The Origins and Evolution of Consumer Capitalism: The Paradoxes Posed by Continuous Mass Production

Abstract

Continuous-mass production technology, widely adopted in the late nineteenth, early twentieth centuries, enabled businesses to vastly increase output. Thorstein Veblen was among the first to observe the business response: how to prevent production from exceeding what the market could profitably absorb? How to prevent losses? How to increase profits? Continuous-mass production introduced consumer capitalism, applying the technology to consumer goods, creating the necessity of increasing consumer demand, making imperative adopting the corporate form of business enterprise. Continuous-mass production has accentuated a number of paradoxes, some of which were addressed by Veblen, Polanyi, and Keynes. Those paradoxes include the prospect of depression, the rise of dynastic ambitions channeling the increased output into militarism, financial innovations involving identifying and liquefying consumer assets to provide credit and expand demand, laying the foundation for the financialization of the economy. Financialization culminated in the Great Financial Crisis (GFC), requiring massive government intervention. The GFC gave rise to Modern Monetary theory, overcoming the limits of the market economy. And the environmental crisis resulting from the commodification of everything, accentuated by applying continuous mass production to the extraction and burning of fossil fuels, combined with a belief in infinite growth.

Keywords:

• continuous-mass production
• consumer capitalism
• Veblen
• Polanyi
• Keynes
• Darwinian dilemma

JEL Classification Codes:

• B15
• B25
• N0

Notes

1 The second industrial revolution applied “the inductive method in the study of an industry, and individual concerns composing it, with a view to gaining facts and generalisations which may serve sooner or later as the basis of the replanning of the productive process and plant. The essence of the new industrial revolution is the search for exact knowledge, and the planning of processes: from the minutia, of manual operations (based on motion-study) to the lay-out of the machinery of a gigantic plant-even of a whole industry throughout the country” (Jevons 1931, 1).

2 “Integration of mass production with mass distribution offered an opportunity for manufacturers to lower costs and increase productivity through more effective administration of the processes of production and distribution and coordination of the flow of goods thorough them. Yet the first industrialists to integrate these two basic sets of processes did not do so to exploit such economies. They did so because existing marketers were unable to sell and distribute production in the volume they were produced” (Chandler 1977, 287).

3 Exceeding the condition of the charter is referred to as ultra vires, which the courts had forbidden.

4 Oil was largely used to make kerosene for home lighting.

5 Among the domesticated animals, the dog is the most favored for its servile, fawning attitude toward humans (See Veblen [1899] 1979, 141).

Additional information

Notes on contributors

John P. Watkins

John Watkins is a professor of economics at Westminster College in Salt Lake City. This article is from a talk using selections of an upcoming book to be published by Routledge.