Things Luxury Might Signal

Debates over luxury are as old as recorded history and continue today. In his book The Theory of the Leisure Class,¹ Thorstein Veblen popularized the expression conspicuous consumption: consumption that is intended to signal something—such as being a member of the leisure class—by making itself conspicuous.

It is now common for people to interpret behavior in terms of signaling. “Virtue signaling” is a common expression. Signaling, too, calls for ambivalence; it all depends on what is being signaled, and why.

Adam Smith wrote of “that love of distinction so natural to man.”² The remark comes in Smith’s parable about a poor man’s son who pursues wealth and luxuries. Is it for the comforts, conveniences, and aesthetic pleasures that luxuries afford him? No, not particularly. Luxuries afford only “trifling conveniences” yet are attended by significant burdens. The spectator, Smith says, “does not even imagine that [the rich and the great] are really happier than other people: but he imagines that they possess more means of happiness.”³ A diamond buckle signals wealthiness. The poor man’s son seeks the distinction thought to come with recognition of his wealthiness.

Whereas today one can signal wealthiness by documenting financial status, historically, wealthiness was signaled by having large retinues, sporting luxuries, or building castles. Even today, however, luxury may be a person’s signal of his wealthiness.

The reasons one may signal wealthiness are numerous. Smith suggests a connection between demonstrating wealthiness and securing political allies, for example. Also, luxury is not the only signaling device. Indeed, luxury need not be a signaling device at all.

What drives culture and politics today? What motivates the influencers?

Wealthiness might signal a willingness to do what brings more wealth. That prompts the question: if more wealth is what the signaler seeks, why does he care so much about more wealth? If you have several million dollars, what do you need another million for? Doesn’t diminishing marginal utility apply to dollars?

Smith asks: “What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience?”⁴ Alluding to the beggar Diogenes of Sinope, Smith said, “the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.”⁵

Perhaps the additional million helps one attain a sort of cultural distinction, maybe a “win.” Are we avariciously fixated on “more,” irrespective of how much we already have? Are we like Johnny Rocco in Key Largo?

Here, I treat luxury as a signal and distinguish among things that luxury might signal. Yes, luxury often signals wealthiness, but in context it may signal more besides. It may signal certain interests, purposes, attitudes, or aptitudes, and thereby character traits.

Let me clarify some concepts and underlying points.

Signaling: In economics and game theory, the concept of signaling is central to many topics. In education, the thing to be explained is the large investment people make to earn vaunted educational credentials. Are such credentials pursued for learning and improvement? Partly, but the signaling explanation is that they are pursued as a way to signal abilities. Students study to prove themselves, not to improve themselves.

In advertising and other large irreversible outlays, the thing to be explained is why they are made. Do expensive advertisements instruct viewers about the merits of a perfume? Unlikely. The signaling explanation suggests, rather, that the producer incurs an expense that would make sense only for a sound and viable product; thus the advertisement might signal quality.

The concept of signaling is predicated on the idea that certain traits are not readily knowable. Both honest and dishonest may say “I’m honest”; that doesn’t signal honesty.

Traits may remain less than certain or fully known, even after signals have been sent. Who knows what lurks in the hearts of men.

The key idea of signaling theory is that, while all may like to pass themselves off as having some desirable trait, X (or being of some type X), one signals having trait X by taking an action that non-X players would not find worth taking even if they could take it and even if by doing so they could, for the time being, pass themselves off as having trait X.

An action, such as sporting luxuries, works as a signal of X-ness (e.g., wealthiness) because non-X types would not find it worthwhile to take that action even if doing it would induce others to believe (mistakenly) for the time being that they are type X.

Signal versus sign: Both “sign” and “signal” are forms of communication, and communication is messaging, the intentional conveying of an idea, image, or sentiment from one mind to another mind. Our culture pervasively uses communicative words—consider, “indicate”—for human inference: Dark clouds are a sign of rain; smoke is a sign of fire.

“Sign” differs from “signal” in that a sign communicates a more enduring relationship or invariant condition. In automobile travel, the “stop” message that never changes is called a stop sign while a traffic signal says “stop” only when its light is red.

Signs may be thought of, metaphorically, as messages from the cosmos, which we implicitly animize into a being (or animism). On a theological view, the cosmos is God’s book of nature, and we read that book to receive and interpret God’s meaning. We speak pervasively of what empirical results “tell us.” Adam Smith wrote of how the laws of justice “call” to us and of how our conscience “calls to us.” Smith said that the conscience is a representative of “the impartial spectator” in the theological or allegorical sense of that expression, so hearing our conscience relates to seeing words of the book of nature.⁶ 

The distinction between “sign” and “signal” is important for thinking about luxury. An instance of luxury may be a sign of wealthiness without being a signal of wealthiness: Someone’s Rolex may be a sign (from the cosmos/​God) of his wealthiness without it being a signal (from that person to others) of his wealthiness: Maybe he sports a Rolex because he loves his Rolex for reasons apart from signaling. Here, we are concerned primarily with the things that luxury might signal and only secondarily with what luxury is a sign of.

Luxury: The term luxury is rich in connotation, but a simple definition is high-​priced consumption goods and services. And by “high-​priced,” I mean high dollar price—and “high” is contextual, of course. As for the adjective consumption, it, too, is tricky, since, if luxuries are sported for signaling purposes, there is a sense in which the Rolex is not merely a consumption good: it is something of an investment or capital good. But, when we pause to think about it, much of “consumption” is input to more remote ends. As you read this essay, is the act one of consumption, investment, or both? Still, the common distinction between consumption and investment/​capital serves well enough—no one would propose to write off the dollar costs of his Rolex as a business expense.

Luxury is not always about signaling. I do not mean to bash luxury. Some people like and can afford a Rolex. There are worse things one might do with wealth. Also, a durable commodity, such as a Rolex or a pricey work of art, is a store of wealth, as it can be resold.

And remember that some novelties serve as experimentation and product development: the rich pay to test new goods and services before industry has learned how to make them inexpensively.

Signaling and distinction are essential to virtue: Signaling is not to be scandalized. A virtuous action may signal a habit of virtue and a virtuous character. An excellent action may be a signal of excellence. Conversely, a vicious action is a sign of a lack of habitual virtue—a sign from the cosmos, if not a signal from the actor.

Nor is there necessarily a scandal in the love of distinction. Smith counsels us to channel that love properly. We do what is “so generous and so noble” from “the love of…the grandeur, and dignity, and superiority of our own character.”⁷ That superiority is, primarily, as compared to what our own character would otherwise be. That is a species of distinction, at least to those who know us well, “those we live with,”⁸ including our own conscience, “the man within the breast.” Smith tells us to channel our love of distinction towards wisdom and virtue.

Sometimes one takes an action because doing so signals a trait that signals yet another trait. Luxury signals wealthiness. What does wealthiness signal? The answers are numerous.

Many of the things that luxury signals have to do with advantages of different kinds; the advantages often overlap or interrelate, but some distinctions may be drawn.

“My life is so pretty—so nice!”

Owning a Rolex watch may signal that one also owns wealth extending far beyond the Rolex itself and hence signals that one owns “more means of happiness … than other people.”⁹ The signaler might wish to signal his wealthiness so as to put himself forward as an object of attention, a focal person, or an object of envy. Relatedly, luxury may signal vanity: A fop may wish to signal his foppishness to appeal to fellow fops with whom he can swap flatteries. “He flatters in order to be flattered.”¹⁰ The vain person might not consciously understand his own actions in this way, just as the poor man’s son did not until he looked back, late in life and in “splenetic” humor, on his gumptious decades.¹¹

Note that in art, designer jewelry, and fashion, luxury sometimes constitutes itself in features of the object recognized only by mavens. Such luxuries may signal an enthusiasm or savviness. Such specialized interests may form the basis of sympathy, companionship, and friendship.

“Somebody up there likes me.”

A species of advantage that may be distinguished from potency is luckiness or blessedness. A wealthy person might display luxury to signal that he is favored by Fortuna, the gods, or God. Max Weber suggested that Calvinists believed that good works “are indispensable as a sign of election.”¹² If wealthiness gained from honest commerce reflects beneficialness to the whole, as implied in the teachings of Protestant clerics such as Richard Baxter, then such wealthiness reflects good works. If luxury reflects such wealthiness and good works reflects election, then luxury may signal election.

“I am potent …”

We said that wealthiness might signal a willingness to do what would bring more wealth. The actions that would bring more wealth may be, in relation to the receiver of the signal, cooperative or non-​cooperative. And the signaler may be, in either case, virtuous or vicious. Virtue may signal virtue, and vice may signal vice.

Although unwholesomeness, like falsehood, comes in many flavors, whereas wholesomeness, like truth, tends to converge, we might flatten unwholesomeness as though it came in only one flavor and think of a simplified 2x2 scheme of what the signaler communicates to the receiver. FAFO is “F- Around and Find Out.”

Again, just as the vain may not consciously understand that vanity is their motive, the wicked may not understand themselves to be wicked. Their conscious minds often think themselves good. In the “Collaboration, albeit unwholesome” relationship, often the signaler and the receiver are subconscious parts of those two human beings. Whether or not those subconscious parts recognize themselves as unwholesome is hard to say.

“I am beneficial to the whole.”

On the notion that one’s wealth derives from one’s beneficialness to the whole of humankind, a notion that Smith advances in The Wealth of Nations as presumptively true with respect to the pursuit of honest income, luxury and, hence, wealthiness may signal such beneficialness. The expensive social gatherings—meals, retreats, conferences, cruises, country clubs—of honest private-​sector businesspeople may signal that they succeed in benefiting humankind since so many customers and other trading partners have “voted” for their goods and services in the voluntary marketplace. And besides the exclusive habitats of wealth, philanthropy itself may be perceived as akin to luxury or even as a type of luxury. And for many, the motive to signal beneficialness relates to signaling blessedness, election, or God’s favor.

“Let’s make a deal.”

Expensive cruises and country clubs are no scandal. Such luxury may signal not only one’s beneficialness to the whole but potential beneficialness to particular individuals on the cruise or at the country club. Demonstrated wealthiness may be a way to signal the prospect of mutual gains. The mutual gains may be of many kinds, and again, wholesome or unwholesome. Wealthiness implies purchasing power, so sometimes one may wish to signal wealthiness in order to signal one’s potential for and interest in becoming a trading partner.

When employers and merchants meet in smoke-​filled rooms, sometimes “the conversation ends in a conspiracy against the publick,”¹³ said Smith. But often it does not. Secrecy does not imply conspiracy. Conspiracy involves secrecy but, moreover, dishonesty, deceit, or duplicity. Business meetings may be cloaked in confidentiality, but wholesome business meetings involve no dishonesty. Of the prudent man, Smith says that although he “never tells any thing but the truth, he does not always think himself bound, when not properly called upon, to tell the whole truth.”¹⁴ In American football, the coach or quarterback calls plays in a wholesome secrecy.

“I would be a valuable ally.”

The parable of the poor man’s son is a noted passage in The Theory of Moral Sentiments. A noted story in The Wealth of Nations is that of unruly lords redirecting expenditure from supporting the muscle of a thousand men to acquiring luxuries like a pair of diamond buckles. The lords, in this way, “gradually bartered their whole power and authority” and “became as insignificant as any substantial burgher or tradesman in a city.”¹⁵

As Smith tells the story, he makes it seem as though the lords opted for luxuries when they did because luxuries had not been available to them until then. He seems to imply that lords would have opted for luxuries earlier had they been available.

In the telling, however, Smith says something curious about a lord’s opting for luxuries, namely: “With the judges that were to determine the preference, this difference was perfectly decisive.”¹⁶

Jacob Hall and I have offered an interpretation of how Smith really saw the subduing of the rambunctious lords and the jural integration of the territorial state under the crown. In “Why Lords Went for Luxuries,” published in The Independent Review,¹⁷ we draw extensively from Smith’s Lectures on Jurisprudence and David Hume’s writings to argue that “the judges that were to determine the preference” were the king and his ministers, who used increasingly centripetal practices of the royal court to induce lords to shed their muscle (that is, their retinues or retainers) and instead signal their wealth and obeisance by coming to court, not with a thousand men, but with bling such as diamond buckles. Such centripetal practices also selected for allies who were rich and obeisant, even where no inducement was needed. Our interpretation dovetails with scholarship on court life and absolutism in early modern Europe by historians including Norbert Elias, Jürgen von Krüdener, and Peter H. Wilson.¹⁸ Thus, something that luxury signaled was capacity as an ally. The king favored those with the most impressive bling because he wanted to ally himself with those who had wealth and all that wealthiness itself signals. Politics has played a large role in luxury as a signal.

“FAFO”

As noted already, luxury signals wealthiness, and wealthiness signals various potencies, including potency to repay harm, injury, or slight. Luxury may signal one’s formidability as an adversary or enemy. Military parades might be interpreted as luxury-​as-​signal. Even a military operation itself might be, especially when it promises to achieve what the perpetrator aims to achieve. But even failed military operations—like so many US military operations since World War II—signal a willingness and readiness to visit death, destruction, and regime-​change upon others and thereby may help sustain domination over and exploitation of other peoples.

“I’m your man!”

Once a profuse style of luxury corrupts a political class or network of elites, partaking of the custom signals not only wealthiness but particularly the fashionable abjectness. Debasing oneself signals a willingness to debase oneself or to excuse the wickedness of others. Wickedness often expresses itself in forms of luxury, in which cases the luxury signals wickedness. Assuring someone of your debasement ensures him that you are not wholesome. The receiver of your signal feels confident about your willingness to countenance his wickedness or even join him in it. Suitable debasement might signal that you can be counted upon to lick the right boots. This motive also features in the account that Jacob Hall and I give about why lords went for luxuries.

Concluding Remarks

In our modern complex world, our knowledge of one another and social affairs is extremely fragmented and disjointed. In our ignorance, we are immensely dependent on signals. Signals are vital to wholesome cooperation and upward vitality. I have listed several ways in which signaling and the love of distinction can be unwholesome. But signaling and the love of distinction are also vital to wholesomeness.

Again, luxury is not necessarily to be scorned. Luxury is often a part of a process of innovation, experimentation, and product testing, a process in which wealthy individuals volunteer themselves as guinea pigs. We understand that our necessities, like electricity and indoor plumbing, were once luxuries.

Baseball was once said to be America’s favorite pastime. I asked a chatbot how much it costs for a family of four to go to see the Chicago Cubs at Wrigley Field, sitting pretty near the infield, and get hot dogs and popcorn for all, sodas for the kids, and beers for mom and dad. It suggested that the experience would cost at least $1000 with tickets near the infield. Even the bleacher seats are something of a luxury item now.

In some cases, one’s going to the Cubs game might be a signal he intends to send to someone. No doubt going to the Cubs game is a luxury for most Americans—and a luxury that may be eminently worthwhile quite apart from any signal it constitutes.