In the early 1960s, the USSR was implementing a crackdown against economic crimes, and the highest profile court case was the prosecution of two young men called Rokotov and Faibishenko. They were heavily involved in black market currency deals, and had a profitable sideline in smuggling jeans and other Western clothing. With the campaign to enforce ‘socialist legality’ in full swing, both men were sentenced to death. Reportedly, as Rokotov was led to the firing squad, his last words were: “Jeans are the best pants in the world.”
This illustrates something that I think has deep implications for economic policy.
Every planned economy has examples of suppressed demand for fashion and other ‘consumerist’ goods. In the Soviet Union, smuggling of Western clothing was a perennial issue through the decades, with the early-60s crackdown barely stemming the tide. When covert imports weren’t available, citizens would imitate a stonewashed look in their locally made denim by boiling it in bleach.
The citizens of East Germany were even more inventive; they had their own underground fashion scene. Facing a shortage of any clothing that looked good, people improvised their own handmade fashions using any raw materials they could find. Some of the results were simply amazing.
Beyond fashion, evidence of suppressed demand could be seen in many types of consumer goods. In China, during the slow transition to a market economy, there was a period in the late 1980s where people regained the legal ability to buy their own household items, though the goods were still supplied according to a central economic plan. Year after year, staff at the State Planning Commission were surprised by how much the demand for washing machines and fridges would overshoot their forecasts. The planning systems were used to dealing with inter-industry flows and gross output targets, and were blindsided by the strength of the public’s desire for the good life. Even today, with free markets almost ubiquitous, the leaders of the Communist Party arrive at ceremonial events in their officially-produced Red Flag limousines; but in the parking lots at gatherings of senior Party leaders, where the cars are purchased with their own money, you see nothing but Audis.
We are a long way from a Soviet-style planned economy, but many of the same issues pop up when we implement economic policy. And as far as consumer demand goes, we repeat the same errors. Late last year, for instance, an Australian inquiry recommended that welfare payments be given in the form of restricted debit cards, which could only be used for “life’s essential costs”. A writer in the Daily Telegraph followed this lead by editorialising on behalf of hard-working taxpayers, who were willing to provide basic welfare but not to ‘fund a lifestyle’. Similarly, the American food stamp programme was originally designed as a subsidy for the farm sector, but in recent decades has provided a convenient way to restrict the consumption choices made by welfare recipients.
At the other end of extreme there’s an army of Guardian writers and progressive think-tankers, who rail against capitalism’s emphasis on luxury and excess. “Consumption is no longer about satisfying our needs but creating a sense of self,” writes Clive Hamilton, who goes on to excoriate Barbeques Galore for selling a deluxe model with ‘electronic multi-spark ignition in each of six burners’, and a TV manufacturer for including a motorized swivel stand that can adjust the angle of the screen.
It’s easy to sneer at other people’s consumption choices. It’s even easier when we’re thinking about economic policy, because we’re already in a frame of mind that makes us feel like we should be tough-minded and serious. “Nothing but empty consumerism,” says the left. “They’re spending their welfare money on TVs and other junk,” from the right. Oh, but all these purchases that I’ve made recently, me, myself, personally? They’re more cultured; they’re locally-sourced; I’ve earned them by working hard, or working for an NGO, or as a CEO.
Looking at the evidence from planned economies, and thinking about my own experience, I’ve come to see these attitudes as pure humbug. Everyone—apart from religious ascetics—chooses to spend some amount of their money for no reason other than to enjoy themselves. If we choose to pretend that other people’s consumption choices need to be regulated more than our own do, then government policies become inefficient and patronising, such as welfare being given in the form of food stamps. And in the longer run, we gradually create an economic system that people chafe under, the kind of system which needs to be enforced rather than enjoyed.
Only one political group has consistently hit the right note on this issue. Right-wing libertarians always defend people’s ability to spend their own money, and never reach for stale jibes about ‘flat-screen TVs’ to describe consumption. It may be true that right-wing libertarians are wrong about literally everything else, and they deserve the relentless mockery they endure when they venture outside their think-tanks. But I’d like to pause for a moment and give them snaps for having a good attitude on a topic that everyone else—conservatives, socialists, technocrats, centrists—often gets wrong.
So it’s all about consumption without limits? But what about income inequality? What about the environment, or personal responsibility, or social capital, or public health, or fairness, or …?
Well, yes. The principle of consumer sovereignty quickly collides with other priorities, and there’s no reason to make it priority number one. My point is that as we design and implement policies that address all those other things, we need to be careful not to squeeze out consumer sovereignty altogether, because it should be part of what we’re aiming for, even if off in the distance.
Krushchev, at times, saw the cold war as a contest to see who could give ordinary people the best kind of life. I think that fits with the vision of the future that’s presented in Iain M. Banks’s Culture novels; they’ve been described as the first fictional utopia that people might actually want to live in. Even though the books are mostly about spying and covert ops, citizens of the Culture are fashionable, faddish and fun. It’s a striking contrast to the very serious, very boring lifestyles in most socialist utopias, starting with Marx’s “hunting in the morning, fishing in the afternoon.”
Some day soon, we’ll find outselves in a worldwide communist paradise, organised by computers. Or perhaps we’ll reach for the stars and follow the path traced out by the Culture. On that day, however it turns out, I’ll be celebrating in my jeans and an AC/DC t-shirt. Because jeans are the best pants in the world.