Capital Accumulation and Opting Out of the Consumerist Machine

by Charles Hugh Smith

Correspondent Ken R. offers examples of opting out of the consumerist marketing machine.

In broad brush, frugality is mocked and scorned in American culture because it is extremely subversive to the dominant consumerist machine. Frugality and the work ethic have deep roots in the Northern-European-Protestant (key root:"protest") ethos: a penny saved is a penny earned, the Lord helps those who help themselves, etc. Many other cultures from around the world share these same values.

The connection between the Protestant ethos and Capitalism has been a given since Max Weber's work in the early 20th century ( The Protestant Ethic and the Spirit of Capitalism). The key feature of Capitalism is not greed--that existed long before capitalism and flourishes in non-Capitalist societies. The key feature of Capitalism is capital accumulation, i.e. what's left after expenses are subtracted from income, i.e. savings that can then be invested in productive assets.

Frugality is a key mechanism of "capital accumulation." We have been brainwashed into thinking that "growth" and "the good life" are based on consumption. The motivation for the brainwashing is obvious: those with capital invested in productive assets want others to squander all their earnings on consumption, as that boosts profits.

Without capital, there can be no wealth accumulation (unless you're a "too big to fail" bank and you can borrow billions from the Federal Reserve for free, and then deposit the money at the Fed for a nice "free-money" yield).

For all of us who are not corrupt officials and/or corrupt bankers (love that revolving door) then accumulating capital is our only hope of escaping consumerist poverty.

A vast consumerist marketing machine seeks to encourage consumption at every turn. You are nothing but what you own, wear and drive. This insecurity and dependence on "cool stuff" for an identity and sense of worth is the key dynamic of the marketing machine. (I discuss this at length in my book Survival+.)

One of our young friends is a Chinese student who recently completed her graduate studies in the U.S. and returned to China. Since we have had many Chinese and Chinese-American friends for the past two decades, one of her joking observations of American life resonated with us: Americans try to save 5% and spend 95% of their income, she noted, where Chinese try to spend 5% and save 95%.

This is how frugal families (often legal immigrants) pay off their mortgages in a few years: not 30 years, 3 years. With the debt gone, then they start accumulating capital.

The key to capital accumulation is to opt out of the consumerist machine. Longtime correspondent Ken R. recently shared some of his experiments in frugality. I know many of you have similar experiences and values. Those who do have capital/assets, while the typical American has little to none.

It is my observation that income is only loosely correlated to capital and asset accumulation. Yes, we all need moderate income in order to save. Interestingly, those with moderate incomes seem to save more than those with high incomes. We are brainwashed into believing that our lack of wealth is "caused" by not making enough money, but it seems more likely that a lack of assets is more the result of expenses exceeding or matching income, whatever that income may be.

Here are Ken R.'s comments:

My house sits on a piece of property that is about 3 acres. Of that 3, I would say about 1.5 has grass that needs cut and the rest is wooded. A few years ago when my 20 year old farm/garden tractor mower blew up I decided there was no way I was paying $4000.00 for a new "must have" yuppie John Deere tractor. So I went the local small business lawn mower repair guy and bought a 15 year old push mulching mower from him for $40 bucks. I call it frankenmower and yes I sweat my ass off pushing it around but I needed to lose weight. The 15 year old mower cuts fantastic and the $40 I spent went into an American businessman's hands.

Last fall my very old (over 20 years) trimmer started to have problems. Again, I am not spending money on a new corporate made, profit motive only, piece of lean six sigma garbage that does not help an American business person. Went on Craigs list, found a guy cleaning out his garage and bought a used professional grade trimmer for $50 bucks that would have cost me over $300 new.

When I went to buy a car 3 years ago, I could have gotten a big ticket. I took the bare bones Hyundai that gets 33 MPG and I am driving it till it drops. Are you familiar with the term psychological obsolescence? It's how the marketing folks convince the masses the piece of cheap garbage they have now is no longer " cool " and needs to be replaced by a new piece of mass produced garbage. Probably most of your readers are above the ploys of marketing but I wonder what the percentage is of folks that are clueless about how they are being led?

Thank you, Ken, and kudos to you for improving your health and strength while also saving money. Ken sent me this quote, which is of course is in my list of aphorisms: "Without health there is no happiness. An attention to health, then, should take the place of every other object." (Thomas Jefferson, 1787)

Bonus quote:
"The man who has a garden and a library has everything." (Cicero, via Lee Bentley