The deeper the crisis, the greater the luxury. The hypocrisy of consumption?

Why in times of recession does the luxury business grow?
In times of recession and market contraction, we are still surprised at the growing business figures published by companies under the ‘luxury’ heading. This sector has become a defensive stronghold for recession. On the basis of this, its industry endeavours to detect new niches of products and services that could expand and reinforce the category: millionaire fairs, exclusive best-buy clubs, TV programmes, among others, are arising in our lives for the enjoyment of some and the shame of others. What are the hidden reasons for this phenomenon? How is it possible that during one of the hardest market times, luxury and top-end fields are expanding and advertising is turning them into the icon of the moment? I shall present some issues that, in my opinion, may explain this phenomenon:

-World globalization: It has spectacularly increased geographical areas and potential groups of consumers: China, Russia, India. The ‘new rich people’ need to vindicate their sense of belonging to a new class, the best way to achieve this is by incorporating iconographies and stereotypes that can provide class recognition to their daily lives. For many people, it is useless to reach a status if they cannot transmit it and share it with others.

The ‘new rich people’ need to vindicate their sense of belonging to a new class, the best way to achieve this is by incorporating iconographies and stereotypes that can provide class recognition to their daily lives.

-A widely recognized iconography: Means of communication have conveyed aesthetic messages and icons of these products for years. The world is global and digital, through means of communication the luxury iconography and the triumphant message of its owners have spread without any kind of barrier. For those classes that -beyond the economic power- did not have access to these products (China, Russia, etc.), they are not only a social icon but also a political standardization icon.
-Polarization of the extremes of wealth distribution: Less rich people by percentage of population but much richer people. There are certainly less rich people and it is more difficult to become rich; it is one of the symptoms of ‘standardization’ or stagnation of economic growth (especially in times of recession). The entrance in emerging countries’ consumption markets with great volumes of population has provided the luxury market with new and broad demographic bases; new rich people from China, Russia, India, etc. are entering the luxury market en masse.

-A west industry that has not been attacked by emerging countries: The west industry of consumer goods and equipment is seriously threatened by the relocation of its production in emerging countries. Luxury items ignore this general threat and although they may be affected by several Asian copies, their margins and handmade quality still constitute a barrier to entry. Curiously, emerging countries, which are huge consumers of economic consumer goods, are at the same time the ones that are consuming the most luxury.

-The great spread caused by copies: One of the best defences of luxury items has always been the shortage of items in the markets; we could say that there was a correlation between luxury and shortage. Today due to the entry of quality copies at low prices, this concept has disappeared; the spread of copies has maximized luxury. The possession of one of these copies constitutes the first link to be able to have a luxury item one day; as it has increased the general public knowledge about product aesthetics and typologies.

-The mediocrity of our lives: If one visits Japan, one of the most surprising aspects is the huge spread and popularity of luxury items; at first glance we could think that it is caused by the differential of standard of living and currency exchange with the Japanese economy but a deeper analysis denies this statement. In Japan everything is homogeneous and aseptic; its citizens live in a grey and predictable way. Curiously, it is in the country of homogenization where luxury items (with luxury prices) have become popular. It might be a beam of light to their grey lives.

-The excellence of the well-done. An extrapolation to the standardization of production: Some luxury items have risen to the category of art or supreme craftwork. They are original works of art with respect to mass consumption products; on the basis of this, the concept of luxury has broadened its frontiers, providing a more intellectualized vision of luxury toward well-done things, toward tradition, the highbrow and the well-done. Above this analysis, the increase in the luxury industry in times of recession constitutes a clear symptom of a certain double social standard, of lack of solidarity among people, lack of moral values and the supremacy of material values…

The Wall Street protagonist, Gordon Gekko, has already said this: ‘I don’t want to generate wealth, I want to have it.’

 

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Mª Luisa Vives – Jaime Gross

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