The Stack

Book Review: Against Thrift by James Livingston


Editor's Rating: Stars_7

A Rutgers University historian argues that the cure for the nation’s malaise is for consumers to spend more—a lot more

Against Thrift:
Why Consumer Culture Is
Good for the Economy,
the Environment, and Your Soul

By James Livingston
Basic Books; 257 pp; $27.50

 

The nation’s unemployment rate sits obstinately above 9 percent. The housing market is still underwater. Consumer confidence stinks, the stock market is schizophrenic, and the big banks have been humbled. We aren’t in another recession, according to the professionals, but it sure feels as if we’re stuck. To cure this listlessness, the following treatments have been applied: bailouts, stimulus packages, programs that aren’t called stimuli but really are in intent, blue ribbon panels, verbose op-eds, foreclosure assistance, short sale assistance, even interest rates that are essentially zero. And still, here we are in an ever-deepening rut, with elected officials bickering about the next steps.

Into this malaise and debate comes James Livingston, a Rutgers University historian, whose new book, Against Thrift, argues that the magic bullet for the nation’s problems is for consumers to spend more—a lot more—and rub out the phrase “saving for a rainy day” from the American lexicon. Today, he says, is that rainy day.

Livingston is a lively, argumentative writer. He assails the “pathetic” thinking of Republicans, Democrats, economists, philosophers, and journalists while sounding like the guy at a dinner party who dominates the salad, entrée, and dessert conversation with a stubborn will to prove everyone but him is bananas. Which does not necessarily mean he’s wrong. Livingston reserves his harshest abuse for the “new Puritans” among economists, government leaders, and commentators who regularly admonish us to stop being slaves to consumerism and recommend practicing austerity on an individual level. Though others have made similar arguments, Livingston modestly compares his theory to Galileo’s heresies in 1610. “Practically speaking,” Livingston writes, “the facts and figures I will cite to demonstrate my case are invisible to most economists, just as invisible as the moons and phases Galileo measured were to most mathematicians and physicists of his time. They’re invisible because in theory, they’re preposterous, even impossible.”

One key complexity in Livingston’s argument is that private investment by business is not the kind of spending that creates jobs and spurs growth. All the clamoring about companies needing lower taxes because the resulting increase in profits will drive them to build more factories and create more jobs is, Livingston writes, a two-syllable word that includes the letters b and s. He argues that all the surplus profits—such as the ones still accruing on the books of America’s biggest corporations—are really invested in speculative bubbles like the ones that helped cause the Great Depression and the current global crisis. (He has a 19-page appendix with numerous graphs to bolster his points.)

So what should be done with all the surplus capital? Livingston thinks it should be redistributed to workers—in the form of higher wages—so they can presumably spend it on everything from iPads to Whirlpool washing machines, never mind that many of the most consumed products these days are made in China, a weakness in his argument never quite acknowledged. All the same, Livingston insists on “a redistribution away from profits and toward consumption,” or actually the socialization of investment. He acknowledges violating “the common sense of our time.”

Livingston is willing to step off that ledge because he says what drives jobs, economic growth, and the general fiscal happiness that causes GDP charts to show nice, steady upward curves is the sound of wallets opening. “We should now be empowering consumers by ensuring that they can earn, or rather receive, incomes sufficient to make their demands for goods and services effective,” he writes. Note the “rather receive” portion of that declaration. Corporations, he implies, should spend on salaries (not just executive bonuses) to grow the overall pie.

Livingston supports this reasoning in part by citing the tremendous growth period from 1933 to 1973, the heyday, as he puts it, of consumer culture, when net investment by companies declined and consumer spending ramped up. What made Joe and Betty America so flush with cash? For one thing, social programs and bureaucratic jobs increased, spreading money from governments to citizens. Also, and perhaps more importantly, rising labor movements bolstered unions and increased wages.

This all puts Livingston squarely against big banks running their own private trading desks and austerity measures by governments that deprive the less fortunate of spending power. Republicans who want to cut entitlements such as Medicare, Medicaid, and food stamps in the name of tightening the country’s belts are essentially leveling a “death sentence on individual initiative, personal ambition, and economic growth,” he writes.

There is also a moral component to Livingston’s argument. He contends that the “new Puritans” have wrongly convinced Americans that it is immoral to live as creatures of consumption—a timely notion to ponder during this repetitive and costly swipe-the-card-and-sign period between Thanksgiving and Christmas. “We apologize to ourselves, among others, for buying things we didn’t really need, or for indulging a child’s ad-induced desire for a molded plastic toy that will never decompose,” Livingston writes.

But advertising, he says, counters repression: “It sells freedom.” Buying forges our identities in ways that saving represses, Livingston argues. It’s worth noting that the words retirement, 401(k), and pension do not appear in the index of his book. Still, he seems hopeful readers will ignore that little oversight this holiday season and heed his advice: “I’m urging them to see that saving for a rainy day—treating this life as austere probation for another—is a soul-crushing emotional trap as well as an economic dead end.” Which way to the ATM?


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