BY DANIEL LAZARE
Lazare writes about economics and other issues for The New York Observer and is a frequent contributor to CJR.

One of the nice things about turning an economic corner is the new angle of vision it provides onto coming economic events. Take the American economy (please). During the frenetic, consumer-driven 1980s, the common belief was that those businesses that catered most energetically to individual tastes and desires would be the ones to survive. During the recessionary early '90s, conventional wisdom says the same. But a decidedly unconventional wisdom has arisen, which holds that individual consumer preferences will matter less in the years to come, as will saturation advertising, high-intensity marketing, and the hyper-salesmanship that also characterized the '80s.

The debate is important for all branches of the economy, including the media, which, with the mushrooming of consumer sections in newspapers, specialized magazines, and cable TV channels, have hardly been immune to the marketing craze. A return to frenetic '80s-style consumerism as soon as the current recession is over would mean a renewed emphasis on packaging, design, and sales pitches geared to ever more narrowly defined audiences -- from teenaged hang-gliders and vacationing physicians to ski bums in search of deep powder. A break with the past, on the other hand, would suggest a return to mass audiences bound by common interests and tastes. Lest cheering erupt among journalists tired of writing for atomized and self-absorbed readers, it should also be pointed out that if the contrarians prove correct about the direction of the U.S. economy, there will be fewer media in general and therefore fewer media employees.

Much depends on the severity of the recession. A short economic interruption such as that predicted by the Bush administration and many business economists as of early April means chances are good that the economy will pick up where it left off. A deeper downturn, as predicted by a substantial minority of economists, means a deeper shakeout and hence a more profound economic transformation.

In order to understand what's at stake, it's necessary to review what has happened in recent years to three interlocking components of the consumer economy -- retailing, advertising, and the media that delivers the ads. The first thing is that the mass market, once the hallmark of Madison Avenue, has given way to a collection of increasingly specialized sub-markets consisting of yuppies, affluent suburbanites, dinks (couples with dual incomes, no kids), and so forth, each group further broken down into subsets and sub-subsets by an army of economists, psychologists, and demographers trained in the micro-analysis of consumer trends. As the marketplace has diversified, the art of reaching customers has risen to a level of almost baroque complexity. This is true in journalism, too. Publishers who once thought a newspaper equaled news plus sports plus comics have learned to organize elaborate focus groups to find out not only whether subscribers want more fashion features, local coverage, or whatever, but which subscribers want what -- i.e., whether they're the upscale readers advertisers crave or the downscale ones they don't care about. Editors have learned to think of readers as groups of customers.

The second thing to consider is: why? Why this tendency toward ever-narrower specialization and ever-finer market analysis? One reason is that high-intensity market analysis breeds yet more high-intensity market analysis, all based on the belief that one can never know too much about a customer. Thanks to supermarket bar codes and credit-card records, moreover, the process of intensive, specialized marketing promises to continue indefinitely as marketers and direct-mail advertisers compile increasingly detailed computerized profiles of each customer's likes and dislikes. Or so the marketing enthusiasts say. But a small number of academic economists see this process as merely a phase in a cycle. America, they point out, has gone through similar bouts of market complexity and feverish consumerism before, only to swing back to market simplification and consolidation a few years later.

One such period was the 1920s which, as Jay W. Forrester, professor emeritus and senior lecturer at MIT's Sloan School of Management, points out, saw the popularization of consumer credit, the birth of the modern advertising industry, and an enormous explosion in the variety and sheer number of consumer goods vying for the attention of a limited buying public. According to a 1920s study of one small town's buying habits, there were no fewer than 101 different brands among 210 purchased pianos, for example, and an equally impressive array of makes of cars, radios, phonographs, and washing machines.

But, while at the time it seemed the trend would go on forever, it didn't. Rather, the economy slowed and a shakeout ensued. Weaker products fell by the wayside in great numbers and, with fewer companies vying in the marketplace, the pendulum swung toward retrenchment, consolidation, and simplification. Consumers in the 1930s who could still afford pianos had fewer brands to choose from and fewer ads to wade through in making their choice. So far did the pendulum swing, in fact, that the effects were felt right through the '50s, when the chief complaint of sociologists like Vance Packard and William H. Whyte, Jr., was that society was too homogeneous and conformist, that members of the great American middle class all seemed to wear the same clothes, buy the same appliances, and listen to the same pop tunes. With just three companies to divvy up 90 percent of the U.S. auto market, the mass consumption of the '50s was the polar opposite of both the chaotic markets of the '20s, and the ultra-specialized markets of the '80s.

Why the oscillation between extremes? Forrester, an adherent of the theory of the economic "long wave" spanning six or seven decades, argues that the U.S. economy since the 1970s has seen a steady buildup in excess productive capacity -- "overproduction of the capital plant," as he puts it, "in the form of too much housing, office buildings, shopping centers, and manufacturing facilities." Excess capital plant means excess production, which means too many goods chasing too few consumers. This, in turn, means that society's focus shifts from making things to owning, buying, and selling them, from manufacturing to advertising, retailing, and marketing, from production to packaging and hype, all of which are designed to push goods into the hands of consumers. An example: certain over-the-counter cold remedies, as The Wall Street Journal recently pointed out, contain the same ingredients in the same quantities and are made by the same companies. "All that actually distinguishes the medications," the Journal added, "are the marketing strategies used to push them."

Such excess production leads to consumer overload, which leads to curious changes in consumer psychology -- to boredom, for example, to fickleness, to a feeling of being stuffed to the gills. During the glory days of the American auto industry in the '50s and '60s, the annual unveiling of the Big Three's latest models was a major event. Today, with more than two dozen auto manufacturers, domestic and foreign, vying for a piece of the American market, there are so many makes and models that few people can be bothered to learn the difference. This boredom, meanwhile, leads to the widely noted phenomenon of "grazing" -- couch potatoes zapping through channels rather than watching a single program; readers leafing through magazines instead of reading them; shoppers wandering through malls, making only one or two purchases.

The grazing phenomenon, in turn, leads to certain changes in retailing and product design. Confronted with an overwhelming number of choices, jaded consumers inevitably gravitate toward items that are eye-catching, and away from the solid but dull. Perhaps the best analogy is that of an elaborate buffet table at some endless event, loaded down with everything from caviar to Viennese pastries. The typical overstuffed guest doesn't head for the veggies, but for the prettily arranged snacks, items that look great but are not particularly good for you.

The media buffet is similar. As the number of consumer magazine titles has proliferated, for example (up 50 percent in the 1980s alone), enourmous resources have gone into snappy editing and graphic design, marketing, and demographic analysis. The glitz quotient has gone up as content (and true individuality) has withered. With the M.B.A. invasion, newspapers have seen a similar emphasis on packaging and selling the news (as opposed to merely delivering it), resulting in a profusion of special sections and bite-sized editorial features meant to appeal to distracted, overloaded readers.

In an era of glut, consumers grow picky about what they read and watch. Thus, for example, reporting about grim conditions in the inner cities, though perhaps only a few miles away from many readers and viewers, is hard to sell because middle-class consumers who pick and choose their reality much as they choose their fashions can't "relate" to it; because poor people are a turn-off for advertisers and retailers; because a consumerist approach to the news means giving the consumer what he wants, not what he needs. And so it goes. While there is no shortage of experts (perhaps even a glut) to argue that marketplace individualization and specialization are here to stay, economists like Jay Forrester point out that rising advertising and marketing costs increasingly add to the cost of production. Relative to GNP, the United States spent three to four times as much on advertising in 1986 as France or West Germany. Retail space rose a startling 50 percent in the 1980s, far outstripping real economic growth (27 percent) or population (up 10.9 percent), leading one respected expert, Walter Loeb, to calculate that America is 47 percent "over-stored." As in the 1920s, there has been an explosion of brand names. Between 1964 and 1980 the number of newly introduced products on the U.S. marketplace doubled, according to Gorman's New Product News, an industry newsletter. From 1980 to 1990, they nearly quintupled. During the same period newsprint sales increased in bulk by 22 percent, meaning that dailies got bigger and weeklies proliferated. Thanks to cable, the number of TV channels available to American households soared. In ad agencies these days the talk is of "clutter," of too many ads straining for attention, of too many goods jostling for shelf space, of too many consumers who are overwhelmed by the seemingly endless profusion of choices.

All of which seems clearly out of whack in an economy in which household indebtedness has risen to unsustainable levels, in which consumer spending has been slowing since 1987 and in outright retreat since mid-1990. With the start of the recession sometime last summer, indications are that the long-awaited shakeout is under way and that particularly in media, with the failure of dozens of magazine start-ups (7 Days, Egg, Fame, Savvy, Wigwag, etc.), along with falling newspaper ad revenues, the shedding of excess media capacity has begun.

How long it will continue is, of course, unknown. So is just what the shakeout will give rise to, since technology is continually revolutionizing economic institutions. America may continue on its current course, only faster; or it may take the entirely new tack that contrarians like Jay Forrester are predicting. Assuming the latter (and sooner or later some contrarians prove to be right), a few general principles would seem to be at work: as consumption weakens and America begins to address its longstanding fiscal and financial problems -- everything from consumer debt to shaky banks and real estate -- the emphasis will shift from a spending mode to one of savings, investment, and productivity. Consumerism will recede, resulting in a smaller role for advertising and marketing. This means fewer media, certainly, but also different media -- publications that are slimmer, more efficient in reaching broader audiences, and, because of declining ad revenue, forced to serve readers rather than advertisers. The process has a political component. A renewed emphasis on production means more thought about how to fix whatever it is in America that has impeded meaningful economic development -- the familiar litany of a floundering educational system, declining industry, economic polarization, and so forth. This, in turn, means journalism that is vital to all of society, news that's less a source of entertainment than of ideas and debate. As the always-contrary Edmund Wilson observed about New York during the grim year 1932, "Life and people here seem to me to have gotten much more interesting since the Depression. They grow more amiable and have more ideas in proportion as they have less money or less hope of making it in large quantities." Nothing concentrates the mind, in other words, more than a serious economic downturn.

The process has hardly begun, but we may already be seeing harbingers of change in the world of publishing -- the surprising recent gains in readership and advertising shown by "thought leaders" such as The Atlantic, Foreign Affairs, Technology Review, and the North American edition of the London-based Economist, for example, and a mild tilt toward seriousness at such mainstream publications as Esquire, Family circle, and even Vanity Fair. This is no to say that fluff will vanish, but it may indicate that more balanced fare will return to the table. The bottom line (to use an '80s phrase): fewer ads, and a smaller press but also a better press and a new seriousness// The process may be painful, involving layoffs and liquidations. Yet, while the outlook is not promising for the business of journalism, it may be promising for the craft of journalism.

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