[VIEWPOINT]Luxury fever is prevalent in Korean society

When the price of goods increases, demand for them decreases, and when the price goes down, demand goes up, increasing the sales of the goods. This is the principle of supply and demand that economics textbooks teach. But in Korea, some goods sell better when their prices are higher. No other country than Korea has higher luxury fever. No fewer luxury shops line the streets of Cheongdam-dong, southern Seoul, than do the Champs Elysees in Paris, Sloane Street in London and Newberry Street in Boston.
More and more consumers show off their social status or taste through consumption rather than the utility of the items they purchase. So those who cannot afford to buy real luxury goods feel they should buy fake luxury-brand products. Those who have lost the appetite for “common” luxury items differentiate themselves by looking for rare and expensive new brands. In this climate, a rare incident of fraud broke in the news recently in which watches made in Korea for 80,000 won ($83) in value were sold to the wives of influential politicians, wealthy people and celebrity entertainers at prices ranging from tens of millions to near hundreds of millions of won. This is due to what can be called, literally, the snob effect. What the victims wanted was not the watch itself but membership in an exclusive club whose members boast owning one of the few hundred-million-won-worth watches in the world.
The main actor in this surprising fraud drama staged a big luncheon show studded with entertainers. He even changed the country of origin of the fake watches. In perpetrating his fraud, he accomplished the “historical mission” of exposing the dark side of contemporary modern Korean society. Without probably meaning to, he applied in his own way the insight of Thorstein Veblen who wrote “The Theory of the Leisure Class” over a century ago and poked fun at his victims, unintentionally, and the humor and wit of Park Ji-won, who wrote “The Stories of Noblemen.”
Veblen explained that conspicuous consumption designed to show off wealth to others is the characteristic of the leisure class, particularly upstarts. And he called those goods whose sales increase when their prices increase “Veblen goods.” Traditional aristocrats in Europe could display their social station through all kinds of titles, coats of arms and conspicuous leisure activities like hunting and sports, but the nouveaux riches in the United States, unequipped with such symbolic capital, showed off their wealth through consumption. Expensive jewelry, great mansions with swimming pools, Cadillacs and yachts became objects of consumption that became markers for status.
The fraud incident involving fake luxury watches shows that Korean society still has traces of the Joseon dynasty in the 19th century when the entire nation was preoccupied with becoming noblemen, after the legitimacy of Confucian rule collapsed due to the corruption and degradation of the ruling class. The high class in Korea, unable to create a unique brand based on moral legitimacy through a noble lifestyle and noblesee oblige, did not have the means to distinguish itself from upstarts and the newly-powerful who tried to become the new high class through shallow and conspicuous consumption. In a competitive society where there are no clear distinctions between classes, conspicuous consumption among the high classes leads to excessive consumption of the middle- and low-income classes and a flood of fake brands.
In a ranking system where the intrinsic utility and value of goods is ignored and the extrinsic - the price ― is dominant, respect for in-laws at weddings is measured by the price of the bride’s gift for them. Parents with daughters of marriageable age are sighing under the burden of preparing those gifts. In a climate where the choice of colleges and majors of study are decided according to College Scholastic Ability Test scores, the adverse effects of school ties cannot be prevented. The crisis in programs of study in critical areas is also unavoidable.
But is conspicuous consumption limited to a few indiscreet entertainers? How about local governments that are busy constructing luxurious government buildings when their financial resources are at rock bottom, building convention centers or international airports on a huge scale that later lie idle? Also, how about the central government and the Blue House who cry out for early return of wartime military control and show off their “ideology of self-reliance” without cool-headed calculation of the cost of national defense?
As the halted construction of the105-floor Ryugyong Hotel in Pyongyang demonstrates, showing off beyond one’s ability increases the burden on the system. We citizens, from children to the president, should learn the virtue of level-headed and rational consumption that cherishes utility rather than inflated nominal prices.

* The writer is a professor of sociology at Seoul National University. Translation by the JoongAng Daily staff.

by Lee Jae-yul