By Ellen Ruppel Shell

In our modern, globalized economy, where people are far removed from the processes of production, it is difficult to know the actual value of anything – that is, the quality of the labour and material that went into producing it. In this there is a historical irony. As Ellen Ruppel Shell points out in this excellent new book, back in the day of Adam Smith, when most adults could not read or use technology to access information, consumers “generally knew more about what they purchased than do consumers in the Internet age where information is both ubiquitous and free.” As a result, price (which is a concrete number) comes to trump value. Or, as Shell has it, price becomes not just the most important thing but the only thing. Price, not value, is what defines the patterns of relationships within the economy, making ours a “discount culture.” Which is not a good thing.

We may feel otherwise. We seem to be biologically conditioned to like cheap stuff. Shell provides some interesting background to this in a pair of early chapters dealing with the science of behavioral economics and psychology. The addictive pursuit of “Cheap” – the capitalized noun refers to a variety of low-priced goods including “shoddy clothes, unreliable electronics, wobbly furniture, and questionable food” – is a drive that is “etched deeply into the national psyche but also into each of us, part of who we are not only as a culture but as individuals.” And it is a bad habit, leading to a false high. “With discounts,” one expert tells Shell, “everyone feels like a winner no matter how much they lose.” Just because something is cheap doesn’t make it a bargain.

But wait! There’s more! Cheap discourages creativity, innovation and craftsmanship. It destroys the environment and guts labour standards, increasing inequality and depressing standards of living worldwide. And it fills the world with a lot of almost instantly disposable trash, products not only dysfunctional but positively dangerous (cheap food, in particular, can kill you). The biggest villains in Shell’s book are, predictably, among the most successful companies in the world, including Wal-Mart and IKEA. The cheap bad products of these retail giants, in an example of Gresham’s Law in action, have effectively driven out the good. I found this out just recently when I tried to buy a new bookshelf that was at least made out of wood. Lots of luck with that.

Most of Cheap seeks to answer the question of why, and even more perplexingly how, the things we buy got to be so cheap. With regard to the latter the answer seems to be a combination of two things: (1) the cheap things we buy are garbage, and (2) they have a lot of hidden costs. In her investigations Shell travels to IKEA headquarters in Sweden, a Behavioral Pricing Conference in the U.S., and sweatshops in China. One thing missing, however, is a discussion of the Internet and what the “culture of free” (a special subcategory of cheap) has done to culture generally. Newspapers, the music business, book publishers, and even the porn industry have all been adversely affected by the discounting, if not outright pirating and theft, of their products online. And cultural craftsmanship will not be any easier to replace once it’s been thoroughly gutted by the bottom line. This too is part of the high cost of cheap.

Review first published September 19, 2009.

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