Matt Hickerson

Diamonds Are Forever – Case Study

Diamonds are an interesting subject because of the vast amount of corruption and centralized authority there is in this space. As many know, De Beers has been settled for upwards of $300 million in response to antitrust and price-fixing schemes. Furthermore, the African natural resource sector is infamous for corruption in providing a small group with strategic and sole access to particular resources (i.e., allowing only one company to operate in a specific area). Because the fixed market nature of this “scandal” was not mentioned in the prompts, I wanted to preface my response with a greater base of assumed knowledge for the reader. 

Hagenbuch aptly points out that marketing is simply “an organizational function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” (Hagenbuch, pp. 377). Does this definition match what Clapp deems “the deification of dissatisfaction” (Clapp, pp. 366)? I think not. Why would one willingly engage in a transaction in which they were worse off than simply overlooking the choice entirely? The answer is––bar compulsion––they would not. The fact is, people engage in “mutually beneficial” transactions to better their lives (Hagenbuch, pp. 377). What the consumer deems as “betterment” is not up to some central authority, but each individual market actor. Additionally, based on the first question, De Beers is no more “exploiting” the consumer as much as the consumer is “exploiting” the business for their “human insecurity” to seek a profit!

In a free market (which the United States is far from), transactions are done voluntarily. I can choose to purchase something, or I can choose to abstain from purchasing for use at a later date. An economy is not built on consumption, but rather on abstinence from buying. Goods are capital-intensive to make and require capital investment (credit) to produce before they can be sold. There is only money to lend when money is saved. Without saved money, there can be no supply of credit for the businessman to buy machinery, materials, and property. Clapp presents a misconception that living in a way in which to not spend “more than $10 a year” is nobler than buying mass-produced products (Clapp, pp. 365). He pictures a farmer who is so self-sufficient, he merely spends $10 a year on the things which he cannot produce. This is contrasted by one who purchases mass-produced products portrayed in a negative light (Clapp, pp. 365). Lew Rockwell Jr., the founder of the Mises Institute, provides a critique of this very argument as seen in his work, In Defense of Consumerism. Rockwell writes: 

This longing for the primitive is nothing but an attempt to cast a pleasing gloss on the inevitable effects of socialist policies. They are telling us to love poverty and hate plenty.


But the beauty of the market economy is that it gives everyone a choice. For those people who prefer outhouses to indoor plumbing, pulling their teeth to dentistry, and eating nuts from trees rather than buying a can of Planters at Wal-Mart, they too have the right to choose that way of life. But don’t let them say that they are against “consumerism.” To live at all requires that we buy and sell. To be against commerce is to attack life itself. [emphasis added]


Similarly, in my view, who am I to encroach on and dictate what is a need and what is a want? I do not have the authority to determine what my fellow man should and should not be buying or producing! If consumers would rather chop, hew, and dry their own wood for construction, they are willing and able to do so. If they would rather have the “store-bought commodities” as Clapp puts it, they certainly can. The free market is propelled by choice, not coercion. 

In isolation, De Beers had a very successful marketing campaign. To truly see if they “created” this demand, one would have to compare the average wage to the average purchase price of an engagement ring before the inception of this campaign. Regardless if they created this demand or not, consumers were buying out of their own volition. No one forced them to spend X amount on a ring! No one forced them to propose to someone who valued a bigger “rock” as opposed to a smaller one! Furthermore, the need for rings at all is something that is individually assessed by each couple. Some prefer a silicone ring for $10, while others prefer no ring at all. Consistent with the thinking of Hagenbuch, consumers engaged in mutually beneficial transactions to get a ring their soon-to-be fianceé would like. 

In order to fully understand this point, consider the following scenario: A 22-year-old burn victim buys the same makeup as a supposed “consumerist” 22-year-old woman without skin damage. One buys for what some call vanity, the burn victim buys the makeup to look normal. The makeup gives her confidence to meet new friends, have great experiences, and adventure in ways she would not have otherwise done. Who am I to say that she was pursuing a “need” and not a “want.” What entity exactly determines these categories for the everyday good? 

Another important point that Hagenbuch makes is that bad advertising is “antithetical to marketing’s goals of facilitating mutually beneficial exchange and forging positive long-term relationships” (Hagenbuch, pp. 380). Just as the free market punishes racial discrimination, it also punishes unethical practices. Consumers who were formerly neutral parties become vehement enemies of your company.

Furthermore, Rockwell (mentioned above) presents a more synoptic view of supposed consumerism. Rockwell writes: 

But are people buying superfluous things that they can do without? Certainly. But who is to say for sure what is a need as versus a mere want? A dictator who knows all? How can we know that his desires will accord with my needs and yours? In any case, in a market economy, wants and needs are linked, so that one person’s necessities are met precisely because other people’s wants are met.


Another attack against the producer (which is the usual form of attack from the Socialist because of the disparate wealth that the producers have over their subservient––producers are the ones who create the opportunity for the common, untrained person to be empowered with tools that make their manual labor more productive like sewing machines, computers, and excavators) which Clapp cites is that “the crises of overproduction [forced] manufacturer[s to initiate] an advertising revolution” (Clapp, pp. 365). What the author neglects is the idea that consumerism starts with the consumer, which should be self-evident based on the root word. Furthermore, the correlation between “consumerism” and the rising standard of living is no anomaly. Rather, as Ray Dalio (arguably the world’s most successful hedge fund manager) puts it, “one man’s spending is another man’s income” (How the Economic Machine Works, 20:06). Without spending, another’s income is sacrificed, which cascades eventually to a lower standard of living for all. This does not imply that people have to buy cheaply made products. In fact, many of today’s products are very high quality and can last for generations––this is what people refer to as “heirloom quality goods.” One cannot demand more than he produces. The more productive workers become, the more they can consume as a consequence. Modern living and common comforts would not be possible in Clapp’s utopia. Newborn mortality would still be staggeringly high. Families would still be reading by candlelight. The common man would not be able to learn SQL and C++ completely free online in a remote Indian village.

De Beers’ marketing campaign did not exploit human insecurity because the mutually beneficial transaction was done voluntarily between two independent parties operating under their own volition and self-interest. Furthermore, the attack on consumerism is more accurately described as an attack on free market systems and a need for a centralized auditor of needs and wants. Clapp and Kilbourne present arguments that presuppose the consumer cannot act against the use of misleading advertisements and purport the institution of a far more authoritarian conveyance of information. While I agree some advertisements incite behaviors that are against the Christian ethic (pre-martial sex, substance abuse, and others), it is out of my rights to act as a market sieve of another sovereign, free individual who acts based on his own cost-benefit analysis that he makes at every purchase or lack thereof. 

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