Four decades ago, in a landmark Public Interest article titled ‘Public Goods and Private Status’, Joseph Monsen and Anthony Downs took up the question of why American society was, in the phrase coined by John Kenneth Galbraith, ‘privately rich but publicly poor’.footnote1 The authors were not convinced by what they took to be the received explanation at the time: the ‘clever and nefarious advertising techniques’ used by large corporations to manipulate consumers, so that they would ‘buy private goods and services they do not relatively need or want’. Instead, Monsen and Downs suggested ‘a more fundamental factor’ was at work, accounting for the differential allocation of goods between the public and private sectors: a ‘desire’ on the part of consumers ‘for emulation and differentiation’, driving them ‘to create visible distinctions between large groups and classes, and, within such groups, more subtle distinctions of individuality’. Drawing on Veblen’s notion of conspicuous consumption in The Theory of the Leisure Class, as well as 1960s explanations of status-seeking consumer behaviour in American society, Monsen and Downs described this desire as ‘an intrinsic part of man’s character, evident to at least some degrees in all societies, past and present’—‘so fundamental that it can be considered a “law” of human nature.’

Why should this ‘law of consumer differentiation’, conceived as something close to an anthropological constant, affect the relative allocation of resources between the private and the public spheres of a modern political economy? The central point of Monsen and Downs’s argument is that what they call ‘government goods’—those produced or distributed by public authorities—are ‘designed with an eye to uniformity’. The standardization of army rifles is the most evident case in point:

Such goods are easier to produce and administer by the bureaucracy, and they accord with the ideal of equality which underlies the distribution of government goods. But by that very nature, such goods cannot be used easily for status differentiation which is a major function of most goods in advanced industrial societies.

In what follows, I shall make use of Monsen and Downs’s productive distinction between these two modes of provision, with inherent capacities favouring different kinds of goods: one mode is public and collective, administered by state authorities; the other is private and individual, mediated by commercial markets. But rather than comparing the two modes synchronically, or examining them within the eternal property space of economic anthropology, I will take a longitudinal view on the development of their mutual relationship. Moreover, instead of anchoring product diversification in a timeless human disposition towards status-seeking, I will relate it to a particular mode of utility maximization favoured in the transition from a need-supplying to a want-supplying economy, from sellers’ to buyers’ markets, and from poor to saturated to affluent societies, which was getting underway around the time (1971) that Monsen and Downs’s article appeared. In this sense, I will suggest a return to the ‘institutionalist’ explanation for the starvation of the public sphere, which Monsen and Downs rejected in favour of their human-nature theory.

The late 1960s and early 70s were, we now know, a watershed in the history of post-war democratic capitalism. It has become customary to speak of the crisis and eventual collapse of a more-or-less coherent, international production and consumption regime which, having sustained unprecedented economic growth during the trente glorieuses, began to be referred to summarily as Fordism. Today what is most often remembered about its demise may be the worldwide wave of labour militancy at the end of the 1960s, and with it the refusal of growing sections of the working class to subject themselves to the discipline of Taylorist factories, together with claims for shorter hours, better pay and politically guaranteed rights of citizenship in employment.

It was not just labour markets, however, that turned into a bottleneck for the progress of capitalist accumulation. Quite similar developments took place in product markets, and in fact changes in the two were intricately related. Fordism had entailed the mass production of standardized goods for societies in a secular transition from rural to urban and industrial ways of life, in which people spent their rising incomes on consumer durables like cars and refrigerators, which they were able to acquire for the first time in their families’ lives. Needs were still obvious, scarcity was a fact, and what people demanded and could afford were products that were both cheap and reliable, with robust and mature technology offered at low prices, made possible by extensive economies of scale. Product markets, consequently, were governed by large oligopolistic firms which benefited from steadily growing demand, often at a rate that made it difficult for production to keep up. In fact for Fordist mass producers, selling was much less of a problem than producing; customers were used to long delivery dates and waited patiently for firms to supply them once their allotted time had come.

Interviewing German managers with first-hand experience of the watershed years, I sometimes heard them speak nostalgically of the Zuteilungswirtschaft, or ‘allocation economy’, of the 1950s and 60s: all you had to do was produce one standard product and then allocate it among a deeply deferential clientele, happy to be served whenever it fitted into the firm’s production schedule. (Another German term would be Versorgungswirtschaft, which might be translated as ‘provision economy’.) Given the structure of competition and their desire for low prices, customers did not expect to have much choice; Henry Ford’s dictum about his T2 model, that ‘you can have it any colour you like as long as it’s black’, still applied grosso modo to the relationship between producers and consumers in the sellers’ markets of post-war Fordism. I even heard managers suggest that the differences between the organized capitalism of the post-war years in the West and the state socialism of the East were not as dramatic as one might have believed at the time: only that delivery periods were even longer in the East. Nor was there much difference between the private and the state sector: applying to the Post Office for a telephone was quite similar to applying to vw for a new car; in both cases there was a waiting period of half a year or more. In Western Europe, the first wave of motorization was in fact supplied by state-owned or heavily state-supported companies: vw in Germany, Renault in France, British Leyland in Britain, fiat in Italy.