Chapter 15
Consumerism
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Harvey W. Wiley
o In the late 1800s, Harvey W. Wiley, a professor at
Purdue University, began working with Indiana state
officials to detect adulteration in food products
o A large, highly competitive food industry applied new
food chemistries using preservatives, colorings,
flavorings, texturizers, and other additives
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Harvey W. Wiley
o With few laws to police dishonorable operators,
dangerous, fraudulent, and cheapened products made
their way to market.
o At age 39, Wiley took charge of the Bureau of
Chemistry in Washington, D.C.
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Harvey W. Wiley
o Wiley began to agitate for a national pure food law
o Wiley set up an experiment whose participants were
nicknamed the “poison squad”
o In 1906, Congress finally passed the Pure Food and
Drug Act
o The Bureau of Chemistry evolved into the Food and
Drug Administration, a powerful agency that protects
public health
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Consumerism
o Consumerism:
o A movement to promote the rights and powers of
consumers in relation to sellers
o A powerful ideology in which the pursuit of material
goods beyond subsistence shapes social conduct
o Consumer: A person who uses products and services
in a commercial economy
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Consumerism as an Ideology
o Consumerism describes a society in which people
define their identities by acquiring and displaying
material goods beyond what they need for subsistence
o The full emergence of consumerism came as
economic changes interacted with cultural and social
developments
o Declining influence of religion
o The industrial revolution
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Consumerism Rises in America
o In the 1800s, a commercial economy began to appear
o Consumerism in America began with a confluence of
events at the turn of the 20th century
o Railroads
o Great merger wave of 1896-1904
o Mass production of consumer goods
o Electricity and other new technologies
o Movement of people
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Consumerism in Perspective
o Marketing research reveals a widespread, profound
effort to find love, status, and individuality in
products
o Materialism is an emphasis on material objects or
money that displaces spiritual, aesthetic, or
philosophical values
o Thorstein Veblen, in his book The Theory of the
Leisure Class, challenged the conventional economic
wisdom that consumers bought goods for their
functional utility
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Consumerism in Perspective
o Complaints about consumerism include:
o It leads to commodification of all parts of life
o It encourages unwise, irrational, and unproductive uses
of money
o Heavy consumption is profligate with natural
resources and incompatible with sustainability
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Consumerism in Perspective
o Consuming beyond necessity violates “the idea the
God’s world is already full and complete”
o It distorts our values
o It is a pathology of corporate capitalism
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The Global Rise of Consumerism
o The ideology of consumerism has risen in Russia,
Asia, Latin America, the Middle East, and even
Africa
o It may be less a Western than a universal
phenomenon, coming with human nature, economic
progress, and cultural change interact at a certain
moment in a modernizing society
o Once it takes hold, consumerism seems irrepressible,
but resistance continues
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In Defense of Consumerism
o Successful products either create value for customers
or they fail in competitive markets
o Intense competition between corporations works to
bring consumers more choices, higher quality, and
lower prices
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Consumerism as a Protective Movement
o The idea of collective interest in protecting
consumers dates back to the earliest transactions
between merchants and customers
o 1870s when Populist farmers attacked railroads
o Food and Drug Act of 1906
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Consumerism as a Protective Movement
o The 1960s and 1970s prompted another wave of
legislation to protect consumers and expand their
rights
o Consumer protection is today a major function of
government
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Figure 15.2 - Spending on Consumer Health and Safety by
Federal Regulatory Agencies: 1960–2010
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The Consumer’s Protective Shield
o Besides federal laws and regulations, there are
significant protections at the state and local level
o Every state and local government has extensive
consumer protection laws
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The Consumer’s Protective Shield
o More than 50 federal agencies and bureaus are active
in consumer affairs
o These agencies and bureaus are effective despite
changing ideologies in administrations, powerful
critics, budget restraints, and too little staff to meet all
their statutory mandates
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The Food and Drug Administration (FDA)
o Evolved out of the authority established by Congress
in the Food and Drug Act of 1906
o Nineteen specific areas of responsibility
o It has authority to:
o Regulate the quality, safety, and labeling of human
food, pet foods, animal feeds, and food additives
o Approve human and veterinary drugs and medical
devices
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The Food and Drug Administration (FDA)
o Set safety and effectiveness standards for over-thecounter drugs
o Regulate the safety and labeling of cosmetics
o Regulate the marketing, labeling, and ingredients of
tobacco products
o Set safety standards for radiation-emitting products
including microwave ovens, televisions, X-ray
machines, lasers, and sunlamps
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The Consumer Product Safety Commission
(CPSC)
o Created by Congress in 1972
o Has power to:
o Set mandatory or encourage voluntary safety standards
for more than 15,000 consumer products
o Ban the sale of products that expose consumers to
unreasonable risks
o Require manufacturers to recall dangerous products
o Investigate the extent and causes of deaths and injuries
from consumer products
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The National Highway Traffic Safety
Administration (NHTSA)
o Created by Congress in 1966 to:
o Mandate minimum safety standards for automobiles,
trucks, and their components
o Set fuel economy standards for cars and light-duty
trucks
o Require manufacturers to recall cars and trucks with
safety defects
o Administer grants for states and cities to promote
highway safety
o No other agency has such extensive controls over a
single product
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Figure 15.3 - One Effect of Deregulation on
Three Consumer Agencies
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Other Consumer Protection Agencies
o The Federal Trade Commission
o The Environmental Protection Agency
o The Equal Employment Opportunity Commission
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Product Liability Law
o Product liability: A doctrine in the law of torts that
covers redress for injuries caused by defective
products
o Tort: A private wrong committed by one person
against another person or her or his property
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Negligence
o A tort involves either an intentional or a negligent
action that causes injury
o Obstacles to consumers in early product liability law:
o Caveat emptor
o Narrow interpretation of the doctrine of privity, which
held that consumers could sue only the party that sold
them the product
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Warranty
o A warranty is a contract in which the seller guarantees
the nature of the product
o An express warranty is an explicit claim made by the
manufacturer to the buyer
o An implied warranty is an unwritten, commonsense
warranty arising out of the buyer’s reasonable
expectations
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Strict Liability
o The doctrine of strict liability established that anyone
who engages in a dangerous activity is liable for
damages to others, even if the activity is conducted
with utmost care
o The key to strict liability is that the injured person
need not prove negligence to prevail in court
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Strict Liability
o Under strict liability an injured plaintiff must prove
only that:
o The manufacturer made a product in a defective
condition that made it unreasonably dangerous to the
user
o The seller was in the business of selling such products
o It was unchanged from its manufactured condition
when purchased
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Perspectives on Product Liability
o The U.S. legal system makes it easier for plaintiffs to
win large damage awards from product makers than
do the systems of other countries.
o Nowhere else in the world has the legal system
created such a favorable environment for product
lawsuits as in the United States.
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Cost and Benefits of the Tort System
o A recent estimate is that the tort system inflicts an
annual economic cost of $835 billion on society,
about 2.2 percent of GDP
o Dangerous products have been either taken off the
market, had their sales restricted, or been redesigned
o Lawsuit threats and high liability insurance costs
regularly cause companies to drop high-risk products
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Concluding Observations
o Consumerism is a word with two meanings: it refers
both to a kind of society and to a protective
movement
o Consumerism as a way of life is spreading around the
world because the conditions that support it are
becoming more common
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Concluding Observations
o Consumers in the United States are now more
protected from injury, fraud, and other abuses than in
the past because of stronger government regulation
and more consumer-friendly common law doctrines
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