Consumption Consumerism Important in Contemporary Global Society Essay
- Length: 6 pages
- Sources: 6
- Subject: Economics
- Type: Essay
- Paper: #1425688
Excerpt from Essay :
Consumption Consumerism Important in Contemporary Global Society
The economies of the world today are subject to inflation and depression, and both are related to the market forces. Today it has become global. To ignore these market forces is not possible. The major market forces basically are termed 'demand' and 'supply'. These underlying forces are determined by two sets of persons or two principal classes of decision makers in the economy: businessmen and consumers. The decision making of businessmen is concerned with the choice and use of resources in firms; the decision making of consumers is concerned with the choice and use of resources in households. This entire volume deals with the many and diverse implications of decision making by consumers, and consumer decision making always has a macroeconomic impact. (Cochrane; Bell, 1956, p. 60)
Consumer behavior is studied at length because it is the basis of production. Entrepreneurs are actually concerned using the option as well as utilization of assets within companies; the decision producing associated with customers can be involved using the option as well as utilization of assets and this decision has varied ramifications associated with choice producing through customers, and the dependence on the customer conduct, which supplies an explanation from the financial values for the choices that are created. The review of the material associated with customer choice producing shows what in reality the customers do. Consumption is the basic component in the economy and when the consumption stops there is an absolute depression with the economy trying to reach a lower equilibrium.
Effects on the Economy:
The recession is a situation where there is money but no employment and consequently less demand for goods and services and therefore lesser jobs and the spiral continues. Keynes advocated government spending as a method of getting over recession. Though the consumption and spending creates the spiral, the one agency that can arrest the fall is the government. Governments can indirectly interfere with spending because the government is in absolute control of the economy. (Beamer, 2000, p. 16)
The main mechanism that the government uses to control the economy is the federal government budget. Federal government makes grants to other institutions for various categories of services that cannot be run with profit motive. These funds may be unrestricted and increasing goods and services by the concerned agency. In some projects the entire spending and lastly the production and consumption of public goods is done by the government. The public goods could be clean water, roads and other services that may not be lucrative to the private sectors. This increases the government spending and consequently the income and money flow in the economy. (Beamer, 2000, p. 20)
The combination of the monetary policy and the Federal spending are instrumental in bringing about relief from recession and in the opposite side bringing down inflation. While in reality the actions of the government encourages the customer and the industry either to spend or save, the monetary policy is dictated by the Federal Reserve System which takes care of the supply of money and caps the interest rate for lending and borrowing. The control of the spending patterns is done steadily by the control of the money flow. In a down turn, it could be understood that targets could be lowered to increase money supply in the economy and this continues till the economy reached stability in spending. (Keat, 2011, p. 499)
Therefore consumerism is the basis of the economy and this factor cannot be denied. During the depression of 1930s a lot of introspection was done on the cause of the problems. One of the faults that were pointed out then was the fact that consumers and producers both are aware of their weaknesses, both as producers and as consumers. Today a total knowledge of the consumer and the problem he or she wants solved is the key for production and innovation. As the problems grow, production is tailored to meet the problem perceived by the market and the availability of the goods or package that can solve a need. (Wyand, 1937, p. 20)
Thus after that depression the consumption pattern was pointed out to have been changed replacing ostentatious consumption which was wasteful. This is replaced by a more careful and ordered attempt to make wealth yield maximum satisfaction. This truly shows the power of consumption on the economy.
Consumer & Consumerism
Consumer often eludes definition while consumerism does not. Consumption and consumerism go hand in hand, and consumerism simply put is the use of the resources based on the choice of the consumer for goods and services. But how is the customer defined? The consumption and consumer are vague terms that define exact definition. So the very definition of the concept of consumption is in reality almost indefinable, fuzzier in its meanings and boundaries. Thus economists have observed that there seem to be a direct link between consumption and morality. (Ekstrom; Brembeck, 2004, p. 11)
Thus in many cases, consumptions are a reflection of the community's moral value. Thus moral and religious values shape consumption and the process of consuming is a localized thing, an activity that can be specific to particular "groups of people, sectors of society or sections of the economy." (Ekstrom; Brembeck, 2004, p. 11) While the reality of it cannot be denied the tendency is to look at the process of consumption as something that is uniform throughout the world, and is summed up as a process that destroys matter or energy and converts them to something of no value to humans. (Ekstrom; Brembeck, 2004, p. 11)
Consumption and production are based primarily on the industry. McDonalds and Coca-Cola contribute in the food industry and promotes a new brand by advertisement or by catering to the existing demand of the customer. The modern enterprise gets the convenience of delivering imaginative and also lasting answers to lots of the problems going through the entire world. When these companies engage in the particular difficulties that may give rise to the long-term sustainability and also earnings, for example a simple thing like a confectionary can be illustrative. (Dunning, 2003, p. 131)
The basic system of manufacture of chocolates for example is based on the perceptive demand for a flavor. In other words, strengths of the entire industry basically revolve around the demand for artistic creation of chocolates which is proprietary. Thus the strengths for the chocolate industry are the use of family brands, intensive distribution, mergers, and retailing at store brands, product differentiation strategies, line extension possibilities, quality and a loyal market following. The general weakness in the industry is the high cost in developing products, and creating new ways of delivery, changing and innovation on packaging, targeting customers, health consciousness of customers and the retail shelf space competition. (Michman; Mazze, 1998, p. 197) Further expansion and franchising of its units to the east -- such that like MacDonald's, the company can go east can also be considered.
Changes with Globalization:
The process of globalization has changed the consumption factors and the argument that after a decade after the fall of the Berlin Wall and simultaneous growth of the World Wide Web and also e-commerce changed the way business and the governments viewed consumption. These concepts thus have the political as well as some economic and scientific angle, along with liberalization regarding cross-border areas, which has brought about an international local community. (Dunning, 2003, p. 11)
It was in 1980s, that this phenomenon-began to be popularly called globalization. Thus the changes have ushered in the international capitalism, because it is currently growing, will help attain lots of the monetary and also business targets. It has to be agreed that the economic changes that came about on account of globalization within the last ten years has generated unheard options regarding international organizations inside business, purchase, companies, and also manufacture. The totally free industry economic climates and also modern organizations have changed the way the customer is being catered to. (Dunning, 2003, p. 12) Customer changes however are not the sole criteria.
Law and Perceptions of the Global Community:
The actual submission associated with earnings amongst customers might be regarded as the basis for progress, and production and growth of the economy, with the government also being treated as a consumer. The actual forces that involve with consumption models through higher earnings are actually only one of the ways; the actual forces are different and are based on cultural backgrounds and many other forces that govern the corporate rather than the consumer. Corporate earnings can be regarded as the outcome of obeying these forces and taxation. (Cochrane; Bell, 1956, p. 72)
Thus apart from the consumer the industries are forced to innovate in terms of requirements and standards that have to be met in terms of safety as dictated by laws, or pollution and ecology as dictated by sentiments and global perceptions. Still basically it is the feeling mostly of the potential customer -- especially those deprived of some resources that…