The term ‘Consumerism’ was originally introduced in the late 17th century and intensified through the 18th century as a result of the growing ‘middle class’ who embraced new ideas about luxury consumption and about fashion as an arbiter for purchasing rather than necessity. Today, in the 21st century, consumerism has come a far way. Spending on goods and services whether extravagantly or necessarily constitutes the idea of Consumerism. It is an approach to economics that views the consumer as the primary force that drives economic activity and outcome. In an economic sense, it is based on the Keynesian idea that consumer demand governs economic activity and encouraging the consumers to spend more should be a major policy objective. In common sense, it means that the well-being of a consumer is directly related to the material possessions and consumption.
Advocates of consumerism point to how consumer spending drives the economy forward and leads to an increase in production. As a result of this increased production, a rise in GDP (Gross Domestic Product) may occur. Economists in this way believe consumerism to have a positive impact on the economy. However, consumerism over the centuries has gained many critiques owing to its detrimental effect on the environment, culture, and psychology of individuals, and even on the economy, most of which is a consequence of conspicuous consumption. People today tend to spend more and more money on the acquisition of luxury goods and services entirely to publicly display the power of their income and wealth. Corporations are successful in developing innovative products inciting the consumer’s desire to fit into the fabric of our culture. These loyal consumers have made some corporations more affluent than some countries.
The annual revenue of companies such as Microsoft, Netflix, and Apple is so huge that they dwarf the economy of many countries across the globe. Revenues of some giant conglomerates when compared with the GDP of countries around the world, as reported by the IMF, depicts which country is out-earned by a company.
COMPARISION OF REVENUE GENERATED BY COMPANIES WITH THE GDP OF COUNTRIES :
Spotify’s revenues in 2019 exceeded Mauritania’s GDP. The GDP growth in Mauritania has been on an upward trajectory since 2016, rising from 3.97% in 2018 to 5.55% in 2019. However, Spotify’s total revenue in 2019 came to $ 6,764 million which is way more than the country’s GDP which stood at $ 5,650 million in 2019. According to this data, Spotify would be at 151 in terms of wealth in the world, if it were a country. Another example is Netflix, which had a greater revenue in 2019 than Malta’s GDP. Malta, a highly industrialized, service-based economy, is considered an advanced economy by the IMF. Its GDP for the year 2019 was $ 14,860 million. Netflix’s annual revenue for the year 2019 came at $ 20,156 million. Considering this data, if Netflix was a country, it would be the 126th wealthiest in the world by GDP.
Starbucks’ profits were higher than Trinidad and Tobago’s GDP in 2019. The country has mostly an industrial economy, with a focus on petroleum and petrochemicals. It recorded its GDP at $ 22,610 million in 2019, whereas, Starbucks’ annual revenue for the same year stood at $ 26,500 million. If it were a country, it would be ranked 104th in the world by GDP. Another in the list is the tech giant, Microsoft, which collected a revenue of $ 125,843 million in 2019 surpassing Slovakia’s GDP for the same year, which was $ 106,550 million. That would make Microsoft stand 65th in terms of world GDP. Another company out-earning a country is Facebook, with an income of $ 55,838 million, which is more than Serbia’s GDP for 2019, $ 51,520 million.
Revenues at Alphabet exceeded Puerto Rico’s GDP in 2019. Puerto Rico’s primary exports include clothing, canned tuna, rum, beverage concentrates, and electronics. The country’s GDP in 2019 stood at $ 99,910 million. Alphabet earned annual revenue of $ 161,857 million during the same year. Going off its revenues, it would be ranked 59 in the world GDP, if it were a country. Amazon’s revenues surpass Kuwait’s GDP in 2019. Kuwait is a small, petroleum-based economy with a GDP of $ 137,590 million. Amazon’s revenues in 2019 came to $ 280,520 million, which would make it stand at 58 in terms of world GDP.
A study has shown that the world’s largest corporations raised more money than most countries in the world combined collected in taxation. Consumerism has intensified over time and taken a turn from consumers buying necessary goods to consumers spending excess money on luxury items or conspicuous consumption. Consumerism is based on the idea that spending an increasing amount of money on goods will provide satisfaction to the consumer and ensure his well-being. However, this idea often leads to an opposite impact on the consumer, environment as well as society. The increased consumption has led to making some corporations opulent and powerful as depicted by the figures above. The drive for short-term profits and extravagant lifestyle today seems to trump basic human rights for millions of people on our planet.
Large corporations are an economic, political, environmental, and cultural force that is unavoidable in today’s globalized world. Large corporations have an impact on the lives of billions of people every day, often in complex and imperceptible ways. They have strong political influence as they can influence governments through political donations and direct lobbying and are also avid contributors to political campaigns. These can be effective in influencing public policy. For example, according to lobbying disclosure reports filed by Wal Mart, the company has spent close to Rs 125 crore on lobbying activities, including on issues related to enhanced market access for investment in India.
Another defining characteristic of modern MNC is its ability to transfer resources across national borders. The mobility of MNCs allows them to shift production and profits across national borders in an attempt to reduce their tax burden. The concessions provided to them by nations competing with each other may include environmental damage, human rights abuses, and negative social consequences. While benefiting from the competition by nations, corporations have also obtained powerful concessions in recent international trade agreements, which has provided them a powerful new tool for influencing and even reversing, public policy decisions. An example of this is NAFTA. Chapter 11 of NAFTA specifies no party to the agreement may “nationalize or expropriate an investment” of a foreign investor without sufficient compensation. While the purpose of this clause appears to be simply to protect foreign investors from a seizure of private property, in practice it has had much broader implications. NAFTA permits investors (typically corporations) to sue a host government. In at least 17 cases to date corporations have filed complaints against NAFTA signatories. The cases demonstrated that a foreign corporation could force a national government to change its environmental policies in the interest of free trade.
Making these corporations wealthy and affluent transforms the global environment, which brings to notice the need for corporations to become more accountable for their social and environmental impacts. Loyal consumers across the globe, as a consequence of globalization, have transferred a great deal of power in the hands of corporations. As discussed, the corporations hold power to influence political, public policy, and environmental decisions. Therefore, the objectives of corporations must converge with the broader goals of society in human interest and as a social responsibility, through national regulations as well as international actions.
References
International Monetary Fund World Economic Outlook ( October 2019) Retrieved July 5, 2020, from http://statisticstimes.com/economy/projected-world-gdp-ranking.php
Fortune Global 500, List of largest companies by revenue, Available at : https://fortune.com/global500/2019/search/
Roach, B., (2007),Corporate Power in a Global Economy, A GDAE Teaching Module on Social and Environmental Issues in Economics, Global Development And Environment Institute, Tufts University. Available at: https://www.economicsnetwork.ac.uk/sites/default/files/Brian%20Roach/Corporate_Power_in_a_Global_Economy.pdf
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