I suspect that counterfeits don’t really cut into Chanel’s profits directly. The people who buy bags that costs thousands of dollars are not going to try to save some pennies by buying a knock-off...Instead, policing the counterfeiters is a response to a much more intangible concern, something Pierre Bourdieu called “cultural capital.” You see, a main reason why people spend that kind of money on handbags is to be seen as the kind of person who does. The handbags are a signal to others that they are “that kind” of person, the kind that can afford a real Gucci. The products, then, are ways that people put boundaries between themselves and lesser others...But, when lesser others can buy knock-offs on the street in L.A. and just parade around as if they can buy Gucci too! Well, then the whole point of buying Gucci is lost! If the phony masses can do it, it no longer serves to distinguish the elites from the rest of us.
An interesting curiosity as far as counterfeit goods goes is that a significant portion of their consumer base is elite children. Consider bratty, nine-year-old Bryce, who doesn't have the patience to wait and save up several weeks' worth of $100 allowances to buy a real Rolex watch to show off to his friends. Alternatively, what about poor Madison the twelve-year-old, whose mom is so mean she actually said, "Not another one now, I wanna get home," when Madison only had four purses anyway (except for that ugly one Grandma gave her)? Brittani too, though only 17, suspects that Gucci doesn't buy some of its diamonds from the best of people, so her counterfeit watch isn't just about fashion--it's a statement about helping people, and about fair trade, which those stupid, selfish, jealous girls at the poor high school just don't understand.
In that sense, counterfeit goods actually do cut into corporate profits, re-routing tiny slivers of money to poor South American and southeast Asian communities, where it rejoins a different region of the great elite money loop. Lordlings at play, and all that.
Roles, though. Elites and proles understand, deep down, that wearing "fake" things is stupid, because it violates caste-signaling rules. As an elite, you keep up appearances, and it is a duty--not in the sarcastic way, as we might critique Brittani or the other inexperienced ones above, but in a serious way. It holds the world together.
The Emperor wears new clothes, and the people cheer for them, because he and they must. If there are no castes, and no signals, then there is no divine order to the world. Fearful people need to see impoverished masses, several middling functionaries, and a few obscene kings. It provides a reassurance--a sense of order--to the dominating and the dominated, that there is some kind of plan; a shaman, filing cabinet, or computer, somewhere out there, that organized things. And organization proves order, which proves that someone has thought about something. You have a place. How reassuring. Everything has its place. Like an Edwardian court dance, or any other ritualized art, it extracts the soul to offer reassurance of the safe emptiness of existence. In a bowling alley where the gutters have all been blocked off, there are no traumatic highlights and no frightening gutterballs.
It is the duty of elites to be extravagant, pompous, and uninformed of suffering. It is the duty of proles to suffer, want, and be ignorant. It is the duty of functionaries to ineffectually whine, groan, or mock, proving thereby the futility of any life but the order in which they operate.
If you are an elite, you betray the world by acting differently. True charity would not only offend other elites, but would offend the masses. By failing to act as you should, you might appear to "help" a few people, but you would destroy everyone else's reliance on the system: you would do greater harm to the man you gifted than by letting him starve. You would harm his psyche; shake his entire faith in the world and himself.