The logic of neo-classical consumption theory.

Abstract

In the course of its development and application neo-classical consumption theory has been attacked from a variety of different perspectives. While many of these attacks have raised valid and important criticisms of the neo-classical approach, few have had a significant impact on the willingness of economists to view neo-classical consumption theory as being beyond reproach. Undoubtedly this stems in part from a political and methodological bias shared by the vast majority of mainstream economists. However, part of the blame for the inability of criticisms of neo-classical consumption theory to gain wider acceptance is attributable to the fact that they have often not been as rigorous or as comprehensive as the theory they seek to criticize. This essay attempts to set forth a thorough and rigorous account of the logic of neo-classical consumption theory, bringing forth important, although often unstated, assumptions. By carefully analyzing these assumptions it shows that the neo-classical approach rests on very tenuous grounds, which make any possible real world applications extremely questionable. It also attempts to set forth the outlines of an alternative theoretical foundation for consumption theory. Instead of individual optimization, this approach emphasizes the sociality of consumption. In this alternative approach it is argued that the objects which individuals consume are inherently social in nature, and that their meaning depends on the particular social context in which they exist. It is also argued that the consuming subject must be recognized as a social being that carries on acts of consumption in order to establish an identity for herself to others and to herself. This quest to be recognized by others, and to recognize oneself in one's individuality is presented as the goal of consumption, in opposition to the neo-classical notion of utility maximization.