But there was another shift underway. Marx also divided products into three categories: means of production, subsistence goods, and luxury goods. Marx was analyzing data from early in the Industrial Revolution, when the main problem was one of production, of increasing the industrial capacity; Marx saw that economies would be driven by capital investment in the first category, means of production. As more capital went towards means of production, the economy would expand, which would create more surplus value, which would increase the ability of people to consume the other two categories of products. But here's the thing: the financial virtues of an economy driven by the first category are investment and saving. If more surplus money is going towards factories than the products those factories produce, eventually supply catches up with and surpasses demand—which is exactly what happened in the later 19th century, just as the "labor problem" was coming to a boil. Marx saw it coming:
Thus the production of surplus-value, and with it the individual consumption of the capitalist, may increase, the entire process of reproduction may be in a flourishing condition, and yet a large part of the commodities may have entered into consumption only apparently, while in reality they may still remain unsold in the hands of dealers, may in fact still be lying in the market. Now one stream of commodities follows another, and finally it is discovered that the previous streams had been absorbed only apparently by consumption. The commodity-capitals compete with one another for a place in the market. Late-comers, to sell at all, sell at lower prices. The former streams have not yet been disposed of when payment for them falls due. Their owners must declare their insolvency or sell at any price to meet their obligations. This sale has nothing whatever to do with the actual state of the demand. It only concerns the demand for payment, the pressing necessity of transforming commodities into money. Then a crisis breaks out. (Capital, volume 2)19th-century capitalists were getting squeezed from two directions; overproduction was eating into the amount of surplus value they could claim, while political sentiment, even pro-business political sentiment, was still based on the assumption that the price of a product reflected the amount of labor put into its production, and the government's role was to enable investment and improvement in that production. Even before Marx, classical economists tended to think in terms of production. Adam Smith, in The Wealth of Nations, famously contrasted diamonds and water:
The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called 'value in use'; the other, 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.Smith's solution to the seeming paradox was that more labor was required to produce a diamond than to produce a drink of water. The labor theory of value, be it Smith's or Marx's, was firmly ingrained in the 19th-century mind.
American pro-capitalist economists thus saw a need to get around the labor theory. They did this with an idea called marginal utility: the value of a product reflects the difference in utility that comes with one more or less unit of that product. A gallon of water has less value than a diamond, according to a marginalist, because an increase or decrease in the world's water supply of a gallon makes far less difference than the increase or decrease of the diamond supply. For products with a more complicated provenance than that, the market is the arbiter of value—irregardless of the amount of labor required to manufacture the product. Products with a low labor-value might have a disproportionately high marginal utility value, and vice versa, based on how useful consumers viewed them to be.
Marginal utility originated in Europe, but American economists jumped on it, and it's not hard to see why: the theory is entirely dependent on consumers, completely sidestepping the labor theory of value. Here was coherent economic cover for a political solution to overproduction, shifting government attention to stimulating sufficient consumer demand to soak up whatever supply capitalists could produce. What's more, the focus was firmly on the macroeconomic level, on aggregate, rather than individual behavior. Here's how the leading American marginalist, economist John Bates Clark, put it:
Exchanges are always made between an individual and society as a whole. In every legitimate bargain the social organism is a party. Under a regime of free competition, whoever sells the thing he has produced, sells it to society. His sign advertises the world to come and buy, and it is the world, not the chance customer, that is the real purchaser. Yet it is equally true that whoever buys the thing he needs, buys it of society. Under free competition the world is seeking to serve us, and we buy what the world, not a chance producer offers.The historian James Livingston has provocatively, but I think correctly pointed out how conveniently the marginalist revolution in American economics dovetailed with the need to reorient the country's economy around consumers in order to alleviate capitalists' suffering at the hands of overproduction. Now, whether that reorientation was inevitable makes for an interesting though probably inconclusive debate. The point is that, from the beginning, the focus on consumers was as much a cultural shift as an economic one. It involved reshaping society so that acquisition took the place of thrift as a societal virtue.
When market valuations are made, society is primarily the buyer. Goods in individual hands are offered to the social whole, and the estimate of utility made by that purchaser fixes their market value. In the process the social organism is true to its nature as a single being, great and complex, indeed, but united and intelligent. It looks at an article as a man would do, and mentally measures the modification in its own condition which the acquisition of it would occasion, or which the loss of it would occasion, if once possessed. "With the article my condition is thus; without it, thus; the difference measures its effective utility;" such is the mental process by which individual or society makes a valuation. (John Bates Clark, "The Philosophy of Value", 1881)
One of my favorite soapbox tropes (here's a recent appearance) is the lousy job the free market does at matching up price and value in the arts. You can see how utility factors into this: paintings and sculpture command higher prices because of their possible utility as investments; going to the movies, though equally ephemeral as live performance, has the advantage of reproducibility, which enables the opportunity cost of a ticket to remain low enough to make up for the lack of utility. (I'll grumble at putting down ten bucks at the multiplex, but I'd have to bust out an old student ID to get into a concert for that money.) And the emphasis on the aggregate ensures that finding aesthetic utility in something other than the lowest common denominator means paying a higher price, which, over time, increases the barrier-to-entry for potential consumers of non-majority tastes.
That's old news. More intriguing is matching up the shift from production-based culture to consumer-based culture and the coincident decline in the status of composers. Composers are, after all, producers, and the staggering amount of music produced and published in the early 18th century would suggest that demand was not a problem. A great deal of that was due to domestic music-making; once recordings took hold, the need to actually make music at home disappeared. But that's a matter of utility as well: the pleasure in performing didn't change, but recordings required less effort, less practice—less labor-time—and convenience comparatively won out. And note the increasing market share of popular music—a largely performer-driven genre—and the corresponding increase in the performer-centric marketing of classical music. Capital moving away from the means of production and towards the product. (If you're inclined to view performers as the means of production, and the music as the product, feel free to substitute the shift from live performance towards recordings.)
Is this a capital-letter Bad Thing? Well, for me, characterizing it as good or bad isn't really the point. I mean, I wish the mass media was just packed with avant-garde music, because it would save me a lot of effort and money to hear it, but that's just my own preference. For now, the world is the way it is. But I think the recognition of the basis for the consumer culture we live in—and a recognition that it's historically quite new, relatively speaking—casts a lot of the controversies we bat about so much in an interesting light. Take the common charge that atonality scared away the audience for classical music: one could argue that the cultural shift towards consumerism meant that something was going to scare away a lot of the audience for classical music after the 19th century, and atonality just happened to be in the right place at the right time. Livingston quotes Richard Wrightman Fox and T.J. Jackson Lears:
[T]he new professional-managerial corps appeared with a timely dual message. On the one hand they proposed a new managerial efficiency, a new regime of administration by experts for business, government, and other spheres of life. On the other hand, they preached a new morality that subordinated the old goal of transcendence to new ideas of self-fulfillment and immediate gratification. This late nineteenth-century link between individual hedonism and bureaucratic organizations—a link that has been strengthened in the twentieth century—marks the point of departure for American consumer culture. [emphasis added]If Fox and Sears are right, that would seem to increasingly disadvantage any genre of music as it requires/expects more reflection and/or critical engagement than your most basic pop song—which might explain why Copland, Barber, &c., didn't counterbalance the supposed serialist hegemony, why minimalism didn't restore classical music to the status of its pre-Schoenberg glory days, and why people are starting to worry over jazz the way they already worry over classical. Is that a better explanation for recent musical history? A more useful one, perhaps? Maybe, maybe not—and I'm certainly not inclined to think that the social organism is true to its nature as a single being when it comes to historical causes célèbre. But it does introduce a datum into the calculation that I, at least, have not much seen previously.
"Men make their own history, but they do not make it as they please," Marx wrote, in The Eighteenth Brumaire of Louis Bonaparte, "they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past." That transmission can happen over a rather wide band, and on a lot of different frequencies.