Business

Last updated: 3 february, 2011 - 13:52 GMT

Non Consuming Passion

About this programme by Peter Day

When it comes to correcting the huge imbalances in the world economic system which may lie behind the financial upheavals which followed the bursting of the US subprime mortgage bubble, some people are pinning big hopes on awakening a new appetite for consumer goods in China.

It is (after all) a place where most people have limited amounts of personal stuff and are cautious about spending rather than saving.

Experts say that China needs to start using more of the torrent of consumer goods pouring out of its own factories, rather than exporting them all. Domestic consumption would reduce the huge Chinese trade surplus, people argue; this might give the USA a breathing space to reduce its own deficit, and let the world rebalance the out of kilter financial flows which have deepened the impact of the bubble bursting three years ago.

That is one argument, which puts pressure on the Chinese authorities to allow their currency, the RMB, to rise and reflect the strength of the Chinese economy.

For a completely different approach, turn to Chandran Nair, author of "Consumptionomics: Asia's role in reshaping Capitalism and saving the Planet".

Radical

Chandran Nair was born in Malaysia to Indian parents, and he now lives in Hong Kong. He is a business consultant who founded something called the Global Institute for Tomorrow.

He has written this book whose starting point is consumption as the fuel for the engine of global capitalism. He says the world cannot cope if Asian consumption rises to anything like the amount per head now prevailing in the USA or Europe.

So Chandran Nair's book, quietly and moderately written, is an attempt to nudge Asian countries into adopting a radically different approach from the pursuit of economic growth powered by consumption which has so preoccupied official economists for the last 80 years or so.

He wants China and other developing countries to turn their back on consumer goods as a badge and engine of growth. The world does not have enough raw materials to satisfy China if that country gets an appetite for consumption on the scale of today's American consumer.

That is the simple but difficult message of the book: Asian countries should wean their people off recreating a Western sort of consumer, substituting in its stead economies that are more at peace with the world they are part of.

Gospel

Although China is at the beginning of an apparent consumer revolution, Chandran Nair argues that the country should turn its back on personal consumption because it is full of economic contradictions.

Instead of encouraging people to move from the country to the cities, China - says Mr Nair - should concentrate on making its villages worth staying in: better education and healthcare, better connected to the world outside. This is easier to do in authoritarian states.

Chandran Nair's call to abandon the gospel of consumer led growth is bold and simple, and made urgent by the rising cost of food, water and industrial raw materials that appear to be connected with the rise of Asia as a new marketplace.

But getting this argument heard is a huge undertaking, let alone persuading the developing world that Western models of personal appetites should be ignored. So the book is a starting point for what may turn out to be a great debate, impelled by increasing worries about raw material shortages.

For the moment, Consumptionomics is just a funny word. If Chandran Nair is anything like correct, it may turn out to be rather more important than it sounds.

Previous updates - November

October

September

  • The media is going through a 'double-mangle' says Peter Day.

  • In San Diego, Peter Day investigates the company that produces WD40's secret formula.

  • Peter Day looks back on a year of the credit crunch with Simon Johnson, former chief economist for the IMF.

  • Peter Day finds out from the experts how to start a bank.

  • Peter Day looks at the great expectations in landlocked Bolivia and its part in the auto revolution.

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