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The Consumer Society

Foundations of Economic Thought
Overview Essay

by Frank Ackerman

The standard economic theory of consumer behavior is a relatively recent creation in historical terms, no older than consumer society itself. That theory, in brief, assumes that consumers come to the market with well-defined, insatiable desires for private goods and services; those desires are not affected by social interactions, economic institutions, or the consumption choices or well-being of others. Only prices, incomes, and personal tastes affect consumption -- and since tastes are "exogenous" (that is, determined outside the realm of economics), there is little point in talking about anything but prices and incomes.

The relationship of this theory to the visible facts of economic life is tenuous at best. No other social science accepts this theory, nor holds a similarly narrowed view of the process of consumption. Yet in economics the neoclassical theory, as it is called, has dominated professional discourse throughout the twentieth century. Its abrupt appearance in the last third of the nineteenth century is a central event in the history of economic thought. This section and the next examine the foundations of the neoclassical theory of consumption, and the critiques and alternatives that have been proposed. This section focuses on work done before 1960, while Section 6 addresses the period since then.

The economics that we know today did not triumph for lack of well-articulated criticisms and alternatives. Indeed, one great mystery of the field is how rapidly and totally its dissenters have vanished. One step beyond the mainstream in economics, evidently, there lies an intellectual Bermuda Triangle where voyages of thought disappear without a trace. Some of the missing have turned up on other shores, leading new lives as influential voices in sociology, history, political debate, and cultural criticism. But word of their survival rarely makes it back to their native discipline.

The goal of this section is two-fold: to explore the origins of neoclassical theory, and to rediscover some of the lost dissenters of economics, whose criticisms may yet point the way toward a new frontier in economic thought.

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