Home > updates > Research > Consumerism during the Cold War era.

Consumerism during the Cold War era.

Date: 2023-08-13Views:

Article / Kate Kui, Partner at Harvest Capital

Yesterday, the United States implemented restrictions on investment in China, introducing the so-called reverse CFIUS review mechanism. Despite attempts to disguise it, the pursuit of decoupling and the underlying Cold War mentality have been laid bare. Our generation may not have a particularly precise impression or memory of the Cold War because the main battlefield was not in China at that time. My understanding of the Cold War is mostly based on history books, various dramas, and the recent years' discussions about "cold war" due to trade tensions and decoupling between China and the United States.

This morning, while reading foreign media, only two industries in China were mentioned: new energy vehicles and photovoltaics. Foreign media believe that China has a well-established supply chain in these two industries, and if investment is not allowed, the US might end up hurting itself. The review mechanism involves several key industries, including semiconductors, microelectronics, quantum information technology, and many applications of artificial intelligence in China. It's somewhat akin to the idea of "kill a thousand enemies, hurt yourself eight hundred," roughly speaking.

But isn't this what the Cold War is about?

These days, I have been revisiting books and documents about the Cold War, coming across some interesting snippets that I plan to jot down. For instance, today, I encountered the Kitchen Debate. Not many people of our generation remember this event: then-Vice President Richard Nixon and Nikita Khrushchev engaged in a series of dialogues in a kitchen showroom, which were recorded. According to Baidu, on July 24, 1959, Vice President Nixon unveiled the American National Exhibition in Sokolniki Park, Moscow, as a "return visit" for Soviet officials visiting New York. The entire pavilion was arranged to showcase everything an American citizen could possess. The pavilion was filled with modern, automated entertainment devices to demonstrate the achievements of the massive consumer and market economy under the capitalist system. The debate took place in a model American-style home kitchen, and Nixon shifted the focus of the debate to household appliances like washing machines, avoiding discussions about weapons. This maneuver prevented him from admitting the clear military disadvantage of the United States compared to the Soviet Union during the debate.

Although Khrushchev repeatedly claimed that the Soviet people were only interested in whether items were practical and not interested in luxury goods, he was clearly surprised by the variety of products in the kitchen and even asked if there was a machine "that could stuff food into the mouth and make people swallow." Nixon replied that technological competition was much more important than military competition. In the end, both agreed that there should be increased exchanges and openness between the United States and the Soviet Union.

The rise of American consumerism occurred rapidly after World War II. I asked ChatGPT about the connection between the rapid development of consumerism and the Kitchen Debate, and here's the response:

"Consumerism development is related to the Kitchen Debate in the context of the Cold War between the United States and the Soviet Union. The Kitchen Debate, which took place in 1959 between then-US Vice President Richard Nixon and Soviet Premier Nikita Khrushchev, centered around a US exhibition of an American kitchen in Moscow.

During the debate, Nixon showcased the advanced appliances, modern conveniences, and overall high standard of living in American households. This exhibition was part of the larger cultural and ideological battle between the two superpowers, where they sought to promote their respective societies as superior.

Consumerism development, particularly in the kitchen and home appliance sector, was a key element in the American argument for the superiority of capitalism and the free market. The US presented its consumer-driven economy as a testament to the success of capitalism, stressing the idea that the American people enjoyed a higher standard of living than their Soviet counterparts.

By showcasing the abundance and efficiency of American kitchens, Nixon aimed to emphasize the benefits of consumerism to the Soviet people and imply that the free market system provided a more prosperous and fulfilling life. This focus on consumerism development aimed to win hearts and minds, contrasting the perceived stagnation and scarcity of the Soviet economy with the abundance and choice available to American consumers.

In summary, consumerism development was an essential aspect of the Kitchen Debate as it highlighted the disparities in living standards between the capitalist United States and the socialist Soviet Union, ultimately serving as a tool for ideological persuasion during the Cold War."

At that time, the Soviet Union had invested heavily in space and the arms race, even surpassing the United States at one point. But did the consumption in the Soviet Union matter? I looked at various materials and believe it did matter a lot. The Soviet store shelves had few imported goods, and the country made significant efforts to encourage the establishment of domestic brands. For example, there was a brand called "Алёнка" (Alyonka). This chocolate brand was named after the first female astronaut, and its products were launched in 1966 and quickly became popular nationwide due to their low cost and high quality. Another brand, "Байкал" (Baikal), was established to compete with Coca-Cola. When Coca-Cola boycotted the Moscow Olympics in 1980, the Soviet people rose to the occasion, developing their carbonated drinks without any artificial additives and claiming certain medicinal effects. The drink became extremely popular, and a bottle was hard to come by.

Returning to the Kitchen Debate, one brand stole the spotlight—Pepsi. The then-President of Pepsi, Donald Kendall, handed Khrushchev a cup of Pepsi at the exhibition. It's said that Khrushchev enjoyed it so much that Pepsi subsequently entered the Soviet market. However, due to Kremlin's currency issues at that time, buying Pepsi could only be done by exchanging it for vodka. So, for a period, the popularity of vodka in the American market was roughly equivalent to the popularity of Pepsi in the Soviet Union. When the contract between the Soviet Union and Pepsi was about to expire in 1989, the Soviet government used 17 submarines and 3 warships, worth $3 billion, to secure the contract. As a result, Kendall joked that they had managed to destabilize the Soviet Union faster than they had imagined with Pepsi.

After World War II, coupled with the Cold War, the stage was set for nearly 100 years of consumerism. Do you remember Eisenhower being asked how to boost the U.S. economy and his reply? "Buy!" "Buy what?" he was asked. His response: "Anything!" Consumption at that time was seen as an expression of patriotism.

Now, isn't consumption of paramount importance again?

Related information