Theory of the Luxury Class

I am lying in a $8,000 bed trying to read "Theory of the Leisure Class," the book that coined the term "conspicuous consumption." As I read, I am waiting for one of those brilliant insights that journalists are supposed to have when they do things like contrast early 20th century socioeconomic theory with ultra-high-thread-count sheets.

But I can't concentrate on Thorstein Veblen, or his book. I am instead totally obsessed with thinking about this bed -- the Dux -- with its 2 miles of Swedish steel springs, and its lumbar support. All I can think is: "I want to own this bed."

The bed, to be sure, is very comfortable. But it's also a status symbol, the Donald Trump of beds, found mostly in exclusive hotels.

If you care about what people think of you and you care about sleeping, which is to say, if you are American and you are alive, then you can't help but want this bed.

And that, it occurs to me, is Veblen's point about conspicuous consumption, or the act of buying very expensive goods, whether they be $8,000 beds or $6,000 shower curtains or platinum encased cell phones. The wealthy buy these items so they can talk about them and people can see them using them and then talk about them, too.

When Veblen wrote in 1899, he was living in what would eventually be known as the gilded age. A new class of wealthy Americans had emerged, and they wanted people to know just how well they were doing.

The rich built lavish homes, filled them with luxury goods, staffed them with dozens of servants and then hung out and played sports.

Today, people are richer than ever. There are some 8.7 million people worldwide who have at least $1 million, and 984 of those are billionaires.

And the rich still want luxury items, they still want servants and they still want to enjoy their free time.

There may not be many "high net worth individuals," but they nevertheless spend a lot of money. The size of the luxury goods market is estimated at somewhere around $450 billion.

The Beauty of Bespoke

So, what are the super-rich conspicuously consuming these days? And, as Veblen asked more than a hundred years ago, why are they spending so much money?

The latest trend in luxury consuming can be "summed up in one word," said Carol Brodie, chief luxury officer at the Robb Report -- "bespoke."

"The truly high- net-worth individual wants to say, 'This was created for me,'" Brodie said. "When you get to the point where money isn't an issue, your own taste is all that you need."

The rich purchase bespoke suits from the world's premier designers for which they specify every single detail. They design the cabins of their $47 million Gulfstream jets, and they select the materials for the interiors of their $400,000 Mercedes Maybachs.

"Luxury is owning Louis Vuitton anything," Brodie said. "Bespoke is having custom Louis Vuitton luggage created for you. In the world of home furnishings, if it's Edra from Italy, it's made specifically for the buyer. … It is Bottega Veneta furniture. Traditionally, owning a Bottega Veneta handbag or clothes was luxe. But furniture, that's another stratosphere.

"The true definition of luxury," Brodie continued, "is about choice. It's about having the ability to chose."

More Money Than Sense?

But there is no accounting for some of the things rich people chose.

When the Securities and Exchange Commission investigated former Tyco chairman Dennis Kozlowski in 2002, it was revealed he had spent lavishly on hundreds of otherwise normal household items.

Among other things, Kozlowski owned a $6,000 shower curtain, a $2,200 gold-plated garbage can and a $15,000 dog-shaped umbrella stand.

That kind of money makes an $8,000 bed look like a perfectly reasonable purchase.

When many people think of luxury goods, however, they are not thinking of bespoke suits, custom yachts and butlers. Instead, they are thinking of Kowzlowski-style luxury-goods porn: the diamond encrusted furniture, $2,000 silver holders for ketchup bottles and caviar-soaked pizzas.

If the Robb report is the Playboy of the luxury-goods market -- you know, people read it for the articles -- than blogs like luxist.com are the amateur porn Web sites.

Luxist updates daily with image upon image of Prada snow skis, diamond-encrusted cell phones, DeGrisogono truffle slicers, a (this is my personal favorite) Mini Cooper limousine with swimming pool, antique bottles of wine, 24 karat iPods and multimillion dollar homes.

There is a real market for this stuff outside the United States, said Robb Report's Brodie.

"There is a market, not necessarily in America, for people buying very, very over-the-top things. Look at tastes in Russia and in the Middle East. It's a much different market of connoisseurship," she said. "They want diamond studded everything. … They want things that are incredibly intense and incredibly rare. We might say that it's completely over the top, but it's the norm for those cultures."

Perception of Wealth

"What may be ridiculous to you and me is normal, and required, and natural in other communities," Sharon Zukin, a sociology professor at the City University of New York and author of "Point of Purchase: How Shopping Changed American Culture," told ABC News. "If all my peers are buying $5 million or $55 million apartments, certain expenses become natural or required to be part of community."

"What you consume and the way you consume, all depends on your 'taste community,'" said Zukin, a 'taste community' being "the group of people you run around with or want to run around with."

But companies, for the most part, don't expect to sell extravagant items in the United States, market watchers say. Instead, they hope outlandish items will raise their profile and encourage consumers of more modest means to purchase their more affordable goods.

"Selling something so expensive that no one will buy it is an old marketing strategy," said Lynn Kahle, a psychologist and professor of marketing at the University of Oregon. "It's a way for people to make it look like they're spending a lot of money. When you buy a $2,500 watch from a brand that makes a $250,000 watch, you create an image of being upscale."

"These goods are a statement of accomplishment," said Kahle. "They say, 'I'm an important person, so I can afford bigger, better, nicer, fancier things.' It's a way to assert and image of power and authority."

The Modern 'Leisure Class'

Veblen called the well-to-do he studied the leisure class because they had enough money to worry more about fun than about work. They left the running of their huge estates in the hands of professional servants.

Having a butler is again very in vogue, according to Charles MacPherson, vice chairman of the International Guild of Professional Butlers.

"There is a huge upswing, because there is a world shortage of butlers," MacPherson said.

"At the turn of the 1900s, during the Edwardian era, 30 to 40 percent of [a mansion's] floor space was in the back of the house for the servants," he explained. "During World War I, people left houses to work in factories. Now a hundred years later, with the increase in the size of houses, people again need a staff to run their homes."

MacPherson said a well trained butler earns around $60,000, but with experience can earn more than twice that.

Talk about aspiration.