Diamonds have a slightly more complex role than just being conjured from thin air by marketing.
Premarital sex is not, popular opinion to the contrary, a new discovery. In most societies we know of, however, men prefer to marry women who have never slept with anyone else. This creates a problem. Unmarried women are reluctant to have sex for fear that it will lower their ability to find a suitable husband, and as a result unmarried men have difficulty finding women to sleep with.
One traditional solution to this problem is for unmarried couples to sleep together on the understanding that if the woman gets pregnant the man will marry her. This practice was sufficiently common in a number of societies for which we have data that between a quarter and half of all brides went to the altar pregnant.
One problem with this practice is that it creates an opportunity for opportunistic breach by the man, the strategy of seduce and abandon familiar in folk songs, romantic literature, and real life. That problem can be reduced by converting the understanding into an enforceable contract. Under traditional common law, a jilted bride could sue for breach of promise to marry. The damages she could collect reflected the reduction in her future marital prospects. They were in fact, although not in form, damages for loss of virginity.
Starting in the 1930's, U.S. courts became increasingly reluctant to recognize the action for breach of promise to marry, with the result that between 1935 and 1945 it was abolished in states containing about half the population. This created a problem for women who wanted to engage in premarital sex but did not want to end up as single mothers in a society where that status was both economically difficult and heavily stigmatized.
The solution they found was described in "Rings and Promises," an ingenious article by Margaret Brinig. The practice of a man giving his intended a valuable diamond engagement ring is not, De Beers' ads to the contrary, an ancient custom. Data for diamond imports in the early part of the century are not very good, but Brinig's conclusion from such information as she was able to find was that the practice only became common in the 1930's, peaked in the 1950's and has since declined.
Her explanation was that the engagement ring served as a performance bond for the promise to marry. Instead of suing, the jilted bride could simply keep the ring, confiscating the posted bond. The practice eventually declined not because of further legal changes—at present no states recognize the action for breach of promise to marry—but as a result of social changes. As pre-marital sex became more common and virginity of less importance on the marriage market, the risk of opportunistic breach, and thus the need for a bonding mechanism, declined.
So there was an opening market for something that could be construed as both romantic and serve a strictly financial purpose. Diamonds could fit that bill, and DeBeers deftly latched onto it and milked it hard.
I think marketing has power to shape and inform already existing needs and desires, but it has extremely limited power to create need where none exists. That is, you can plausibly make me want a BigMac over a Whopper, but you can't make be want a burger if I'm already full.
> That is, you can plausibly make me want a BigMac over a Whopper, but you can't make be want a burger if I'm already full.
But that's all the power in the world because it's what allows you to sell something not as good for more money instead of selling something better at razor-thin margins.
Go back to the diamonds. If the purpose you state is correct then anything of similar value could substitute instead. It could be an emerald, or a platinum bracelet, or real estate. Anything that serves as an appropriately valuable engagement present.
Moreover, diamonds have been particularly poor at serving that purpose because they don't have high value. Ever try to sell one? De Beers had a de facto diamond monopoly and artificially inflated retail prices by restricting supply and controlling resellers. But if you go try to sell a diamond as a private individual, you won't get anything like what someone would pay for it at retail, because the retail prices were set artificially high by De Beers. Compare this to e.g. precious metals where you can walk into a pawn shop and buy or sell for only a small percentage deviation from the spot price. Meanwhile you're just asking for someone other than De Beers to discover large deposits of diamonds and break the monopoly which will cause prices to crash much harder than they would for a normal commodity with the same new resource discovery, which is exactly what happened a little more than a decade ago. And this is before we even get to the whole issue with conflict diamonds.
"All the power in the world" is overstating the case a bit.
> because it's what allows you to sell something not as good for more money instead of selling something better at razor-thin margins
Competition isn't turned off because of marketing. Any company that has a poor product with a large margin is subject to a competitor selling a better product at the same price or a similar quality product at a lower price. McDonald's and Burger King sell competitive (to each other) products at razor thin margins for this reason, and, by the way, not generally at higher prices than smaller competitor with much smaller marketing budgets.
The diamond case is tricky because it has to convey solid honesty on the top of a many-layered set of explicitly un-stated expectations - so any attempt to "get out of it" would be viewed with suspicion, voiding the entire purpose. De Beers definitely and cleverly cornered that market and yes, that gave them some power. That said, it would be silly to expect that there did not exist substitutes in the market. Emerald jewelry goes way back.
> "All the power in the world" is overstating the case a bit.
I don't think it is. Einstein said compounding interest is the most powerful force in the universe. That's what it gives you. Higher margins that can be reinvested into growing the company. Over the lifetime of, say, Coca Cola (incorporated 1892), a 2% annual ROI which is then reinvested into the company will result in a company which is not quite 11 times as large. Make the ROI 8% instead and the company will be more than 11,000 times as large.
> Competition isn't turned off because of marketing. Any company that has a poor product with a large margin is subject to a competitor selling a better product at the same price or a similar quality product at a lower price.
This is provided the competition has equivalent marketing. Take the companies that charge you money for getting your credit report even though you can get it for free. Or any of the services offered by local towns (e.g. use of gym at the community center) at or below cost, with any number of for-profit gyms just down the street which charge much higher rates and see no shortage of business. Or the people who pay for proprietary software when there exists superior free software. Or, most relevantly for this place, the scads of companies run by engineers without good marketing (e.g. Novell) that had superior products and failed in the market because someone like Microsoft came in with something inferior and marketed it better.
> McDonald's and Burger King sell competitive (to each other) products at razor thin margins for this reason, and, by the way, not generally at higher prices than smaller competitor with much smaller marketing budgets.
Higher prices, no. Higher margins, yes. Because that market is highly price sensitive so it is more successful to expand margins by reducing quality than by raising prices.
It's always interesting to me to see how many things people take as sentimental, even sacred, rituals and practices, things that people write poetry and music about, turn out to be coldly economic when looked at in a broader historical context. This is especially true when it comes to anything having to do with marriage.
"Coldly economic" is too cynic IMO. It's a practical solution to a practical problem that must be overcome for two young lovebirds to engage in sexual intimacy. The solution to roughly the same problem today is a condom. Condoms are not the subject of many love songs, but they still enable something that very much is.
What sounds suspicious here is that diamond rings are not particularly good as the performance bond. Sale value of the ring usually much less than the purchase price (which means the woman loses part of the value that the man is willing to commit) and this sum is much smaller than the price of rearing a child alone and even the price of the marriage prospects destroyed. Of course, the woman may refuse to accept anything but a super-expensive ring but in reality the rings that get accepted are not that expensive, compared to the value that it is purported to be the bond for. It can not really be otherwise - if it is too expensive for an average person, it can not become a tradition among these people.
So this theory, while it looks plausible, does not seem to properly explain the rings, unless I am very wrong about the prices in play - are there any data about it?
Doesn't matter; its the males opportunity cost. Have sex with as many single women as you want as long as you're willing to pay a months pay for a ring for each of them. Compared to modern child support payments that would be pretty cheap for some fun, although in context in the olden days it was a relevant issue.
There are of course other societal and cultural issues with an institutionalized "pay a woman for sex" scheme forced on all women. The issue with a street walker is not her chosen line of work which all women are also culturally forced into, the problem is she's undercharging the rest of the fiancee market, cheapening their "product". The union work rule is you get an expensive ring.
I'm not necessarily agreeing or disagreeing with those positions but just pointing out they exist.
I think "zero" is overstating it. And there are many products that lose a substantial fraction of their value as soon as they're purchased. Try reselling your mattress even if it's in near-perfect condition.
Well, they do have some value ( 1/3 of purchase price?), but who cares? The well marketed perception of "Diamonds are forever", that they don't lose their value ever, is a common consensus belief of the majority of diamond ring buyers. So what if it's not true - it achieves the intended goal anyway.
Premarital sex is not, popular opinion to the contrary, a new discovery. In most societies we know of, however, men prefer to marry women who have never slept with anyone else. This creates a problem. Unmarried women are reluctant to have sex for fear that it will lower their ability to find a suitable husband, and as a result unmarried men have difficulty finding women to sleep with.
One traditional solution to this problem is for unmarried couples to sleep together on the understanding that if the woman gets pregnant the man will marry her. This practice was sufficiently common in a number of societies for which we have data that between a quarter and half of all brides went to the altar pregnant.
One problem with this practice is that it creates an opportunity for opportunistic breach by the man, the strategy of seduce and abandon familiar in folk songs, romantic literature, and real life. That problem can be reduced by converting the understanding into an enforceable contract. Under traditional common law, a jilted bride could sue for breach of promise to marry. The damages she could collect reflected the reduction in her future marital prospects. They were in fact, although not in form, damages for loss of virginity.
Starting in the 1930's, U.S. courts became increasingly reluctant to recognize the action for breach of promise to marry, with the result that between 1935 and 1945 it was abolished in states containing about half the population. This created a problem for women who wanted to engage in premarital sex but did not want to end up as single mothers in a society where that status was both economically difficult and heavily stigmatized.
The solution they found was described in "Rings and Promises," an ingenious article by Margaret Brinig. The practice of a man giving his intended a valuable diamond engagement ring is not, De Beers' ads to the contrary, an ancient custom. Data for diamond imports in the early part of the century are not very good, but Brinig's conclusion from such information as she was able to find was that the practice only became common in the 1930's, peaked in the 1950's and has since declined.
Her explanation was that the engagement ring served as a performance bond for the promise to marry. Instead of suing, the jilted bride could simply keep the ring, confiscating the posted bond. The practice eventually declined not because of further legal changes—at present no states recognize the action for breach of promise to marry—but as a result of social changes. As pre-marital sex became more common and virginity of less importance on the marriage market, the risk of opportunistic breach, and thus the need for a bonding mechanism, declined.
http://www.daviddfriedman.com/Laws_Order_draft/laws_order_ch...
So there was an opening market for something that could be construed as both romantic and serve a strictly financial purpose. Diamonds could fit that bill, and DeBeers deftly latched onto it and milked it hard.
I think marketing has power to shape and inform already existing needs and desires, but it has extremely limited power to create need where none exists. That is, you can plausibly make me want a BigMac over a Whopper, but you can't make be want a burger if I'm already full.