The Cost of More: Consumerism, Sustainability, and the Limits of Growth

Consumerism originated more than two hundred years ago when the Industrial Revolution enabled mass production. It is now a dominant force in advanced economies, further fostered through mass communication. Despite its role in driving globalization, technological advancement, and cultural exchange at an unprecedented rate, it is now pushing us toward the edge of materialism.1 This economic and social trend of blindly promoting more consumption of goods and services poses challenges to sustainability and long-run growth, tipping us off the balance between human needs and limited natural resources.

On the consumers’ side, consumerism prioritizes immediate gratification over long-term financial security. By cultivating a "buy now, pay later" scheme2, consumerism encourages consumers to purchase beyond their means, resulting in debt and economic crises.3 A lowered household savings, and hence lower investment, hinders long-run economic growth. Highlighted by the Solow-Swan model4,5, saving (i.e., foregone consumption) is crucial in maintaining healthy long-run investment, and there exists an optimal savings rate that sustains long-term economic growth. However, a World Bank 2025 report6 shows that household savings rates in high-consumption economies like the United States have declined significantly over the past few decades, as shown by Figure 1, partly due to increased spending on non-essential goods7. According to Edmund Phelps8, the US is probably below the "Golden Rule" savings rate for optimal growth and social welfare.

Figure 1. The Personal Saving Rate of U.S. Households from 1960 to 2020.9

The consequences of consumerism on manufacturing and the environment are equally gloomy. While consumerism led to extensive global trade and a rising new middle class in many developing economies,10,11 the insatiable demands for cheap, trendy, and convenient goods cultivated unsustainable production cycles, excess inventory, and environmental harm. Fast fashion, characterized by the rapid production of inexpensive products like clothing, relies on low-cost labor and lax environmental regulations in countries like Bangladesh, Vietnam, and India. For example, fast fashion sweatshops in Bangladesh’s garment industry cut costs through exploitative labor practices, low wages, and poor working conditions.12 Ross et al.13 identified the underlying "low-cost at all costs" model that perpetuates poverty wages and unsafe conditions in many developing countries. Besides, fast fashion’s rapid turnover generates 92 million tons of textile waste annually, with less than 1% recycled into new clothing,14 as manufacturers often incinerate or dump unsold inventory in Global South landfills.15 On the other hand, drop-shipping, a retail model where products are shipped directly from manufacturers to consumers, often relies on long supply chains. It is a major contributor to global carbon emissions and wastewater production, as the materials in drop-shipping are mainly derived from fossil fuels and contribute to microplastic pollution.16

ESG (environmental, social, and governance) metrics, a set of standards that allow investors and consumers to screen investments and choose consumption, were promoted to mitigate the above negative effects of consumerism17. Some research indicates that adopting ESG metrics may improve brand reputation and attract socially conscious investors, hence enhancing corporate profitability18. However, ESG metrics suffer several limitations, including inconsistent reporting frameworks19 and the focus on short-term performance20,21. In addition, ESG’s impact fractures along economic lines. In advanced economies, robust regulations and investor pressure turn sustainability into a competitive advantage, boosting green innovation and consumer trust. In developing economies, the implementation of ESG criteria is challenging because of limited regulatory frameworks and resource constraints.22 Developing nations face a paradox: ESG compliance attracts foreign investment but imposes steep costs on local industries ill-equipped for rapid transition. While multinationals leverage ESG for premium branding, smaller firms risk exclusion from supply chains. The result? A growing divide where sustainability becomes a luxury enjoyed only by wealthier markets.

Can ethical consumption and capitalism truly coexist? The tension is undeniable. Ethical consumption demands restraint, while capitalism thrives on expansion. The critical problem is whether a profit-driven system truly prioritizes people and the planet before exploitation outweighs innovation. According to Paul R. Ehrlich, "If everyone consumed resources at the US level, you will need another four or five Earth”.23 Maurice Leblanc had a vivid description of human nature when their greed goes uncontained: “With what thieving claws they must have scratched at the stone. You see, there’s nothing left.”24 ESG metrics could be offering a pathway to align economic practices with sustainable goals, only if their limitations can be effectively addressed. As the world grapples with the challenges of climate change and inequality, a new day can truly be dawning when there is a rethinking of consumerism and a separation from materialism.

References:

1. Monika A. Bauer, James E. B. Wilkie, Jung K. Kim, and Galen V. Bodenhausen. “Cuing Consumerism: Situational Materialism Undermines Personal and Social Well-Being.” Psychological Science, 23(5), 517–523, 2012.

2. McKinsey & Company. The State of Fashion 2025. https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion-archive.

3. M Duta Amrillah. “Consumerism and Materialism Culture: Its Impact on Society and the Environment.” 2024.

4. Solow, Robert M. 1956. “A Contribution to the Theory of Economic Growth.” The Quarterly Journal of Economics 70 (1): 65–94. 1956.

5. Swan, Trevor W. "Economic Growth and Capital Accumulation." Economic Record, vol. 32, no. 2, 1956, pp. 334–361.

6. World Bank. Global Economic Prospects. 2025. https://www.worldbank.org/en/publication/global-economic-prospects.

7. “Americans have spent their savings. Economists worry about what comes next.” https://www.cnn.com/2024/05/07/investing/premarket-stocks-trading/index.html.

8. “The Golden Rule of Accumulation: A Fable for Growthmen.” Edmund Phelps, The American Economic Review, Vol. 51, No. 4 (Sep., 1961), pp. 638-643. Economic Data, St. Lous FED, https://fred.stlouisfed.org/series/PSAVERT.

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10. Statista. (2021). E-commerce Revenue Statistics.

11. Islam, M. S., & van Staden, C. (2021). "Social Disclosure and Corporate Accountability in Fast Fashion: Evidence from Bangladesh." Journal of Business Ethics.

12. Ross, R. J. S. (2019). "The Rag Race: How the Textile Industry Exploits Developing Nations." Cambridge Journal of Economics.

13. Niinimäki, K., Peters, G., Dahlbo, H., Perry, P., Rissanen, T., & Gwilt, A. "The Environmental Price of Fast Fashion." Nature Reviews Earth & Environment, vol. 1, no. 4, 2020, pp. 189-200.

14. Birtwistle, G., & Moore, C. M. (2007). “Fashion clothing – Where does it all end up?” International Journal of Retail & Distribution Management, 35(3), 210-216.

15. International Transport Forum. ITF Transport Outlook 2023. OECD Publishing. https://www.itf-oecd.org/itf-transport-outlook-2023.

16. Eccles, R. G., & Klimenko, S. "The Investor Revolution." Harvard Business Review, 2019. https://hbsp.harvard.edu/product/R1903G-PDF-ENG.

17. Friede, Gunnar, Timo Busch, and Alexander Bassen. "ESG and Financial Performance: Aggregated Evidence from More than 2000 Empirical Studies." Journal of Sustainable Finance & Investment, vol. 5, no. 4, 2015, pp. 210-233.

18. Sustainability Accounting Standards Board (SASB). The State of ESG Disclosure. 2020. https://sasb.ifrs.org/standards/.

19. Kotsantonis, S., Pinney, C., & Serafeim, G. "ESG Integration in Investment Management: Myths and Realities." Journal of Applied Corporate Finance, vol. 28, no. 2, 2016, pp. 10-16.

20. Global Sustainable Investment Alliance (GSIA). 2020 Global Sustainable Investment Review. https://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf.

21. Boffo, R., & Patalano, R. ESG Investing: Practices, Progress and Challenges. OECD Publishing, 2020. https://www.oecd.org/en/publications/esg-investing-practices-progress-and-challenges_b4f71091-en.html.

“Biologists think 50% of species will be facing extinction by the end of the century.” https://www.theguardian.com/environment/2017/feb/25/half-all-species-extinct-end-century-vatican-conference.

Maurice Leblanc, 1909. L'aiguille Creuse, Chapter 10, The Treasures of the Kings of France.