A ringing endorsement for consumer power

We got mobile telephony because we wanted it, not because the big companies persuaded us to

I realised polyphonic ring-tones must be big when I was on the Gatwick Express on Sunday. The 12-year-old opposite had put a peculiarly disagreeable ring-tone on her mother's mobile and was negotiating the terms under which she would take it off. Mum, of course, didn't know how to do so herself and had to threaten to use the nuclear weapon: to read the instructions.

If mobile telephony has joined programming the VCR as another key competence at which children are better than their parents, it also illustrates the power of the ring-tone. So it is no wonder that this year looks like being the first when record companies make more out of selling ring-tones than they do out of selling singles.

But who would have thought it? For yonks it has been easy, technically, to design a mobile phone that could play the Albanian national anthem, should you want one. It was just that no one, least of all the phone manufacturers, realised that anyone might actually be prepared to pay for this. It is like texting (a word still sufficiently new that the spellchecker on this computer won't accept it); it is something that we as consumers demonstrated we wanted by voting for it with our credit cards at a time when manufacturers were dubious that there would be a demand.

Two profound economic lessons follow from this, both rather encouraging. One is that individual people are better at knowing what they want than giant corporations. The other is that humans have an infinite capacity of finding new ways of spending money.

The first should come as a comfort to anyone who fears that our culture is being subverted by American capitalism, or indeed any other "ism". The second should come as a comfort to anyone who fears that a prolonged period of slow growth is likely to blight the next decade.

Even since Vance Packard's The Hidden Persuaders was published in 1957 in the United States, people have been worried that the power of marketing would exert an undue force on people's attitudes and behaviour. The subtitle of the book was "What makes us buy, believe - and even vote - the way we do?" and the book's two themes were persuading us as consumers and persuading us as citizens.

The book was written in response to the power that those early days of television seemed to have handed to professional manipulators. He was particularly concerned about the public relations industry rather than advertising, for PR was hidden while advertising was out in the open. But, of course, his book came a time when mass TV was only a decade old. Now, nearly half a century later, I think we are less worried about the impact on consumers of these professional persuaders because we have seen that they can really only reinforce success; they cannot create it.

Mobile telephony is a classic case. With the possible exception of the internet, it has taken off more rapidly that any other consumer item in human history. Here in Britain it went from less than 5 per cent penetration in 1990 to more than 50 per cent by the end of 2000. This was not because it was pushed on us by giant phone companies. It was despite the downplaying of the technology by the main phone providers, such as BT here or AT&T in the US, crass decisions that enabled then tiny firms such as Vodafone to dominate the market.

We got mobile telephony because we demonstrated as consumers that we wanted it, not because the established companies had tried to persuade us that this was a service that we ought to have because it would enhance our status.

Now the companies - the new giants - are trying to persuade us that we want video and other fancy 3G services on our phones. So far this seems to have been a magnificent failure. Ring-tones hardly came up on their radar, yet the market (that is us, or maybe our children) has shown that tones are something it does want. The pop music industry, struggling with the switch from the single to the album, has a new outlet.

That is encouraging in the micro-economic sense that it shows that we get what we want, not what companies persuade us to want; but I find it even more encouraging in the macro-economic sense that it shows we can find new ways to spend money.

Spending falls into two groups: what we need to spend and what we wish to spend. Of course, there is no absolute line; what one generation feels is a luxury the next reckons to be a necessity (foreign holidays are an example). But there has long been a genuine concern that, as societies get richer, people really will feel that they don't need to spend much more to be satisfied.

At one level that is great: wonderful for people not to feel they must strive for an ever higher standard of living. It is also a natural shift as societies age. But if you look at the world's oldest societies, the ones with the highest proportion of elderly people, you also see economic stagnation: Japan most obviously, but also increasingly Germany and Italy.

Japan is brilliant at developing electronic toys but not so good at generating overall increases in economic demand. The result is rising unemployment, particularly among the young, which has disturbing implications for the future. A world without growth is also a world without economic opportunity, a world where the young cannot hope to have as high a standard of living as their parents. It is a recipe for social dissent, or worse.

The response of some people to this is that if growth means more irritating ring-tones in trains, they'd rather not have growth. To spend money on something essentially frivolous seems somehow improper. Nobody actually needs the Albanian national anthem on their phone any more than they need a Bentley. Far better to spend money on schools and hospitals. But this ignores the desire of humans to have fun. And out of fun comes not just economic growth, but exuberant, healthy societies. Crush the fun, stress the earnest, and you end up with the old East Germany.

So here is the answer to anyone who ponders such questions as: where will economic growth come from in the future? - or: where will the jobs come from?

The answer is: we cannot know. But that is all right because we don't need to know. What we, or indeed any country that seeks to generate enough growth to fund better provision for its ageing population, must do is learn to be nimble. We need an education system that teaches people to be able and prepared to retrain. We need to accept new disciplines in education - my own favourite is Dundee's specialisation in video games. We need to spot things we can do better than others - I've been encouraged by the Department of Trade's promotion of the creative industries. We need them to reinforce that success.

The fact that people want different ring-tones shows how we cannot predict the ways in which communications will change our lives. We know we are in the early stages of something that is certainly as important as television, maybe as important as the motor car. We know that here in Britain we are quite well placed to take advantage of it: perhaps not as well as Scandinavia, but better than the large Continental countries. The trick is not to overplan but to watch like hawks each twist and turn of the market. And if that means children putting irritating tones on their parents' mobiles, then that seems to me a reasonable price to pay for a vigorous, changing society.