In 1899, a scholar named Thorstein Veblen published a book he thought was a work of serious economic and social theory. Somewhat to his chagrin, reviewers and readers thought "The Theory of the Leisure Class" was satire.
Still, it was popular. And Veblen would surely be delighted that his misunderstood theories spawned a phrase that is instantly recognizable – and meaningful – over 100 years later: "conspicuous consumption."
Veblen wanted to use anthropology to understand contemporary economics. He didn't believe that consumers and individuals acted rationally in pursuit of their economic self-interest.
He thought much modern economic behavior had primitive roots, relics of the customs and survival mechanisms of a predatory society. But his turn of the century audience thought it was hilarious when he compared the fine silver and mansions of Midwest burghers to tribal chieftains who had more goats than his family could possibly eat and more beer than they could possibly drink.
But Veblen was dead serious about this conspicuous consumption, which he argued was a way for people to signal their wealth and status to others. A key to this kind of social display is waste. The wealthy chief had more food, drink, shelter and weaponry than he could consume or use – and this made him safer and more powerful; the wealthy industrialist had more homes, staff, cars, and airplanes.
The other key is the creation of easily visible symbols of wealth. The chieftain had fat wives, huge feasts, fine feathers and thick furs; the railroad baron had private trains, silk clothes, gold watches and Rembrandts.
In some European and Asian cultures, dress and ornament could signal caste and status with extraordinary precision. And that is why even now a Judith Leiber handbag or a pair of Manolo Blahnik shoes are important: they may not be prettier or longer lasting than less costly alternatives, but they are instantly recognizable to strangers as expensive and wasteful. Conspicuous consumption.
Veblen thought that as societies grow larger and more dispersed, conspicuous consumption needed to get more complex in order to work. It's one thing to show a village of 100 that you're rich; it's another signify this to a city of one million. Chiefs had to start adorning their wives and children and servants to reach larger groups.
In today's nomadic country of 250 million, signifying wealth takes far more sophistication involving homes, cars, airplanes, clothes, jewelry for a network of family, servants and supplicants, as well as publicity and celebrity.
Veblen is on my mind because I recently spent a week in the Chicago suburb where I grew up (to the extent that I did, in fact, grow up) and I thought I saw a whole lot more conspicuous consumption than I had when we baby boomers were growing up there – conspicuous consumption generally perpetrated by we baby boomers, all grown up.
The houses are gargantuan. The shops are peddlers of luxury, not utility. The cars are all fancy. The jewelry is gaudy. The parks are empty. I think all this is apparent to most anyone who visits big cities and their suburbs.
Some caveats and full disclosure: By any statistical measure, Glencoe, Illinois was as well-off in the 60s, 70s and 80s as it is today, though it is also true that the gaps between the absolute super-rich percentiles and the rest of the economic ladder are wider than they have been in generations. It is also true that by any statistical measure, I am a conspicuous consumer compared to the population as a whole, though not compared to the super-rich.