The Consumption Motive
Table of Contents
The previous section explained that fellow economic feeling or common economic interest is the glue that:
- keeps an economy together
- prevents buyers from stealing from sellers by not paying
- prevents sellers from running away from buyers after taking their money
But who is more important – the seller or the buyer?
- In Economics, the supplier is more important since they make money, while buyers merely spend money.
- In Supereconomics, money is not important and so the importance goes to the buyer.
An easy proof is that a business that sells a product that no one wants will not be able to stay in business.
Economists counter this by saying that it is the entrepreneurs that make the needed goods and services.
But still Supereconomics counters this by saying that those entrepreneurs do what they do for the buyers and customers.
The Consumer is King
We call the emphasis on the buyer, demander, or consumer as the consumption or demand motive.
This is opposite of the production or supply motive which emphasizes the suppliers.
Consumption is the sole end and purpose of all production. The interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer. It considers production, and not consumption, as the ultimate end and object of all industry and commerce.
Adam Smith
The Wealth Of Nations Book 4, Chapter 8
This is easily seen in the concept of the human family which is the smallest and most common type of society. We see parents work to provide or produce food for their children who are their consumers.
Humans do this by instinct because this is how our species has evolved to be so advanced over animals.
In Neoclassical Economics, the Supplier is King
The maxim that the parents must provide for the children is the opposite of the current maxim of Economics of Say’s Law which states that production* is the root of all economic activity and is the source of demand.
The encouragement of mere consumption is no benefit to commerce because the difficulty is in supplying the means, not in stimulating the desire of consumption. Production alone furnishes those means. Thus, good governments stimulate production, bad governments encourage consumption.
Jean Baptiste Say
Book 1, Chapter 15
The maxim of Economics is similar to a family that makes the children serve the parents instead of the parents serve their children.
Smith very clearly explains that such a Production Motive is a mercantile sophistry:
By such maxims as these, nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye on the prosperity of the nations with which it trades, and to consider their gain as its own loss. Commerce, which should naturally be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.. But the mean rapacity, monopolizing spirit of merchants and manufacturers, who neither are, nor should be, the rulers of mankind, may very easily be prevented.
Adam Smith
The Wealth Of Nations Book 4, Chapter 3
Supereconomics strives to “very easily” prevent the domination of merchants and manufacturers through a moneyless system using barter credits.
Without a doubt, it was the spirit of monopoly which originally invented and propagated this doctrine. Those who first taught it were by no means such fools as those who believed it. In every country, it is always the people’s interest to buy whatever they want the cheapest. This proposition is so very manifest that it is ridiculous to take any pains to prove it. It could never have been questioned had not the sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is directly opposite of the people’s interest.
Adam Smith
The men of business stoop as they walk. They pretend not to see those whom they have already ruined. They insert their sting—their money—into someone else who is not on his guard against them. They recover the parent amount many times over multiplied into a family of children amounts. And so they make drone and pauper to abound in the State. The evil blazes up like a fire. They could extinguish it by restricting a man’s use of his own property and letting everyone enter into voluntary contracts at his own risk. But the men of business will not do this as this will lessen this scandalous money-making.
Socrates
The Republic By Plato Simplified, Book 8