I used to sit through my Economics courses and learn about what it means to be a normal good and a luxury good. I would often ask myself this question a lot over the years– Can luxury become a normal good? What I mean by this is, can luxury become the standardized consumption good?
Let us propose a thought experiment. Everybody in the economy produces strictly high quality, luxury goods for consumption. Each district of production is optimized to produce and trade sustainably. Meaning, resources are not threatened, nothing is exclusive in this way. Goods are produced seasonally meaning that goods are manufactured and offered according to its season. There is no sourcing outside the district but everything is open to free trade.
Turns out this is a loaded question.
To begin and eliminate any confusion, normal and luxury goods are good categories that modern economic theory uses to classify goods based on their demand and accessibility characteristics when there is a change in income. It is mainly used by economists to understand how consumers allocate their spending, thus revealing their preferences, purchase demand, and shows overall market demand related to the specific goods. This information can be used to predict changes in spending when faced with income changes, whether it is on a microeconomic or macroeconomic level like a change in policy.
There are four: inferior, common, normal, and luxury– but my particular question only involves the last two. Normal goods are consumption items that when income increases, the demand for the consumption item increases proportionally to that of income. On the other hand, luxury goods are a class of goods where the consumption of them increases more than proportionally to that of an increase in the consumer's income.
It is logical for the next step to clarify the physical characteristics of these items. We will compare the characteristics of a business suit. For the purpose of cohesiveness when I provide examples I will only refer to fashion items.
Qualities of a ‘standard’ business suit would be your blazer, shirt, slacks, and loafers. The accessibility of these items are relatively effortless– you can find them at a nearby mall, storefront, or online. You could also find multiple brands selling a similar item, for a low price. On the other hand, a luxury suit would be tailor made. It would be likely that you would want to go to two separate specialty houses to purchase a suit and loafers. These suits will be more exclusive and perhaps you may even need an appointment. They use high quality materials, high level craftsmanship, and the price will reflect these characteristics and be set above that even, as the house is selling a dream along with the suit.
Now this is where my question becomes loaded. Economic theory is not synonymous with luxury sector theory.
There is a disconnect between my original question and the function of the luxury consumer goods sector. Therefore, it is also important to define and distinguish between certain comparable goods nearby the luxury sector.
We will start with masstige. Masstige brands are those who are affordable and accessible to more consumers in the market, but hold some luxury-like quality to it, often it appeals to the aesthetic that luxury sells. Masstige caters to the mass market. A common masstige fashion brand we are familiar with today is Zara. An economist would categorize masstige under normal goods.
Then there is premium. There can be a fine line between premium strategy and luxury strategy in their executions. Premium offers high quality and superior features. The emphasis in premium strategy is the quality and functionalities of their products. The aim is to provide perfection. Premium is positioned above standard goods, and therefore are priced above standard goods. You will notice, however, a lack of identity and depth to the brand. You can think of Nike, Diesel, Hugo Boss.
So what characterizes a luxury good?
Luxury goods are steps above premium in terms of their exclusivity and quality, and adhere to a number of codes in order for it to be considered luxury. If one code is left out, it has lost its status.
The codes of luxury are as follows: exclusivity, craftsmanship, heritage and tradition, attention to detail, symbolic value, experimental luxury, timelessness, and finally, sustainability and ethics. Luxury and its items also uphold a dream. The dream is vague enough to be applicable to anybody but has somewhat to do with an elevated lifestyle of some sort. It's approachable, but always just out of reach for many.
Another rule of luxury is to keep non-enthusiasts out. It is important for the brands to maintain loyalty from its clients who have a genuine understanding and admiration for the brands ethos. Sure, there are people who purchase luxury that do so ignorantly in chasing the dream, but generally living this lifestyle is forever out of reach, since the values do not align between the brand and client. These characteristics are ever binding with the term luxury, without them luxury does not exist and would most likely revert to a premium product.
It can however be the case that luxury items are imperfect, meaning they lack some sort of functionality. Here, premium has leverage. Nevertheless, the codes adhered to are the emphasis here– where uniqueness, innovation, heritage, etc. take precedent. Watches are a good example: some watches are made of quartz which allows for the functionality feature. Yet, the most innovative and unique watches that emphasize the epitome of craftsmanship are mechanic.
Now, back to the original question…
With all of the proper definitions in place you should be able to identify the logical fallacy in my original question. Essentially, it would be impossible for luxury to become the standardized consumption good due to its definitions in its codes. The largest fallacy to point out is that the goods would no longer be exclusive. If the good is no longer exclusive, it is no longer considered luxury.
So, what if we eliminated this code of exclusivity from the definition? Isn’t that the point of my asking this question in the first place? We can disregard the full definition of luxury and solely focus on producing high quality goods that adhere to the codes of luxury, devoid of exclusivity, for obvious reasons. What would happen? And, is this possible?
Let's imagine a more developed picture. The entire economy produces luxury, sans exclusivity, where there is an emphasis on quality, tradition, innovation, etc. It is a standardized market, yet we still remain in a capitalist and private economy. Economically, what would happen?
Because everyone in this economy has the same access to the same quality of goods in all aspects of their lives, the standard of living would rise. Cultural significance and heritage are born among districts, thus complying to luxury code. There will also be an extremely skilled workforce with advanced innovation timelines. Innovation is advanced in this economy not only because it adheres to luxury code and aids sustainability, but it is necessary as producers make an effort to compete against each other to create a better product. Due to this competition and innovation among producers, prices drive down with the potential of reducing income equality, as higher quality goods become more accessible. Economic growth slows due to the lack of variable differentiation in the market. It also results from a change in consumer behavior as purchasing slows due to the increased quality and thus durability of goods. Finally, the term “luxury” would cease to exist, as it has become a new benchmark for standard living.
But there is a catch.
We are humans, with human biology.
Competition is in our evolutionary nature and there is no denying it. Humans and all species have evolved through time through favorable characteristics for the sole purpose of survival. This includes the ability to compete and end up on top. This need for competition leads to stratification, and in modern society, social stratification. Humanity arguably cannot exist without social stratification– people seem to have a need to categorize and compete against themselves. It is not rewireable.
Innovation will be fiercely competitive as it is the drive for creating the best product. Again, the best ones succeed and survive. Among consumers, people start to recreate values and beliefs around brands and their products, determining extrinsic social values as well as intrinsic ones. Differentiation is natural, obvious, and unavoidable.
Our consumption is a great reflection upon our complex personal values. There is also the question of what is luxury to one's eye? People will find different things invaluable and useless. The market will once again become stratified and diversified as a reflection of these social and personal values.
