PART TWO
Preface
By the late twentieth century, consumption had reached a height unparalleled in the history of the world, in both its material scale and global reach. In the preceding chapters we have followed the dynamics of this great transformation across time, from the Renaissance to twenty-first-century China. As we moved forward in time, we have seen the decisive contribution made by states and empires, war and ideology, as well as markets and money. And we have observed how possessions, comfort and entertainment left their mark on the modern city, the home and politics. Why not stop here? We would have a perfectly presentable work of history. But the story is not over. Consumption has become central to the economy, society, politics, public and private life. Not all life today may be about consuming, but consuming is certainly intrinsic to most aspects of our lives, and that is reflected in the range of heated debates in which it plays a leading role.
Consuming has been criticized as a fundamental threat to wealth and well-being. People had become addicted to consumer credit, it was said when the Great Recession hit in 2008–9. Shopping, materialism and luxury fever have been blamed for longer work hours, stress and time poverty, the rise in inequality and selfishness, and a decline in civic feeling and politics; for good measure, some add that goods killed God. The consequences for the planet are, if anything, even more dramatic. Affluent societies, it is said, no longer make and care about things: they just throw them away. For many observers, the world has been reordered according to a neo-liberal diktat of individual choice and markets. But what about all the consuming that is not about individual choice but collective, and that takes place outside the market, such as welfare services? There are, on the other hand, also those who stress the emancipatory effects of consumption, its breaking down of old barriers of class and sex and setting the young free from established old hierarchies. Most optimistically, some look to consumers to lead us out of the moral, economic and environmental crisis by shopping for fair and sustainable products.
How much truth is there either in these accusations or these hopes? The chapters to come seek to provide some answers. Unlike Part One, where we were travelling forward on the path of history, Part Two reverses the direction. In each of the following chapters, we will start with contemporary debates but then fall back, placing current developments and anxieties in a longer historical perspective, in order to come to a better understanding of our present situation and what it might hold for the future. The main topics we need to examine are credit and saving; the speed and quality of life and leisure; the impact on generations; consuming outside the marketplace; the movement of goods and people and their impact on ethics and identities; the impact on religious life; and, finally, waste and what happens to goods at the end of their life.
9
Buy Now, Pay Later
Diagnoses of ‘affluenza’ identify consumer credit as a decisive transmitter in the viral spread of excess. Few subjects trigger such strong reactions. A widespread view about what happened in the 1990s and 2000s goes like this: people became addicted to credit they could not afford in order to buy stuff they did not need.1 Easy credit fed a cult of novelty and luxury, with disastrous consequences. ‘Buy now, pay later’ made people short-sighted and self-centred, easy prey for advertisers peddling the illusion that more stuff means more self-esteem. Inherited self-restraint was thrown to the wind in pursuit of instant gratification. Depression was pre-programmed, in the psychological as well as economic sense. Individuals were losing their balance, and so were entire economies. When the world recession hit in 2008–9, it was natural to point the finger at silly mortgages and credit-card debt, especially in the Anglo-Saxon world. In the words of one commentator, ‘the prevailing evil of our day is extravagance.’
Actually, the last quotation comes from an American writer in 1832, the home economist Lydia Child.2 It alerts us straightaway to a problem. Warnings against credit and a loss of self-restraint are as old as commercial life itself. Plato, in his Republic, dreamt of doing away with credit altogether. Avarice, the early Christian apostle Paul warned, was ‘the root of all evil’. Purgatory was invented in the Middle Ages to calculate the afterlife of moneylenders. Dante, in his fourteenth-century Divine Comedy, condemned usurers to the seventh circle of hell, alongside sodomites and blasphemers, pulled down by their moneybags on to the burning sand, their fine dress – a sign of their lust for material goods in the world – offering no protection against the rain of fire.3
Such moral indignation left its mark on European languages; the German Schuld conveniently rolls debt and guilt into one. From the sixteenth century, the Christian critique received additional support from a republican ideal of free and independent citizens. Debt made one person slave to another. He ‘that goes a-borrowing goes a-sorrowing’, as Benjamin Franklin summed it up in 1732 in his Poor Richard’s Almanac, a global bestseller that became the bible for champions of thrift from colonial America to imperial Japan. Vanity and a lust for things were bad enough, Franklin wrote. But even worse was to run into debt for ‘these superfluities! . . . think what you do when you run into debt; you give to another power over your liberty’. To avoid the lender, a debtor would start hiding ‘and sink into base, downright lying . . . Lying rides upon Debt’s back.’ 4 The Victorians swore by the three Cs – civilization, commerce and Christianity – and dreaded the three Ds: debt, dirt and the devil. ‘Under the best of circumstances a man who is in debt is only half a man; his future is not his own,’ an English social reformer wrote in 1896. For a working-class man it was infinitely worse. Facing weekly visits from debt-collectors and taking his family’s clothes back and forth to the pawnshop, he ‘has sold himself into a slavery from which there is no escape but flight’. Such a person inevitably drifted into ‘despair’ and ‘indifference’, dragging his family down with him. Buying goods on instalments was especially alarming. Hire-purchase schemes seduced the poor into impulse buying of furniture and sewing machines which they then had to return before they were able to enjoy them because they could not keep up with the payments. These ‘temporary owners are like spoiled children with too many toys, always wanting something else’.5
Such admonitions about a ‘live now, pay later’ lifestyle could be quoted at length, but these examples should be enough to make us sceptical about the presumed sudden collapse of self-restraint in recent decades. If people already lacked self-restraint in earlier periods, it is not possible for later generations to have lost it in the 1930s, ’60s or ’90s. A second problem concerns the link between debt and excess. From ancient Romans to today’s critics of ‘affluenza’, debt has been associated with extravagance, superfluities and false needs. Credit, it was feared, gave our animal sensations the upper hand over the critical faculties of reason and foresight on which our moral character and well-being depended. This is one reason women as the ‘weaker sex’ have figured so prominently in moral panics about credit bingeing, past and present. This moral tradition has inspired commentators to the present day and is interesting in its own right.6 Yet it is not especially helpful if we want to understand the changing realities of consumer credit. It tells us more about how observers felt people ought to behave rather than why or how much they in fact borrowed. It always tends to be others who are extravagant. As we have seen earlier, what is excessive or superfluous is relative. There is no fixed line between ‘needs’ and ‘wants’. What appears a ‘false need’ to one person may appear genuine and authentic to another. The same is true for societies. When fear of ‘excessive consumption’ reached South Korea in the early 1990s, high tutoring fees were seen to be the main culprit, well ahead of fashion or electronic products.7
Credit and debt were a normal part of life long before the credit card. In commercial societies where cash was short and financial institutions embryonic, borrowing was a vital part of day-to-day household management. In England in 1700, every second head of a household left behind unpaid debts at death, and a quarter had debts t
hat exceeded their credit and movable goods.8 Living beyond one’s means was customary in the best quarters. Revd John Crakanthorp of Cambridgeshire, whose detailed account books from the early eighteenth century survive, routinely overspent yet continued to live in the biggest house in the village. His standing meant he commanded good credit in the community. Credit was face to face and built around personal trust. Demonstration of character was critical. Into the nineteenth century, respectable debtors in England benefited from their own charities and enjoyed drink and dance in designated prisons, and a respite from demanding creditors. Debt was treated as a temporary misfortune that could happen to the best, not a sign of recklessness that required stiff punishment to set an example. It was when debt became more firmly associated with the poor that it spelled moral shame.
In shops across Europe in 1900, cash purchases were the exception, not the norm. Rich and poor alike bought on credit. In tailor shops in Jena, Germany, for example, only a quarter of customers paid in cash or settled their bills within three months. Students were notorious for extending their credit, ‘sometimes for years’, although their parents and university corps saw to it that debts were eventually paid off.9 For the working poor, borrowing was an unavoidable strategy of survival. Like their superiors, workers used credit to bridge the temporary gap between earnings and expenses. Unlike their superiors, they had neither the assets nor the ‘character’ to be especially credit-worthy. For them, the gap could be a matter of life and death. Labour was casual and poorly paid. Income was unpredictable. Sudden unemployment, ill health, birth and death – any of these could push them over the edge. For working-class housewives, making ends meet was a weekly, sometimes daily high-wire act. Being poor and needing a quick loan to get through the week translated into exorbitant rates of interest.
An investigation of 305 labouring families in Shanghai in 1934 gives a sense of just how precarious life could be. The average family took in $417 in wages a year, but it needed to borrow a further $148 to get by. Much of this came from hui funds – a kind of mutual-aid loan society – and from notorious ‘stamp money’ (yin-tse-chien), advanced by small moneylenders, ‘usually gangsters or Indian constables’. Three in four families regularly pawned goods. Pawnshops came in three classes. The large first-class ‘Kungtien’ charged 2 per cent a month but reserved its trade for better-quality articles. The poor had to make do with the smaller third-class ‘Ya-pu’, which accepted their goods but charged up to 9 per cent a month for the privilege – a good 181 per cent interest per year. For most, it was a vicious cycle. Their earnings were barely enough to redeem half the pledges. ‘It is easily conceivable what a miserable life the average working families must have experienced as they have to live on borrowings which they can not refund and receipts from pawned articles which they can not redeem.’10 The daily papers were full of stories of debtors driven to suicide or to selling their children.
Working families in American and European cities did not sell their children to meet their obligations but, with local variations, these were familiar stories. Few managed without the routine visit to ‘Uncle’. Pawnshops were the banks of the people, turning their winter coats into food and rent in the summer (see Plate 24). In late-Victorian London, pawnshops managed 30 million transactions a year. Moneylending was ubiquitous. Liverpool, England’s unofficial capital of lending, had 1,380 registered moneylenders alone in 1925. Many were women who ‘carry on business in small streets and from their own houses’. On average they charged a penny in the shilling per week – which may not seem much but adds up to 433 per cent interest a year. A Liverpudlian reformer waved a promissory note at a parliamentary committee to show how it ‘simply consists of a series of blank spaces which I think is typical’.11 The Shanghai ‘stamp money’ lender, even if he was neither Indian nor gangster, would have known exactly what was going on, for he too liked to leave a blank space for the amount of the loan. That way, the rate of interest looked quite reasonable.
THE DEMOCRACY OF DEBT
This old regime of credit never entirely disappeared, yet, slowly but surely, it came to be overshadowed by a new regime in the course of the twentieth century. At the same time as recognizing that debt and credit have a very long history, we also need to appreciate that after 1900 they evolved into something qualitatively and quantitatively new. Consumer credit underwent a revolution as dramatic as the revolution on the industrial side that made cheap, mass-produced articles available. Indeed, it was in no small part the growing number of ‘buy now, pay later’ instruments that turned the dream of possessions into a reality for the many. New credit arrived in a series of overlapping waves, beginning with instalment plans and mortgages, then extending to store cards and personal loans, and, most recently, adding credit cards and equity withdrawal.
Credit injected consumer capitalism with fresh energy. By the interwar years, paying in instalments already financed 2–6 per cent of consumer expenditure in the United States and Western Europe. By 2006, ‘unsecured consumer credit’ made up 25 per cent of disposable income in the United States, 24 per cent in Britain, 16 per cent in Germany and Austria, and 9 per cent in Italy.12 This includes loans, credit cards, instalments and mail order – what, for brevity’s sake, we shall simply refer to as consumer credit. But people buy homes as well as things and, once we add mortgages, the credit revolution looks even more dramatic. By 2007, total household debt as share of gross disposable income stood at 180 per cent in the United Kingdom, 140 per cent in the United States, 130 per cent in Japan, and 96 per cent in France and Germany.13
As important as the volume of additional purchasing power it released was credit’s new social purpose and moral standing. In the old regime, credit had been face to face. For most, it was a revolving door: in and out of the pawnbroker, but rarely getting a foot off the ground. The new regime was more akin to an escalator: credit gave people a chance to accumulate goods and assets and move up in the world. Instead of debt marking a character defect – a lack of prudence and a habit of sacrificing the future for the present – it came to be defended as a sign of virtue: a wise investment in future wealth and happiness. Gradually, credit was liberated from the face-to-face surveillance which had kept a check on what people did with the money loaned to them. Credit-rating mechanisms took the place of character tests, anonymous financial institutions that of local moneylenders who knew a family’s biography inside out and built up their clientele from one generation to the next.
To be sure, this was not a smooth, linear story. Countries evolved their own distinctive credit cultures, some more liberal, some more paternalistic. Today, Anglo-American countries have a penchant for credit cards, Germany for instalment credit and France for personal loans. Similarly, within countries, some households remain thriftier than others. The size and speed of the credit escalator varies, too: some countries still will not let everyone step on to it, while others did away with handrails altogether. Pawnbrokers and pay-day lenders never became extinct but by the late twentieth century they had been pushed to the margins of society. The democratization of credit was neither complete nor painless, but its limits should not distract from its revolutionary force.
It was in the early nineteenth century that Cowperthwaite and Sons in New York first began to sell furniture on instalment. In Paris, Dufayel followed in the 1860s. By 1900, Dufayel had grown into a national system, where customers bought vouchers on instalments which then enabled them to purchase goods at participating stores. Almost every second Parisian used it. Other countries developed their own credit networks – the British had their ‘cheque trading’, the Germans the ‘Königsberg’ system, where customers bought their vouchers from a separate credit firm. Whatever the particulars, the general idea was everywhere the same. Stores wanted customers without having to go through the trouble of checking whether they were creditworthy, let alone collecting debts. Instalment banks took care of that, and charged interest in return. By 1930, half the furniture and electrical goods sold in Ge
rmany were bought on instalment.14
The instalment boom was most dramatic in the United States. By 1881, the United States was still in the rearguard of consumer credit. Most states had laws against usury. In Europe, these had been abolished by the 1850s. With instalment credit, America moved into pole position. A 1936 study found that Americans owed $408 million of instalment debt that year. For every dollar spent, credit added ten cents. National income gained 2 per cent. Most of it was spent on cars (60 per cent), followed by electrical appliances (25 per cent), radios (10 per cent) and furniture (5 per cent).15 If the average American had chosen to pay cash for his car, he would have had to save up for five years. Thanks to the instalment plan, he paid 20 per cent down and could drive off into the sunset straightaway, spreading the remaining debt over years to come.
Not all drivers or manufacturers were immediately convinced by such schemes. In the 1920s, one in three car owners still paid in cash. But these were the wealthy few. Henry Ford wanted customers to channel their savings into a weekly purchase plan before getting behind the wheel. In 1926, after three years, his plan had to be dropped. The future belonged to competitors such as General Motors, which offered credit through its own Acceptance Company.16 European producers started their own credit schemes, too. Philips set up Radiofiduciaire in 1933. In 1953, Cetelem (Compagnie pour le financement des équipements électro-ménagers) brought France’s electrical manufacturers together with banks. Soon, every second TV set in France was sold on credit.17 Instalment credit converted mass production into mass consumption. Economists emphasize how credit allows the ‘smoothing’ of consumption over the lifecycle, enabling people to draw on future earnings. Equally important, instalment purchases helped smooth production, freeing manufacturers from the headaches caused by idle plants.
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