Expensive Eccentric

Markets are the friend of the plutocracy. In the market the votes are per dollar rather than per person. Which is, in passing, one reason why “market choice” isn’t synonymous with democratic freedom. Progressive governments do assorted things to counter the pro-plutocracy tendency of markets, for example creating public goods that raise the foundation the entire economy stands upon, but that’s not what this post is about.

Tibor Scitovskyin his book “The Joyless Economy” points out that mass production can act as a countervailing force. Mass production, which can lower unit costs tremendously and that empowers the masses to draw out of the economy goods which raise their standard of living and fulfill their desires. The market aggregates their dollars and mass production leverages those dollars. These pseudo public goods are leveraged by both rich and poor.

This arguement is analogous to the change the subject argument made whenever the distribution of wealth becomes the subject of attention; e.g. that rising standards of living have raised all boats. I don’t have much patience with those arguments, but that’s not what this post is about.

Economies of scale create a well known perverse effect; they tend to make the largest producer in an industry the cost, quality, and profit leader. That’s is good for the plutocracy and bad for the health of the market. What Scitovskyin highlights is a perverse effect on the consumer side.

Scitovskyin uses an older term for the consumer, he calls them the mob. The mob is the complement of the plutocracy. The mob can only benefit from economies of scale if a coherent demand signal emerges in the market about their desires. In the absence of that signal the producers don’t know what to make. That creates a yearning for both producers and consumers to rendezvous, standardize, on achievable desires.

It is perverse that mass production creates incentives for everybody to be more conventional. Advertisers pour money into the market is their yearning to accelerated the forming of this or that consensus. It’s parsimonious to argue that when they succeed it’s their desires, rather than the mob who’s desires really being fulfilled. One is tempted at this point to call them the herd. In any case, economies of scale act encourage normative of behavior in the mob.

Markets make it expensive to be eccentric. What ever goods and services the eccentric desires are substantially less likely to be produced by the market. Of course if your rich you can bear that expense. If your poor these market forces pressure you to extinguish your abnormal desires. There is a long tradition of plutocrats fearing the mob, see French revolution. Early propagandists felt it was in their brief to help keep the mob in line. It probably says something about American education that I’d not previously noticed that the market works to normalize the mob’s behaviors.

It is amusing to note that the rich, while probably not born more or less abnormal than the rest of us, are less likely to have their rough edges worn off.

But there is another point I want to draw out here. As I’ve only just begun this book I don’t know if he goes onto make it. The economies of scale also work to extinguish some goods and services. Mass production is not a universal solution. It is not effective across all goods and services. It works well for something thing, e.g. lawn furniture, but much less well for others, e.g. live music.

So a second perversity of markets is that they work to extinguish goods and services that are resistant to scaling and this happens even if there is substantial demand for them. Thought provokingly, by the force of habit the market will label those activities as eccentric; and when members of the mob signal their demand for them they the market’s return signal will be “mind your manners.”

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