Definition: Consumerism is an economic principle that promotes consumption as an engine of economic growth. It places consumption as the center piece of the economic system development.
What Does Consumerism Mean?
Consumerism stands for a consumer-driven society. Apparently this economic thinking got more attention after the industrial revolution, since production figures were sky-rocketing and companies needed a society willing to buy whatever they were selling. Developed economies believe in consumerism. Governments often modify economic policies to increase consumption. Interest rates play a key role here, since low interest rate environments create the opportunity for individuals to buy more by using debt. On the other hand, consumerism also promotes fair treatment and high quality production.
Customer service is also highly regarded here because it drives people to buy more. Also, customer’s rights are well protected, to make sure negative experiences don’t impact on future purchases. Some studies have also identified some disadvantages in consumerism. They point to the fact that it promotes a materialistic society where individuals get their identity and value from what they possess. In their opinion, it also promotes greed and this might lead to corruption, since people see no limits to get more resources to buy more things.
Let’s say hypothetically that Norway is a country that had a bad economic history. Many of its former leaders were corrupt and tried to implement communist economic systems in the country but their strategies failed considerably. This generated poverty and scarcity. A new government was recently elected and the leader wants to promote a more productive economy. Consumerism is on the table, since the country actually has enough infrastructure to produce different goods and services.
In this case, what the government wants to do is to put businesses to work and to create incentives for customers to buy. In order to this, the government reduced interest rates and expanded liquidity to give banks enough room to give out credit cards and loans. They also crated unemployment benefits and reduce sales tax. They expect to increase the GDP by 10% this year after implementing these measures.