University of Massachusetts Amherst ScholarWorks@UMass Amherst Doctoral Dissertations Dissertations and Theses Summer November 2014 Advertising and the Creation of Exchange Value Zoe Sherman University of Massachusetts Amherst Follow this and additional works at: https://scholarworks.umass.edu/dissertations_2 Part of the Economic History Commons, Political Economy Commons, and the Public Relations and Advertising Commons Recommended Citation Sherman, Zoe, "Advertising and the Creation of Exchange Value" (2014). Doctoral Dissertations. 205. https://doi.org/10.7275/5625701.0 https://scholarworks.umass.edu/dissertations_2/205 This Open Access Dissertation is brought to you for free and open access by the Dissertations and Theses at ScholarWorks@UMass Amherst. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact [email protected]. ADVERTISING AND THE CREATION OF EXCHANGE VALUE A Dissertation Presented by ZOE SHERMAN Submitted to the Graduate School of the University of Massachusetts Amherst in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY September 2014 Economics © Copyright by Zoe Sherman 2014 All Rights Reserved ADVERTISING AND THE CREATION OF EXCHANGE VALUE A Dissertation Presented by ZOE SHERMAN Approved as to style and content by: ______________________________________ Gerald Friedman, Chair ______________________________________ Michael Ash, Member ______________________________________ Judith Smith, Member ___________________________________ Michael Ash, Department Chair Economics DEDICATION Dedicated to the memory of Stephen Resnick. ACKNOWLEDGMENTS I have had many strokes of good fortune in my life, not least the intellectual and emotional support I have enjoyed throughout my graduate studies. Stephen Resnick, Gerald Friedman, Michael Ash, and Judith Smith were the midwives of this work. Their well-rounded mentorship paired enthusiasm and encouragement with plenty of pointed questions and critiques. They all managed to push me to meet their exacting standards while also allowing me the freedom to hold positions with which they did not always agree. My husband, Chris Kendig, kept the household afloat while I was buried in books, accepted two years of part-time separation, and ferried Matilda and me between Amherst and Boston, to name only a few of his countless acts of everyday care and support. He never once showed even a flicker of doubt or resentment in my presence. My parents, Janet and Joseph Sherman love ideas and they took me seriously as a thinker from the very beginning. I came to believe that ideas matter and I was able to believe that my ideas mattered because they, my first and most important mirrors, showed me a reflection of myself in which what I thought was consequential. I doubt I could have found the courage to take on this project without the foundation they gave me. The web of family and friends that sustain me is well populated. In addition to those already named: Reid Sherman, Margaret Dunlap, Joan Dolan, Tom, Suzanne, and Katie Kendig, the BARCC alumnae brunch crew, the lovely singing ladies, aunts, uncles and cousins galore, and more. I have learned an awful lot from the opportunities to share my work and learn about others’ work in the UMass economics department – my thanks to faculty and to EGSO. Carol Heim’s courses “Introduction to Economic History” and “History of Capitalist Development in Europe and the World Economy” first showed me what it means to be an economic historian. I am also grateful for all that I have learned (and for the friends I have made) through participation in conference panels sponsored by the Union of Radical Political Economists and the Association for Institutional Thought. I received important financial support from the Political Economy Research Institute (PERI), which allowed me to focus a full semester on writing in the fall of 2013. A generous fellowship from the Hartman Center for Sales, Advertising, and Marketing History at Duke University, supplemented by a PERI travel grant, allowed me to spend a wonderful week in the archives with the ghosts of billposters past. Although state resources are not targeted at me specifically, I benefited from a web of financial support as wide as the Commonwealth of Massachusetts as a student at a public university, a heavy user of the Boston Public Library, and a parent of a public school student. The skilled and committed teachers, administrators, and support staff at the Center for Early Education and Care on the UMass campus, and then their counterparts at the Baldwin Early Learning Center and the Edison K-8 School in Brighton offered Matilda many hours of care. My confidence in them freed me to put many of those school day hours into my research and writing. And Matilda herself? Well, her very being helped me keep it all in perspective. v ABSTRACT ADVERTISING AND THE CREATION OF EXCHANGE VALUE SEPTEMBER 2014 ZOE SHERMAN, B.A., SIMON’S ROCK COLLEGE OF BARD M.A., UNVERSITY OF MASSACHUSETTS, BOSTON Ph.D., UNIVERSITY OF MASSACHUSETTS AMHERST Directed by: Professor Gerald Friedman Advertising is a large industry and we feel its presence almost everywhere, but it is not easy to say what exactly the thousands of people employed in the industry produce and what exactly advertisers get in exchange for the billions of dollars they spend. Advertising and the Creation of Exchange Value explores the economics of the industry and the commodification of communications that characterizes consumer goods advertising in the U.S. I consider three phases of communications that take on three distinct commodity forms. First is access to attention, the interception of the audience’s perception; Chapter One, “The Commodification of Audience Attention in the U.S., 1865-1920” traces the conversion of audience attention to commodity form as advertising space/time. Second is content; Chapter Two, “The Value Analytics of Advertising,” examines the nature of advertising content as a commodified form of speech, produced on demand for purchasers who wish to disseminate rather than receive it. Third, the sets of meanings and mental associations we carry around in our brains become brands, business assets whose value is measured in money. Chapter Three, “The Use Value of vi Advertising,” considers the role of advertising in the branding and sales strategies pursued by the firms that advertise. I also explore the use of advertising to influence policy-makers, influence capital markets, or serve as a tool of labor discipline. I conduct an interdisciplinary historical analysis of the interests driving the construction of these communicative commodities and the labor processes involved in producing and exchanging them. I analyze the value flows associated with their trade using tools derived from Schumpeterian market theory, Chamberlin’s theory of monopolistic competition, and Marxist value analysis. The concluding essay considers the relevance of my analysis to our pursuit of the democratic ideal of freedom of expression. vii TABLE OF CONTENTS Page ACKNOWLEDGMENTS ...............................................................................................v ABSTRACT...................................................................................................................vi LIST OF TABLES .........................................................................................................xi LIST OF FIGURES.......................................................................................................xii CHAPTER INTRODUCTION VALUE: LABOR, SCARCITY, RIVALNESS, EXCLUDABILITY.........................................................................................................1 1 PRICING THE EYES OF PASSERSBY: THE COMMODIFICATION OF AUDIENCE ATTENTION IN U.S. PUBLIC SPACES, 1890-1920 ..............................27 Introduction .......................................................................................................27 How Big Was the Business ................................................................................30 Audience attention as a fictitious commodity.....................................................31 Commodified access to attention: Intercepting eyeballs......................................33 Public Spaces: Pricing the Eyes of Passersby .....................................................34 The Outdoor Advertising Supply Chain..................................................34 Monopoly...............................................................................................37 Efficiency Gains: Lowering the Cost Per Gaze.......................................50 Sequential Rents in Outdoor Advertising................................................55 Competition Across Sectors of the Audience Attention Market..........................56 Entanglement of Cross-Sector Competition with Other Battles Over the Public Sphere...............................................................................................61 Urbanization and the Governance of Public Space..................................61 Conclusion.........................................................................................................70 viii 2 THE VALUE ANALYTICS OF ADVERTISING .............................................76 Introduction .......................................................................................................76 Value production in the advertising