In the modern era, "consumerism" is a buzz word. As we know it, consumerism is fulfillment of human desire to possess consumer goods. And it generally denotes desire to possess luxury items. The consumerism of a certain individual depends upon a number of factors and most importantly on demonstration effect. When a particular commodity is widely used in the market, the demand for that commodity increases among people. Such consumerism is also backed by the purchasing power of that individual.
Consumerism creates a demand for a particular commodity in market which denoted increased production and output. This also signifies growth and development of new industries which in turn generates employment in the country and increases the standard of living of individuals. Consumerism promotes capitalistic structure of economy. Consumption pattern of a country is determined by propensity to consume. It is obtained by dividing the average consumption of a country by the average income. It is usually expressed in percentage.
But we can never deny that consumerism is the creator of inflationary tendencies in the economy. Excess demand for a product creates abnormal hike in its prices which makes it beyond the reach of the common mass. This gives rise to economic disparity and fosters unhealthy social relationships. Moreover the demand for luxury items boosts up the production of the same and thus production of necessary goods are hampered. It is also argued that consumerism results in extravagant expenditure and thus reduces savings.
And reduction of savings results in reduction of investments and production without which a country reaches stagnation.
As an alternative to the above dilemma, people have embraced socialistic pattern of economy where the demand as well as pricing of commodities are regulated by central planning. Though the libertarians criticize that nobody has the right to impose restriction on the needs and wants of an individual, anti-consumerists are of the opinion that consumerism today is mostly influenced by advertisements and media.
But a centrally planned economy is not devoid of its drawbacks. The wages of employees are fixed by government and the difference of wages between a skilled and an unskilled labor is quite less. Though this is done to reduce concentration of wealth in hands of rich, the capable workers get less incentive to work and are not motivated. It gives rise to lethargic tendencies among people and can retard the growth of a nation.
It is inferred that both extreme consumerism and extreme anti-consumerism have their share of harmful effects on the economy. The harmful aspects associated with both capitalism and socialism can be checked if they are implemented with skill and efficiency. A capitalistic nation should actually restrict the ill effects of capitalism by integrating some ideas of socialism within its economic plan and vice versa. A government of a capitalistic nation can determine the consumption pattern by modifying its taxation policy. Excise duties and sales taxes levied on consumption of luxury goods and its consumption can be checked, thereby fostering production of necessary items. Therefore the government has a pivotal role to play in modifying the consumption pattern of a nation. It is only a carefully balanced consumption pattern of an economy that drives a nation towards progress and prosperity.
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