Visitors take photos along the cavalcade at Shanghai Disneyland Resort on Feb. 8, 2026. Photo: Rong Zhi/CSST

Consumption is not only the ultimate purpose of production; it also plays a crucial role in driving economic growth. How, then, can household spending be expanded to strengthen consumption’s contribution to economic growth?

Two-sector model

One way to approach this question is to examine the relationship between two sectors. Rohan Dutta, an economist at McGill University in Canada, and his collaborators proposed a two-sector model with two categories of output: “bread,” meaning basic nutrients, and “circuses,” meaning all those things that make life worth living. Taking food production as an example, products such as potatoes, corn, rice, and other basic staples belong to the bread sector, whereas wine, beef, confectionery, and other indulgences fall within the circus sector. To produce such pleasure-oriented goods, producers are often willing to reallocate resources needed for subsistence, such as grain and land. Yet the essence of the circus sector lies not in indulgent food consumption as such, but in non-essential goods and services, including entertainment, culture, tourism, and other experiential or technological products.

Building on this distinction, Dutta and his collaborators argue that technological change in the bread sector can lead to population growth, but may ultimately reduce living standards, as population increases diminish per capita food availability. Only when technological improvement occurs simultaneously in both sectors can sustained improvements in living standards and social modernization be achieved. The Industrial Revolution exemplifies this dynamic: Although technological progress in the bread sector was evident during this period, advances in the circus sector were even more significant. Why, then, is technological progress in the circus sector so important? The answer lies in the marginal capacity for the expansion of consumption.

Marginal capacity for consumption expansion

In the early stages of human civilization, consumption capacity was largely determined by physiological needs, which were often difficult to meet or fully satisfy. Although non-physiological needs did exist, they accounted for only a small share of overall consumption. However, the satisfaction of physiological needs is subject to a ceiling: The human stomach has finite capacity, which limits the amount a person can consume in a single meal. Economics textbooks often illustrate the law of diminishing marginal utility with the example of eating cake: Each additional slice consumed after the first brings ever-diminishing utility; once satiety is reached, additional slices bring zero or even negative utility, illustrating how physiological factors constrain consumption capacity.

In an era of scarcity, consumption capacity was not a central concern—the primary issue was satisfying basic human needs. In an era of abundance, by contrast, expanding consumption capacity becomes a major challenge for economic growth. How does the modern economy overcome the constraints on consumption imposed by physiological needs and habitual patterns? Colin Campbell, a sociologist at the University of York in the United Kingdom, attributes this breakthrough to the emergence of a new consumer ethic shaped by Romanticism. This new ethic liberates consumption from its traditionally fixed limits and places it in a state of continual expansion. The key drivers of this expansion are not physiological needs, but non-physiological ones.

Significance of imagination

More broadly, production activities require imagination. If producers merely cater to existing habitual and fixed demands, they will focus only on increasing output, rather than creating better alternatives or innovating in ways that encourage consumers to transcend their current lifestyles. Although consumption is often habit-driven, producers must envision ever better goods and ways of life, drawing on these visions to spur innovation. Such innovation constitutes the technological advances in the circus sector described by Dutta and his collaborators. Each of these advances boosts economic growth and promotes social progress. Better products and better lives both depend on imagining a more desirable future. Romanticism nurtures this imaginative capacity, and the freer the intellectual environment, the stronger that capacity becomes. In this sense, technological progress in the circus sector is closely intertwined with culture.

Viewed from a macro-historical perspective, modern consumption is an integral component of the modern market economy. A defining feature of modern consumption is its transcendence of traditional limits on consumption capacity—an expansion rooted in the imagination of a better life. It is precisely this imaginative vision that drives technological progress in the circus sector, along with the continual emergence of various technological and product innovations in modern society. Accordingly, greater emphasis should be placed on cultivating a cultural environment conducive to such imagination.

Wang Ning is a professor from the School of Humanities at Southeast University.