A book by Thorstein Veblen (1857-1929) titled The Theory of the Leisure Class provides a very fascinating analysis into the phenomenon of what the author calls conspicuous consumption and conspicuous leisure, tracing its origins and outlining how it impacts our desires and choices.
The Theory of the Leisure Class blends influences of Charles Darwin, Karl Marx and Adam Smith, thereby Veblen's socio-economic theory emphasises social evolution and development as characteristics of human institutions. In his time, Veblen criticised contemporary (19th century) economic theories as intellectually static and hedonistic. He pointed out that economists should take account of how people actually behave, socially and culturally, rather than rely upon the theoretic deduction meant to explain the economic behaviours of society. Readers are conscious how society has changed over the past years since Veblen published his influential work, albeit the rise of social media and endemic advertising has only exasperated the drive to improve one's social standing through consumption. The Theory of the Leisure Class was a bestseller and funded Veblen for the rest of his life, and his ideas influenced the New Deal of the 1930s. Since then, an item that becomes more desirable as it becomes more expensive, is known as a Veblen good. Today, we can observe how the "influencers" on Instagram and TikTok, combined with the characteristics of Gen Z, illustrate this concept. In summary, they expect the latest iPhone, a perfect job, to drive EV cars, and wear the latest fashion.
Veblen's observation of such high-status members of the socio-economic class, is identified by them consuming over-priced brands of goods and services perceived to be of better quality and thus of a higher social-class. What lessons are gained locally from Veblen's philosophy? He discusses how the pursuit and the possession of wealth corrupts human behaviour, yields contemporary robber barons, home-grown oligarchs who own major assets, all these indulged themselves in economically unproductive practices of conspicuous consumption and leisure. Corruption and sleaze creeps in public administration - unsung and unheard. The latter are vain activities that contribute neither to the economy nor to the material production of useful goods and services required for the unfettered functioning of society.
Perhaps the most overt and ostentatious display of wealth by members of the leisure class was prevalent in the US during the Gilded Age. At the time, large mansions were built that served as the summer homes of the ultra-wealthy. The Gilded Age is a term coined by novelist Mark Twain and used to refer roughly to the period 1877 to 1900. It was a time of rapid economic growth, as American wages grew much higher than those in Europe, especially for skilled workers, and a rapid industrialisation demanded increasing numbers of unskilled labour force. Perhaps as in Malta in the past six years, we witnessed an influx of many low-cost immigrants. Therefore, millions of immigrants - many from impoverished regions - poured into the United States, consequently contributing to a high concentration of wealth. This became more visible and contentious. Immigration from Europe/Asia led to the rapid growth of the US, based on rapid expansion of farming, ranching and mining. Sociologically, the industrial production system required workers to be diligent, efficient and co-operative, while the owners of the plantations, factories and capital investors concerned themselves solely with profits and vices. They distinct themselves with public displays of exuberant luxury yachts, skiing holidays in the Swiss alps and fine dining at Michelin restaurants. The development of Veblen's sociology of conspicuous consumption also identified and described other economic behaviours such as invidious consumption, which is the ostentatious consumption of goods, an action meant to provoke the envy of other people and use of charity jamborees meant to enhance the reputation and social prestige of the donors, while political opportunists associate themselves to improve their image among voters. In this example, the socio-economic practices of consumerism thrive upon conspicuous consumption. Both social media and other forms of mass-media have widened the scope of conspicuous consumption and leisure. Today, advertising, which is pervasive on social media and in an increasingly urbanised world, manipulates this need for social acceptance. It is devastating and heartbreaking that every year a circus is made during charity jamborees, with organisers reminding us of human suffering in an effort to awaken people's conscience. Please donate more. The question arises, can we expect an improvement in generosity?
The facts show that the monetary policy cycle is still uncertain with probable policy divergence this year and beyond as the ECB, based on future indicators may potentially implement modest rate cuts later on this year. However, expectations may change drastically overnight depending on the Russian war in Ukraine, Middle-East hostilities and shipping troubles in the Red Sea, while US faces a decisive election. Back home, people whose integrity is not in doubt, preach about good governance and sustainability. Bloggers warn us that linked to the Vitals scandal is corruption, both proven and alleged. It gnaws at the very backbone of democracy and deters those who wish to participate honestly in political and public life.
Many bloggers warn us that conspicuous consumption has hit the island. Speaking about the country's rapid population growth, they protest about it publicly in the streets of Valletta. Many feel, it was unfair to think of people who have been living and working in Malta for several years for authorities to simply label them as "foreigners". After all, it was "our choice" to bring them to the country in the interest of economic development. Rating agencies warn us, inter alia, that the country must properly reflect on how to regulate the economy, now with a tourism intake expecting to blossom to four million.
In conclusion, in the spirit of Veblen's notion of the Leisure Class, good governance and true sustainability points towards our duty to integrate foreign workers into society not only by teaching them our language and customs but protecting them from precarious jobs and alleged exploitation by temping agencies.
gmm@pkfmalta.com
George M. Mangion is a senior partner at PKF Malta