chapter one

Explaining Conspicuous Consumption

in International Relations

A tower studded with elephant tusks marked the way to the palace gate. All elephants be-
longed to the emperor, and by spiking a tower with their teeth he was demonstrating his
power. Beware! The tower said. You are entering the realm of the Elephant King, a sovereign
so rich in pachyderms that he can waste the gnashes of a thousand of the beasts just to deco-
rate me. (Rushdie 2008 , 5 )

W

hat is the role of prestige in international relations? Following de-

cades of relative neglect, international relations scholars are once

again trying to tackle this question.^1 In this volume I contribute to this

renewed effort through an analysis of conspicuous consumption in inter-

national relations. The theory draws on the economic literature on Veblen

effects. I argue that states engage in conspicuous consumption in a quest

for prestige and that the pursuit of prestige rivals the pursuit of power as

a motivating force in international affairs.^2 Veblen effects are an analyti-

cal construct that explains distortions in patterns of demand. Instead of

preferring cheaper goods for a given level of quality, actors sometimes

show preference for more expensive ones. Veblen effects account for these

anomalies by suggesting that actors use consumption as a signal to indicate

their social station. Actors are willing to pay more in the hope that the

additional expense may buy them prestige. Just as in Salman Rushdie’s

fictional palace, excess in international relations is often used as a means

for demonstrating power and seeking prestige.

Hence, a state’s motivation for embarking on a costly policy is some-

times akin to an individual’s purchase of a luxury car or a designer gown — it

establishes that country’s place in an international social hierarchy. Inter-

national relations are replete with examples of excess: some states buy ex-

pensive weapons systems they do not need and cannot afford to maintain;