Where does history flow, or else the perspective of the global consumption pyramid?


When I was a young father I often walked down with my children to the lower quay of the Danube in Budapest from the housing estate located on the bank of the river. One day my 4-year-old son suddenly asked: tell me Daddy, where does the Danube flow? - and he pointed to the leaves drifting “upstream” in the water whirling near the bank. Come, – I said – let’s go to the top of the quay, you can see the direction of the river better from there. We often have the same experiences with history. We have to look at the everyday chaotic events from the perspective of many years so that the direction of the main stream becomes distinct. Today it seems that we have to look back at least 500 years to make it clear: an era finished with the 20th century and a completely new one started with the 21st century. The only determining projection of this transformation – the historical tendency of economic growth – is demonstrated by the following table:

	0	1000	1500	1820	1913	1950	1998
West Europe	450	400	774	1232	3473	4594	17921
East Europe	400	400	462	636	1527	2120	5461
USA	400	400	400	1201	5257	9288	26146
Latin America	400	400	416	659	1511	2554	5795
Asia (- Japan)	450	450	500	575	543	635	2936
Africa	425	416	400	418	585	852	1368

Table 1: Tendency of global growth in various regions of the world (GDP/capita $)

The data in the table show the expansion in the 19th century as well as the dramatic change in the 20th century after the almost unobserved growth of the economy for many thousands of years. Thus, if people had wanted to decide “which way to go” at the historical junction of establishing a civil society by holding a “referendum” the widening range of growth and “benefits of happiness” would have been put into one of the pans of the scale (but only two centuries later and even then “only” for the majority). However, the other pan would have been stuffed with the horrors of the way leading to it. But do not rush to judge. The weekdays of history – let alone wars and natural catastrophes – were full of incomprehensible horrors, diseases, deaths, murders, physical violence, starving, frost, pain, filth, dirt, and noise until the 20th century (and also today for a significant part of humankind).

The promise, however, – as certified by the table – has become true. Three factors accelerate economic growth: innovation, the multiplication of the range of consumer goods and the establishment of the institutions of civil society. The connection of these three factors make it possible to make a product from ideas, and win the market with the help of a business enterprise. Printing of books – just to mention one example – is an invention, a system generating various products – such as religious or political proclamations, cultural works, or erotic pictures, scientific information, entertaining descriptions, but also advertisements, figure tables, dictionaries – as well as a business enterprise. The dynamics of development, however, was determined by the institutional system of civil society – private property, the market, effective government, a democratic political system, and the rule following behaviour of autonomous entities. The societies, which introduced and permanently improved these institutions, grew and became richer. But those, who were slow or rejected it, lagged behind.

All in all, however, looking back from the 21st century, around the year 1900 the personal consumption and quality of life of an ordinary citizen of even the most developed societies was surprisingly low. In 1908 – wrote Brigitte Hammann the Austrian historian – 80 thousand inhabitants out of 800 thousand living in the capital of Austria were night lodgers. The average age of people was around 50 years. Two out of five children born to families died before becoming adults. The main reasons for death were starvation, a low standard of hygiene, and diseases resulting from them, in other words poverty. The past century however, brought a radical change for the countries joining the global economy. Two factors triggered the “economic explosion”: the high rate of growth and the demographic transition (a decrease in the death rate and later in the productivity rate). In 1900 a Hungarian citizen’s income was 1682 $/capita while it was 2900 $/capita in case of an Austrian citizen. At the end of the 20th century – despite two lost world wars, and the mostly negative effects of the socialist era – a Hungarian citizen had 13.500 $/capita. By this time however the average Austrian citizen’s personal income had grown to 28.000 $/capita – after the same lost world wars and occupation.

East-Central European people recall these facts sometimes with sad resignation at other times with indignant fury. Although we could even draw optimism from the data: the richness of the average citizens of a country – eg. Hungary – can multiply within just a few decades. It is not necessary to be a huge, densely populated country rich in natural resources and subjugating others. Small West European countries became rich the fastest which had neither a colonial empire, nor special natural resources or a huge army. It is also possible that they used to consider it a misfortune that they could not lock themselves in, they were forced to apply the international division of labour and they were subjected to competition. The source of their growth was the increase of their productivity which was based on two main elements. One was the investment in human sources which was proportional to the level of education and the infrastructure of public health. The other source of growth was the economic and political institutions assisting development. These made the citizens “law abiding”, teachable in business and open to the world in everyday life.

The fast growth and demographic transition in some groups of countries, while the slow growth and the sudden stop of the demographic transition (decrease in mortality rate, but relatively high level of birth rate) in other groups of countries, resulted in the formation of a special global “consumption pyramid” by the end of the 20th century. On entering the 21st century this consumption pyramid is divided into three levels – struggling with basically different problems. The 4 billion people forming the base of the pyramid try to maintain themselves from an income of less than 2.000 $/capita – or in the case of a significant number of people this sum is even less than 1.000 $/capita. 2 billion people forming the middle of the pyramid try to live on an income of 2.000-17.000 $/capita. 600 million people live on the top of the pyramid, who look at the people below from a height of an income exceeding 17.000 $/capita – with a consumption also reflecting this.

At the beginning of the 20th century an average citizen of the world rarely crossed the boundaries of their village. They found everything necessary for their lives – products, job and spouse – near their place of birth. Their friends who could visit faraway places talked about distant miracles or horrors but they experienced these as fairy tales. In the “global village” of the 21st century, however, everybody knows – often just thinks they know – everything about everyone. Tens of millions of people – some for fun, some under force – flow to far-away countries year by year. Millions of deaths from starvation and the extravagant consumption of several hundred million people are going on before the eyes of 6.6 billion earthlings. This is one of the reasons for the fact that all the citizens of this planet follow the consumption model of the richest people. However, this – otherwise justifiable – desire has becomes impossible in the 21st century. Man has occupied each corner of his world and put all his resources to use. „Every mammal on this planet – said agent Smith in the “cult” film, Matrix – instinctively develops a natural equilibrium with its surrounding environment. But you humans do not. You move to new areas and you multiply. You multiply until every natural resource is consumed. The only way you to survive is to spread to an other areas. There is another organism on this planet that follows this pattern. A virus. Human beings are a disease of this planet. You are a plague.”

This shocking wording is not unfounded: the ecological footprint of humankind – the product of population multiplied by consumption and technology – has surpassed the dimensions of the Earth. In 1900, the size of the ecological footprint hardly reached 30% of the Earth and even in the case of the richest societies it was smaller than the size of the particular country. Around 1980, however, humanity’s ecological footprint reached the size of the Earth and on entering the 21st century it surpassed it by 50%. Moreover, the richest societies – otherwise environmentally conscious according to their own standards – far surpassed their own territory with regard to ecology. We, East-Central Europeans also surpassed the ecological boundaries of our own countries by the 21st century. This means that the 20th-century example of explosive growth cannot be followed either on the top of the consumption pyramid or on the lower levels of the pyramid.

The problems occurring in the 21st century (poverty, helplessness and inequality on the one hand and catastrophes in the ways of life caused by “over-consumption” on the other hand) will force all inhabitants of the planet to radically change their – maybe disliked but usual – way of life and culture. The poverty of the 4 billion people at the base of the global consumption pyramid can be attributed to their own traditional institutions – which is clearly proven by the historical and economical analyses. These societies are poor not because the “intelligence” level of their inhabitants, nor because the richer “exploit” them. Their traditional economical and social institutions do not make upswing possible. Thus acceleration of growth (through economic and social reforms) and the realization of demographic transition (through social and political reforms) are necessary at the same time. This however, requires the acceptance of joining the global division of labour, extreme standardization, the dominance of the market and private property, the practising of democratic power – in marked contrast to the established traditions – and personal civil rights. For lack thereof the countries starting on the way of development are kept in captivity by the “trap of poverty”.

The difficulties of the process are proven by the failure of several countries being modernized –described earlier as success stories. Kenya has been put on the front page of the media during the past months – it was an ideal African state for several decades. In the tribal riots which occurred after the “democratic” elections which took place at the end of 2007 the opposing parties started slaughtering each other– completely unexpectedly. Everybody was at a loss over what had happened although the events could have been foreseen. The population of the country has increased from 2.9 million to 37 million during the past 80 years. A Kenyan woman gave birth to more than 5 children on average in 2007 – the European average is 1.6 – 4 of which grow up. The average age is 18 years and 35% of the male population is aged between 15-29 years. This young generation which is relatively qualified yet frustrated and explosive because they have no jobs and no future, will increase to 8.1 million from the present 5.7 million within 15 years. The global trend of urbanization worsens the situation. The fast increasing population – not finding jobs in the villages – flows to the towns. The proportion of towns-people has also reached 50% in the developing world. These towns do not grow organically but like a malignant tumour. Therefore, they are extremely vulnerable to the changes in the environment (global warming) or social disturbances (wars, crises). The vulnerable state institutional system easily cracks: in such a case the civilization falls apart and terrible events happen.

The situation of the 2 billion ambitious citizens of the world – including also us, East-Central Europeans – is controversial from another aspect. They exited “national poverty” and joining the global economy they received a chance to catch up. Despite the fact that their living conditions have continuously improved they feel their situation hopeless. They hope for further easing of pressing scarcity only from increasing consumption. However, everybody compares themselves with richer nations, regions, professions and people. Thus the eye-catching difference “resets” our satisfaction. This is why - viewing itself and its life through the rich people’s glasses - East-Europe feels cheated. Consequence: populist political trends surge forward everywhere using the slogans “anti-globalist”, “anti-capitalist” and “anti-liberal” –without actually realizing its consequences.

Although the catching up of this wide group of countries – societies of Asia, South America and Eastern Europe – is still in progress in the 21st century the average citizen only notices that the differences between the income increase within their society and the gap separating them from the rich layer is not reduced. Thus it is more and more difficult for them to accept the tasks necessarily inflicted by history on “catching up countries”: discipline, hard work and waiver. The alternating governments following each other in politics are drifting under the pressure of their own promises and circumstances. East-Central Europe – wedged in between the up-and-coming Asians and the already accomplished West-Europeans – wavers between opening which is full of risks but involves opportunities and closing which results in a sure dropping behind.

The 600 million wealthy citizens forming the top of the pyramid are also unhappy and depressed – which is incomprehensible for those at the bottom. Despite that the 20th century resulted in a steady increase of their “happiness-level”, sometime at the beginning of the 70s – when the national income amounted to around 20 thousand USD/capita – the happiness generating effect of money (and consumption) unexpectedly decreased. In the developed societies in spite of the continuous increase of the national income the proportion of people considering themselves as happy has not increased for decades. It suggests that “well being” depends less and less on income, it rather depends on a cleverly chosen life model. However, the majority still connect their satisfaction with consumption – partly because of the “choice explosion”. This reaction can be understood especially if viewed through the eyes of an East-European. When President F. D. Roosevelt was asked – according to an anecdote – which book he would give the Soviet citizens to read which would make the supremacy of capitalism clear as a bell to them, his shocking answer was: the catalogue of Sears department store. Today we can choose from among several million products in any domestic shopping centre – several types of TVs, washing-machines, computers, at least a hundred shirts, jeans, thousands of shampoo and tea brands, innumerable books, medicines, fashion jewellery, insurance and bank services. The number of “individual” products – called stock keeping units (SKU) by economists – grew from a maximum of 1000 at the beginning of our era up to at least 1 billion experienced during last year’s Christmas shopping. The difference between the abundance of the early predecessors and our present age is not expressed by the several hundred times difference between incomes but the huge difference in the available choice amounting to several hundred thousands.

The choice explosion resulted in special but not intended consequences. The time spent compulsorily on shopping increased. What we won with the opportunity of doing the shopping in giant shopping centres we lost when we look for what we exactly need in the baffling choice. Thus – instead of increasing our satisfaction as before –the rich choice actually makes us frustrated. The phenomenon known as cognitive dissonance by psychologists – i.e. we convince ourselves that we have made the correct decision – became the opposite. It is all in vain that we have spent much time on shopping and collected all possible information. We already think before getting home that we have made the wrong decision. Then we try to lighten our dissatisfaction by doing more shopping. „A long time ago when people were unhappy – says the protagonist of A. Miller’s play – they went to church or made a revolution. Today they go shopping.” An increasing proportion of people are characterized as “shopaholics”: they buy products they do not need. As a result of irresistible temptations more and more people far exceed their limits. The number of personal bankrupts is unstoppably increasing. Meanwhile we throw away at least a quarter of the purchased products – food, clothes, furniture, gifts – without using them. The outcome: the almost baffling choice makes us uncertain, the possibility of unlimited consumption causes dissatisfaction and the impossibility of fulfilling the expectations driven up to extremes results in depression.

This is why more and more people on the top of the pyramid feel – the future is lost. The spreading of the “sudden wealth syndrome” or the personality disorder described as “affluenza” threatens those who became rich too quickly and calls our attention to it. These “diseases”, however, cannot be cured either by a high rate of growth or by redistribution. The vital problem of inequality for those who got to the top, can slacken only in one – unexpected – way, i.e. it becomes unimportant. The wealth-differences lose its priority “having existed” for thousands of years. The difference between incomes is considered as a severe social problem by a decreasing number of people because their happiness depends basically on their way of life. The changes are referred to by special way-of-life-movements gaining more and more ground: voluntary simplicity, communalism, LETS (local exchange and trading schemes), and the wikinomics. The birth of the new communities and a new personality however is not without conflicts even in wealthy societies.

The remedy for global inequality is so complicated – contrary to the previous era – because completely different therapies are required in the various regions of the world. The problem of the 4 billion poor people – not undervaluing the significance of the redistribution mechanisms – can be remedied only by accelerating the growth and development of democracy. All nations – following the example of the wealthy ones of today – have to establish their own riches and realize their own equality. All this is subject to the market – which has controversial effects - private property as well as individual human rights and the institutions of political democracy. Thus it is in vain to be lucky (to find sources of raw materials) or to receive uncountable external support, a person, a community or a country without appropriate culture will be just ruined by it but won’t be made happier.

The situation of the two billion of the catching up citizens in the consumption pyramid seems to be simpler: just no relaxation whatsoever, only hard work, and waiver – for a while. In exchange, the expanding choice of the “happiness-goods” is only at arm’s length. However, the generations born in the last decade of the 20th century are not enthused by the life program of the Protestant Ethic. They – following the example shown by the global media – want to enjoy their lives: they want less responsibility, shorter working time and even more freedom. They ignore: you cannot stop before you get to the top. In a peculiar way those people cannot enjoy careless consumption either who have already reached the top. For them happiness can only be reached beyond consumption, by finding a balanced and cultural life. The real challenge of the 21st century is that, first time in the history this question has arisen not only for some thousands, but for many billions of people. The new life program, the establishment of the individual “happiness-strategy” requires a complete break with the past.

After all, all the three levels of the pyramid struggle with the same problem – the difficulties of culture-shift. But people cannot change their culture like their clothes. People experience the loss of the usual – not necessarily loved – culture as death. The new culture gives a chance, but not certainty for rebirth. This is why we feel that we cannot see clearly the tasks, let alone the solutions. What is only clear is that the thoughts of the world-famous American economist K. Galbraith who died not long ago, written about half a century before are truer than of that time: „To furnish a barren room is one thing. To continue to crowd in furniture until the foundation buckles is quite another. To have failed to solve the problem of producing goods would have been to continue man in his oldest and most grievous misfortune. But to fail to see that we have solved it, and to fail to proceed thence to the next task would be fully as tragic.