at least initially. Divorce rates and even suicide rates also tend to rise during major recessions, as does crime, discrimination against minorities and immigrants, and pressure toward greater protectionism.” Already the recession is taking its toll on well-being, according to data economist Justin Wolfers presented on the New York Times’s Freaknomics blog.

Even if we make salutary changes to our lifestyles, it may not make much lasting difference if we feel awful about having to make them. This misery may merely strengthen our resolve to make fewer compromises and be even less prudent in the next upturn in the cycle.

Maybe we could learn to find satisfaction in taking our time, buying less, reusing what we already own, joining voluntary-simplicity movements, making our own household products, and all the rest. Evolving economic conditions may establish new definitions of what “normal” is. For example, extreme commuting could recede from the threshold of acceptability and will again be considered way beyond the pale.

But for better or worse, when given the opportunity to detach from the community and cocoon with consumer goods, our parents seized it. It’s not clear why we would feel any better about being forced to reverse that choice. As Frost puts it,

If we arrange our families and our living spaces poorly when affluence gives us choices, we are unlikely to suddenly flourish when those decisions are forced upon us. Hard times won’t compel Americans into becoming their better selves, and if we are heading into some bleak days, it’s best that we all understand that in advance.

So rather than indulge in daydreams about all the eco-friendly and post-consumerist benefits the New Frugality may bring us, it may make more sense to first think about what we’ll lose. In the Boston Globe, Drake Bennett wrote a speculative essay about what life in the US might be like if a new Depression really took hold. Much like the champions of the New Frugality, he at first traces the lineaments of an anti-consumerist paradise. The new frugal America will have a thriving thrift infrastructure. “Lean times might kill off much of the taboo around buying hand-me-downs, and with modern distribution networks—and a push from the reduce-reuse-recycle mind-set of environmentalism—we might see the development of nationwide used-clothing chains.

But it didn’t require a recession for such chains to develop. They already exist, especially if you count Goodwill and the Salvation Army as secondhand-store franchises. I’ve been to Savers and Value Villages from Seattle to Phoenix to Providence to Montreal. The thrift infrastructure has been building up for years, but it is premised on other people not being frugal, not valuing their belongings, and giving them away for nothing. Thrift stores rely on people replacing perfectly useful things with new versions out of a sensitivity to fashion or a burning itch to spend. But with economic hard times, the fashion cycle could, in theory, slow down. People may suddenly discover all this extra use value in goods they might otherwise have discarded, and only the truly worthless junk would make it to Savers. It may be that second-hand stores thrive in flush times and stand to be depleted in a downturn, from an initial surge of customers and then a drying-up of quality donations.

But if our culture’s return to use value threatens thrift stores, at least it might also take out the brands. Bennett writes, “We might see more former lawyers wearing knockoffs, doing their back-to-school shopping at Target or Wal-Mart rather than Banana Republic and Abercrombie & Fitch.” Sure enough, a Wall Street Journal story from 6 November reported on how consumers are suddenly discovering generic products, offering several suggestive, near-comic anecdotes to illustrate how brands could be losing their hold over us:

When Summer Mills visited her local CVS drugstore recently, to save a few dollars she bought the store-brand facial scrub rather than the Olay version she normally uses. “I thought I’d be able to tell the difference, but I couldn’t—I looked at the ingredients and they seemed almost the same,” says 30-year-old Ms. Mills, a stay-at-home mother of two in Ardmore, Okla. On her next shopping trip, “I’m going to buy the store-brand moisturizer and cleanser—it’s less money.”

You don’t say.

It seems silly that people would need to discover that there’s little qualitative difference between branded and unbranded goods, but that recognition is possibly reassuring nonetheless, since it guarantees we’ll experience no actual austerity. We can basically get as much stuff as before, just without the brands. In flush times, we generally ignore this obvious fact about brands—that they don’t alter the product so much as change what others think of us for using it—because it impedes their main appeal. Brands let us experience the lifestyle marketing for various products vicariously; they allow us to turn the soap we use into an expression of our inner truth, they make buying a new shirt our momentary entrée into a world of glamour, they make our paper products seem to secure our spot in polite society.

There’s no reason to believe that in a era of frugality, the need to signal one’s identity would become any less pressing. Does that mean that during recessions, everybody becomes more the same, since they lack the luxury goods with which to express their distinctions? Without branded goods to differentiate ourselves, would we feel ourselves merging into a Soviet shade of gray?

The impact of a depression, then, may be gauged not in terms of material deprivation—not by whether we are eating dog food and taking up residenece in Hoovervilles— but how expansive our identities can become. Bennett cites anthropologist Grant McCracken’s “surging vs. dwelling” explanation of consumer behavior:

The difference, as he wrote recently on his blog, between believing that the world “teems with new features, new things, new opportunities, new excitement” and thinking that life’s pleasures come from counting one’s blessings and appreciating and holding onto what one already has. Economic uncertainty, he argues, drives us toward the latter.

Consolidation, “dwelling,” is a matter of retreat to more traditional self-definitions—family, religion, etc.—what McCracken dubs “homeyness” and what others would possibly call domestic suffocation. “Surging” is embracing the material richness of capitalism as a means to do some freelance self-fashioning along the lines dictated by our dreams, or more likely, by what seems to be endorsed in the larger world of mass media. This subjects us to various forms of media manipulation, but at least we are fooled into thinking we are autonomous.

The danger in a depression now is not so much that people will starve but that we will be deprived of the usual consumerist tokens we have come to depend on to express our identity. We won’t be able to afford to spend on brand distinctions and will in effect feel declassed. Chances are we wouldn’t get “homey” or immediately snap into those virtuous behaviors that could supplant consumerism. More likely we just feel disoriented, transformed from a somebody into a nobody. We would have to learn to make for ourselves the things that grant us self-knowledge, the stuff we are used to that lets us manifest what we want to believe about ourselves. But the working knowledge of how to be more self-sufficient has been mostly lost—part of our pleasure in technological advances has been the pleasure of forgetting such rituals and skills. And without the vast marketing industry helping us forge social meanings, our homebrew status symbols may seem lackluster and irrelevant.

Image (partial) from

When I was a kid in the 1970s, my family started shopping at a discount grocery store, Jewel-T, where everything on the shelves was some peculiar “no-frills” brand. No-frills goods came to be a brand of their own, making a memorable appearance in the film RepoMan. The point there was that society was going to make you conform and be a no-frills person, but the opposite effect was achieved, in that the characters weren’t upstaged by brands. Perhaps the same could happen for us as branding is forced by recession to recede.

Lately, I’ve become obsessed with the modern version of Jewel-T, the German “hard discounting” chain Aldi, which the Economist profiled a few months ago. When they first started popping up, Aldi locations seemed a harbinger of poverty; the next would come rent-to-own showrooms, a bevy of 99-cent stores, and perhaps some predatory payday lenders. Your average middle-class family would probably much prefer to see Aldi’s antithesis, Wegmans, which sports a huge prepared-food area with a sushi chef and basketball-arena-size layout. But the era of Wegmans—with its endless, often redundant selection—seems to have passed. Aldi, though, perfectly suits the New Frugality. The company, which doesn’t advertise, offers a top-down anti-consumerism, with management that rejects brands and an absurd cornucopia of choices in favor of limited items presented with in standardized packaging:

“It’s the best business model for retail in the world,” says Philippe Suchet of Exane BNP Paribas in Paris. Discounters stock a fraction of the goods that a normal supermarket offers, resulting in fewer suppliers, a high volume of purchases and sales, and massive economies of scale. “You would find 16 brands of tomato ketchup in a normal big supermarket,” says Paul Foley, managing director of Aldi in Britain. “In my store you will find a choice of one.”

Foley sounds as though he relishes saying that, like Seinfeld’s Soup Nazi: “No choice for you!”

At Aldi, goods are displayed with an absolute minimum of aesthetic fuss. “It is as far from the charming ideal of French farmers’ markets and small family-owned shops as you could imagine,” the Economist article notes. “Strip lights glare down on a narrow range of products in ugly packaging, displayed in cardboard boxes piled on the floor and on low shelves.”

In such an environment, shopping ceases to be represented as a fun experience in itself and is reduced to its utilitarian function, unadorned and perfunctory—a humdrum chore rather than the meaning of life. Expand Aldi’s model out across the economy and it becomes possible to imagine the end of shopping as an end in itself. Hence, Aldi offers a glimpse at an alternative world where consumption is separated from consumerism—we get the goods without the optional paralysis that stems from too many unnecessary choices and without the markup that’s needed to pay for brands’ marketing.

Ridiculous as this may sound, I find shopping there exhilaratingly liberating. I don’t have to feel anxious about the stuff I’m supposed to want to try, all these other selves I could aspire to be. Marx writes in the Economic and Philosophic Manuscripts of 1844 that “the increasing mass of objects” capitalism confronts us with increases “the realm of alien entities to which man is subjected.” He argues that new products are ultimately the expression not of use value but “a new potentiality of mutual deceit and robbery.” Stepping into Aldi is like walking into a zone where that potentiality has been drastically reduced.

But it didn’t require a recession to make me start shopping at Aldi—though it does give me an alibi for fleeing downmarket. For those who are forced there, it’s as likely that luxury shopping will be remystified and reglamorized by its sudden impracticality and remoteness. (It wasn’t that all that long ago that luxury brands were concerned that the democratization of luxury would extinguish their mystique.) The problem is that my attraction to Aldi is akin to the hipsters love for Pabst Blue Ribbon—I’m turning its anti-branding into my own personal badge of postconsumerism, but I thereby smuggle the logic of consumerism right back into the heart of my identity. I can’t by my own force of will make my economic decisions free of that taint. The context of consumption has to change around me.

Aldi may well be part of that new context, if one is truly taking shape. Ideally, the Aldi alternative is a compromise between what we fantasize about and what is likely, given our addiction to convenience, bargains, and self-expression through shopping. It’s potentially a first step toward weaning off consumerism, using bargains and the return to use value as a way back from the ultimately self-defeating use of brands to fashion our identities and our relying on conspicuous consumption as social communication. But for us to stop the self-branding, we need a way to garner social recognition that doesn’t have to do with consumerism. Will that social infrastructure be built in this recession along with the bridges and airports that the Obama administration is likely to propose in its recovery package? Or will we be lonelier than ever?

Consumerism lets us participate in a far vaster world than what’s available in our household by letting us share collectively the brands and designs that function as a language of distinction throughout society. If we buy a set of designer measuring spoons at Target, those spoons tell people we have never met just what we are trying to be. But let’s say frugality drives us to fashion our own out of blocks of polished wood. This would be quite a feat of Crusoe-like pluck, but the homemade version will speak a private, most likely incomprehensible language. Aldi’s goods also aspire to be mute. And absent some other public language, the sphere into which we can project our identity contracts with our loss of access to branded goods. Enter domestic suffocation.

As Bennett imagines it in the Globe piece, “Much of a modern depression would unfold in the domestic sphere: people driving less, shopping less, and eating in their houses more. They would watch television at home; unemployed parents would watch over their own kids instead of taking them to day care.” There’s no guarantee that this state would be transitional. The isolating retreat from a society grounded in the shared ability to spend could totally unhinge us; a richer vocabulary of selfhood that could supplant brands and hype and gadgets and gear and whatnot may never emerge. Instead, we may be left watching the social symbols of prosperity and status proliferate in the media while we claw at the bars of our cages, waiting for doors to fly open again at the first hint of a recovery.

Published at: