What kind of goods and experiences comprise a “normal life”? In 1900, Henry George thought millionaires lived abnormally because they had telephones in their bedrooms. Looking back, it’s remarkable how quickly the abnormal becomes ordinary. Today, even the poorest people — not only in rich countries but also in developing ones — carry a phone (which does much more than ring) in their pocket.
From Luxuries to Necessities
That’s one of the miracles of the free market. French sociologist Gabriel Tarde noticed that forks and spoons were once luxuries reserved for the elite, but by his time had become universal. Ludwig von Mises drew inspiration from Tarde’s insight, calling it one of capitalism’s greatest virtues: the transformation of luxuries into necessities. “What was once a luxury becomes in the course of time a necessity,” he wrote. In Mises’s view, this is the inherent tendency of capitalism — to shorten that time lag and make the luxurious accessible to the masses. One might add that in socialist economies, the opposite happens: necessities become luxuries.
But this transformation is only possible through freedom — the freedom of consumers to experiment with new products, and of producers to innovate and take risks. On the supply side, the liberty of entrepreneurs and capitalists to test new methods of production — even when those methods appear “unjust” or “wasteful” at first — opens the door for millions to enjoy the fruits of innovation. As F. A. Hayek put it, capitalism enables “experimentation with a style of living that will eventually be available to many.”
Yet supply is only half the story. Consumers play an equally vital role. Mises called capitalism the sovereignty of the consumers. And yet, in recent years, a “war on consumers” has emerged from both the left and the right.
The War on Consumers
Five months ago, Donald Trump, defending his trade war with China, remarked, “Maybe the children will have two dolls instead of thirty dolls.” On the other side, Bernie Sanders has declared that we “don’t need 23 choices of deodorant or 18 choices of sneakers when kids are going hungry.”
In both cases, ordinary consumers — those walking through Walmart comparing groceries or choosing between brands — are portrayed as the problem. “Why do you need thirty dolls?” they ask. “Why twenty-three deodorants?”
This disdain for consumer choice has deep intellectual roots — not just in populist rhetoric but in academia. From Thorstein Veblen’s theory of conspicuous consumption to John Kenneth Galbraith’s The Affluent Society, many thinkers have looked down on consumer tastes. Galbraith once dismissed American cars as “big, ungainly, [and] unfunctional.” But ugly by whose standard? Dysfunctional according to what measure? The essence of the free market is that consumers decide for themselves — and the normative defense of this system is straightforward: individuals know their own interests better than any politician or professor.
Critics — from Veblen to Marxists who claim capitalists “manufacture” desires — forget what liberal economists understood well: that consumption in a modern economy is not merely about survival, but experience. We don’t just buy things to use them; we buy them to experience them. Marketing, far from being pure manipulation, is part of that experience. Buying a perfume endorsed by your favorite celebrity is not just about smelling pleasant — it’s about identity, aspiration, and emotion. Because preferences are subjective, it’s meaningless to draw a hard line between “needs” and “wants.” Who could have predicted that humanity “needed” airplanes or automobiles before they existed?
Through trial and error, consumers discover what they value. There is no objective measure of “need.” In fact, the unpredictability of human desire is itself a defense of the free market: we need its discovery process to learn what tomorrow’s needs will be. What looks like frivolous consumption today often becomes the gateway for widespread prosperity tomorrow.
Critics of marketing also ignore basic business logic. Which is easier for a firm: to spend vast sums inventing a new “need” and then developing a product for it, or simply to observe what people already want and produce accordingly? The latter is common sense. Marketing’s informative function is often overlooked; if it were purely deceptive, businesses would have little incentive to rely on it. Real profits come from loyal, long-term customers — something deception cannot buy.
As the economist Stanley Lebergott once wrote, “It is an unacknowledged excellence of modern economics that its foundations are pitched on the sands of human desire.” Modern economies achieve miracles not through the commands of kings or planners, but through individuals pursuing their own interests — and that is a virtue, not a sin.
This “unacknowledged excellence” is the moral beauty of the liberal market order: where consumers are free to choose, society has no forced mission — and yet it prospers precisely because of that freedom.