That is a part of it, but only the blandest, most cynical, uncreative part -- and only the most recent part too. Fashion has been around a lot longer than industry, after all. People like to decorate themselves, and always have. It may have started out as instinctual, like those little birds that decorate their nests to attract mates. It certainly springs from necessity as well. Wherever it comes from, it is distinctly and wonderfully human. So frivolous and yet so significant: culturally, traditionally, religiously, historically -- fashion played it's role in liberating the western woman, after all!Fashion is the clothing industry's way of getting people to spend money on new clothes instead of continuing to wear the clothes that still look the same as they did a year or two ago. The whole thing is based on the principle that the manufacturers and retailers don't make any revenue off the clothes that are already in your closet. Fashion makes it irrelevant that the clothes in your closet are stain and soil free, not torn, have no holes and pretty close to the color they were when you bought them.
Fashion, like all other artistic pursuits, helped to develop mankind's skill and industry, and in its turn inspired so many other forms of art, from oil paintings to architecture. It is a very important part of all cultures, no matter how much people try to deny it.
Besides, you're only talking about one kind of fashion: disposable. There are all sorts of different fashion sensibilities, and some of the most fashionable pieces are indeed fashionable because they never go out of style. I have a fine pair of Italian boots that I bought ten years ago, and they're as stunning today as they ever were.