The Economics of Consumption

The Economics of Consumption

The Economics of Consumption

The Economics of Consumption

Excerpt

In the light of the economic history of the past quarter century, a careful analysis of consumer habits by the economist seems imperative if intelligent coördination of the supply of and demand for consumer goods is ever to become a reality. Prediction and a certain measure of control of the demand for consumables are possible only when we know something of the factors that mold this demand. One of the major problems of modern economics, therefore, is to discover more about the nature and relative importance of the forces underlying and governing consumption.

Although a few sociological studies on this subject are extant, it is a commonplace that contemporary economic literature yields but little information on these influential forces and, for that matter, but few data as to types and physical quantities of goods consumed. It is here that one of the major objections to present- day economic theory becomes apparent. From the time of Adam Smith, economists have usually taken the point of view of the middle class commercial and industrial interests and have stressed the intricacies of production and exchange without, in most cases, so much as noting the existence of demand. To be more exact, demand has been recognized, but usually it has been accepted as a fact, as something as unchangeable and impersonal as the law of gravity or Archimedes' principle. Conventional economics posits the existence of demand and lets it go at that. When something goes wrong with this factor, the perversity of human nature is vaguely damned and attention turned to an assiduous analysis of the production and exchange mechanism. In other words, there has been a persistent failure to recognize the fact that demand is just as much the cause as the effect of the actual status of the economic system. As Cooley very aptly says, "to start with demand as a datum shirks the most vital questions, economic questions too, upon which society needs light. Indeed, there could hardly be a more vicious method than to confine attention to the process which mediates between supply and demand, leaving readers to infer, if not telling them in so many words, that economic good or ill is to be looked for wholly or chiefly in the greater or less . . .

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