There should be no surprise that a well-thumbed copy of the Financial Times' How To Spend It supplement has been found in one of Colonel Gaddafi's residences in Libya. The Libyan Investment Authority, the sovereign wealth fund of the Libyan state, is a 3% shareholder in FT owner Pearson. Clearly Gaddafi liked to read How To Spend It as he kept abreast of his investments.To help us out, it is instructive to contrast Adam Smith and Karl Marx's explanations of political economy concerning the production of luxury goods. Smith, the far more sanguine of the two, argues that the vanity of the rich--foolish as it may be--is a source of livelihood for those less well-off. Pardon the comparison, but he outlined in The Theory of Moral Sentiments a form of "trickle-down" theory long before neoliberal economists arrived on the scene. In so doing, he invokes the second most famous invocation of the "invisible hand" metaphor:
How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number. They walk about loaded with a multitude of baubles, in weight and sometimes in value not inferior to an ordinary Jew's-box, some of which may sometimes be of some little use, but all of which might at all times be very well spared, and of which the whole utility is certainly not worth the fatigue of bearing the burden.However, as an attentive reader of Adam Smith, Karl Marx is decidedly more critical of the true nature of labourers endeavouring to produce luxury goods in The Economic & Philosophic Manuscripts of 1844:
Nor is it only with regard to such frivolous objects that our conduct is influenced by this principle; it is often the secret motive of the most serious and important pursuits of both private and public life...[a]nd it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind...
The homely and vulgar proverb, that the eye is larger than the belly, never was more fully verified than with regard to him [the aesthete]. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets, which are employed in the oeconomy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice...
They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species [my emphasis].
The only wheels which political economy sets in motion are greed, and the war amongst the greedy–competition [e.g. LVMH vs PPR in luxury goods-!]...Ouch! While the sing-song comparison by Marx is rhetorically elegant, I think that the Smithian mode of analysis is not only more comprehensive but also more convincing overall. The subtitles of their respective sections say it all: "Of the beauty which the appearance of Utility bestows upon all the productions of art" compared with "Estranged labour."
Political economy conceals the estrangement inherent in the nature of labour by not considering the direct relationship between the worker (labour) and production. It is true that labour produces for the rich wonderful things – but for the worker it produces privation. It produces palaces – but for the worker, hovels. It produces beauty – but for the worker, deformity. It replaces labour by machines, but it throws one section of the workers back into barbarous types of labour and it turns the other section into a machine. It produces intelligence – but for the worker, stupidity, cretinism.