Social Interdependencies in Consumption: An Early Economic Debate on Social Distinction, Emulation, and Fashion
- 1 December 2015
- journal article
- Published by Duke University Press in History of Political Economy
- Vol. 47 (4), 547-575
- https://doi.org/10.1215/00182702-3321312
Abstract
This article analyzes an early and relatively little known debate on the role of social interdependencies in consumption and their implications for economic theory. The debate began in the pages of the Economic Journal when, in 1892, Alfred Marshall's student Henry Cunynghame addressed the consequences that an increase in the supply of goods might have for individual utility when this includes external effects such as a desire for display and distinction. Such interdependencies in consumption were also taken very seriously by A. C. Pigou who, in successive articles in the same journal (1903, 1910, 1913), explored in great detail the impact of third-party consumption on an individual's utility function and, potentially, on social welfare. In fact, in such cases, the derivation of the market demand curve, and even the very notion of consumer surplus, seemed to become problematic. Both Marshall and F. Y. Edgeworth remained skeptical toward the theoretical treatment of externalities in consumption, offering reasons of both practical and analytical relevance. In the same period in the Economic Journal, Caroline Foley (1893) analyzed the phenomenon of social interrelations among consumers in a more evolutionary perspective, emphasizing in addition more general possibilities in interdependencies, including change and innovation. What is of interest in this debate is that it was the first attempt in the history of economic analysis to examine the analytical consequences that considerations of social interdependencies in consumption may have for economic theory. These related to the drawing of the market demand curve, the measurement of consumer surplus, and the more general issue of how to deal with time and change in economic models. These considerations, however, proved difficult to be addressed with the then available economic tools and this, in turn, led to their being simply shelved. We conclude by noting that the participants in this debate cast the problem of social interrelations in consumption almost exclusively in terms of positional rivalry and emulation. This overshadowed the creative dimension and positive externalities that can arise through such interrelations. Foley's more historical perspective has the merit of highlighting precisely this dimension.Keywords
This publication has 44 references indexed in Scilit:
- Alfred Marshall versus the historical school?Journal of Economic Studies, 2005
- Waves in consumption with interdependence among consumersCanadian Journal of Economics/Revue canadienne d'économique, 2004
- Women Economists in the 1890s: Journals, Books and the Old PalgraveJournal of the History of Economic Thought, 1999
- The economics of conspicuous consumption: theory and thought since 1700Choice Reviews Online, 1998
- How to Learn Sociality: True and False Solutions to Mandeville's ProblemHistory of Political Economy, 1993
- The Origins and Early Development of The Royal Economic SocietyThe Economic Journal, 1968
- The Statistical Derivation of Demand CurvesThe Economic Journal, 1930
- The Interdependence of Different Sources of Demand and Supply in a MarketThe Economic Journal, 1913
- Appreciations of Mathematical TheoriesThe Economic Journal, 1907
- A Geometrical Political Economy. Being an Elementary Treatise on the Method of Explaining Some of the Theories of Pure Economic Science by Means of Diagrams.The Economic Journal, 1905