Breaking an information feedback system

Throughout the twentieth century, advertisers have claimed that they discover wants and needs rather than creating them, that markets exist somewhere “out there” waiting to be tapped. Some advertising specialists have been more candid, however, at least with each-other. “It is all very well to get the sales of things people want to buy,” a speaker told Nashville Ad Club in 1916, “but that is too small in volume. We must make people want many other things, in order to get a big increase in business.”

In creating the techniques to make people want things, marketers developed principles that belied neoclassical economic theory. According to that theory, price – determined in the marketplace by supply and demand – functions as an information feedback system, telling producers how much of their product to make. When prices go up, the rational manufacturing firm (which theoretically can regulate supply but not demand) will increase output; when they go down, it will cut back on production. In actual practice, manufacturers operated on the new principle that demand could be created by the manufacturer.

– Exerpted from ‘Satisfaction guaranteed: the making of the American mass market’ by Susan Strasser, p27.