Capitalising on vanity - an industry worth €3.4 trillion
What do you spend money on to make yourself feel good — a lipstick? Gym membership? A Picasso? Because while we all spend money to boost our self esteem and status to varying degrees — what we spend it on depends on how much we have. Even if you have very little disposable income, some of it will invariably be spent on what is called vanity capital.
From buying organic food instead of bog standard non-organic, to the purchase of a vintage Ferrari — chosen not just for its insane price tag but also its history, because this signifies that you are not only minted, but interesting to boot (or at least your car is, which should reflect on you) — global spending on vanity capital is currently worth more than the GDP of Germany.
At the moment it is valued at €3.4 trillion, and is predicted to reach €4.1 trillion by 2018. I spend, therefore I am — the Big I Am. What used to be known as conspicuous consumption has now morphed into what has been dubbed ‘gratuitous signalling’. Vanity capital, according to the man who coined the term, is the monetisation of narcissism, and thanks to social media, its spoils can be instantly uploaded to invoke instant envy. Look at me! And look at my shoes / helicopter / Frida Kahlo collection!
The Rich Kids of Instagram embody the ethos of vanity capital, as do individuals like the Beckhams, who use Instagram to display their status via their stuff. Prior to social media, such vanity capital would be drip-fed to us via more formal structures — think worshipful Hello! magazine spreads — but these days it’s coming at us direct from the source, bypassing traditional media. Uploads hashtagged ‘chilling with my homies in my Lamborghini’.
Ajay Kapur, an equity strategist (no, me neither) with Bank of America Merrill Lynch defines vanity capital as “the pursuit of, and the accumulation of, attributes and accessories to augment self-confidence by enhancing one’s appearance and prestige. It is self-actualisation through self-improvement and self-focus”. In other words, it is the money you spend to make yourself feel good about yourself, and to make yourself look good to others.
“There is a global bull market in narcissism,” Kapur told the Financial Post. “Money has been made, and, in our view, a lot more is likely to be made.” Much of the increase in vanity capital comes from developing markets in Asia — basically ordinary people getting richer — plus the growing global economic independence of women, as well as the ongoing crazed spending of the gold-plated plutocracy.
But vanity capital is not purely the preserve of the Vulgarati, (flash, brash, crass). We all do it, all the time — just with less cash. For instance, a recent Irish survey of 500 shoppers for Checkout magazine asked customers on which products would they most likely trade up and spend more money. The findings were pure vanity capital — vitamins, wine and cake, beer and meat. Nobody was interested in trading up on floor cleaner or cabbage or anything else boring and utilitarian.
Baby food also featured as highly as vitamins in customers’ willingness to spend more, but this does not count as vanity capital. It is straightforward altruism. The same goes for buying, say, an Oxfam goat for a family in a developing country. You might feel good about it, but it’s not vanity capital. It’s not shouty enough.
So let’s have a look at the Vanity Capital Map, drawn up by Bank of America Merrill Lynch. There are two kinds — epidermal or wearable, and augmented. For the plutonomy — who might be defined as the 1% so disconnected from the rest of us by their wealth and power, they might as well be living on Pluto — the epidermal / wearable type of vanity capital would involve ultra-expensive clothing, jewellery, accessories, grooming, and cosmetic procedures.
Ten grand handbags, undetectable face lifts, super-luxury brands, haute couture, that kind of thing. The augmented aspect would include private jets, luxury cars and yachts, fancy homes, art and wine collections, exclusive holidays, posh hotels and restaurants, private schools, banks, and healthcare.
At the top end of the top end, think Roman Abramovich, with his giant yacht and Premiership football club.
But for the super rich, being super rich is no longer quite enough. You need to purchase experiences, as well as objects, plus your objects need to stand out and be special. After all, where’s the exclusivity of merely owning a Picasso, given how, for instance, he painted 15 versions of Les Femmes d’Alger? Far better to gratuitously signal your wealth by opening your own gallery stuffed with your acquisitions. The former Mr Nigella Lawson, Charles Saatchi, is a prime example at this level of augmented vanity capital — the Saatchi Gallery in London houses one of the best art collections in the world. (Plus it’s free entry for peasants). Damian Hirst is about to do the same.
And as for the peasants — that is, the rest of us — there is what we like to call affordable luxury. Our vanity capital is found in mid-market clothing, health supplements, organic food, gym membership, smart phones, sports equipment, wine that costs more than a tenner. Augmented vanity capital might include nice holidays and decent restaurants, and extend to private schools and luxury goods. What it would definitely not include would be clapped out old cars, low-rent housing, cheap mass produced clothing, or no-brand trainers.
But for those of us with very little disposable income for whom luxury goods may be as unobtainable as Roman Abramovich’s yacht, we still vanity capitalise all the time. For instance, you might buy clothes from Oxfam so that you can afford organic food — or live on cornflakes so you can buy fabulous shoes.
And it’s not just a Western thing; the poorer your immediate environment, the more important your clothing and appearance becomes as a social signifier. Anything can be an item of vanity capital — it’s all relative.
Within the plutonomy, however, the urge to compete in conspicuous spending and novelty-seeking is insatiable. You have a world famous pop star performing at your private birthday party? I’m having my birthday party in outer space — just give it time, and a bit more of Richard Branson’s cash. This level of vanity capital does not, however, apply to Ireland. Globally, we are not even in the top 10, which, given the economic trouncing from which we are still emerging, may be a good thing.
“We don’t really have the Lamborghini set here,” says Eamon Porter of Aspire Wealth Management. “That would be more London, with the crazy bonuses. When the Celtic Tiger was at its height, the main purchases were homes and second homes, cars and holidays. Since the recession, people are now starting to look after more basic things like pensions, rather than making exuberant purchases. Move forward a few years and there will be the next generation of suckers wanting to show off. These things go in 15-year cycles, in my experience, and we are still recovering from the last one.” Meanwhile, maybe we should leave the serious pursuit of vanity capital to people like the Kardashians. That’s what they are for.
OTHER KINDS OF CAPITAL:
Power and influence in decision making, based on connections and links within the community. The ability to ask favours, and to be able to return them. Also known as ‘pull’.
I
Knowledge, know-how, education, experience. Gaining it doesn’t always require the exchange of financial capital – you don’t have to go to university in order to be well-read, you just need a library card.
Cannot be owned by individuals, but by a community or social group, in the form of art, music, theatre etc, as part of a shared experience.
Social, spiritual and cultural capital combined with an individual’s experiences, which make them who they are and what they can do.
The power and influence a person has based on their sexual attractiveness, coined by sociologist Catherine Hakim.
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