Consumers Sovereignty An

Consumers Sovereignty An

Consumers' Sovereignty, an economic system in which consumers direct producers through a free, competitive market. By refusing to buy straw hats, consumers have forced the hat industry to make trilby and bowler hats; by preferring packaged to draught beers, they have induced brewers to sell more beer in bottles and cans; by preferring to ride in buses, charabancs and cars, they have made the railways shut down some branch lines. Broadly, the more competitive the market the greater the power of the consumer; the larger the element of monopoly, the more he is at the mercy of the producer.

Man is both consumer and producer; but his interest as producer is immediate and obvious, his interest as consumer distant and diffuse. The two conflict sharply: the interest of consumers is to replace uneconomic coal-pits by profitable pits or by other sources of power; the interest of miners is to keep all mines working whatever their cost or efficiency. The case for consumers' (rather than producers') sovereignty is that, to safeguard his interest as producer, man would be tempted to stultify change by suppressing invention, new methods and ideas; the result would be stagnation and ultimately impoverishment. Consumers' sovereignty is disturbing to established producer interests, but to impede it is to put sectional before general interests.

There are possible dangers in consumers sovereignty. (1)Consumers may be ill-informed or persuaded by advertising into making bad choices. The solution is general education, information and advice (as supplied by consumer organizations), protection by common law (implied warranty that goods are fit for the purpose for which they are bought) and statute law (Sale of Goods Act, Merchandise Marks Acts, Weights and Measures Acts, etc.), voluntary advice (solicitors, stockbrokers, insurance brokers, etc.). To the extent that consumers buy for 'non-rational' motives of emulation or other subjective reasons, the 'artificial' distinctions between products give consumers real satisfaction and make them willing to pay higher prices for wider choice and variety. (2) Consumers' preferences may be frustrated by monopoly or imperfect competition. Market imperfection can be limited by legal penalties on restrictive practices and measures to maintain free entry by new producers; any remaining monopoly due to 'natural' or other unavoidable causes can to some extent be controlled by law or public opinion. (3) Consumers can 'distort' the industrial system by making it produce luxuries rather than essentials. If this is a criticism of consumers for preferring, say, television to tea-cloths, it opens up again the question of personal preference and education. If it refers to the disproportionate influence exerted by the more wealthy, it is a criticism of the distribution of income rather than of consumers' sovereignty. Inequality of income is itself the result partly of consumers' sovereignty, since those with abilities in wide demand (film actors, playwrights) or producing goods that sell well will earn high incomes. If the inequality of Income is considered excessive, it can be tempered by progressive taxation. Consumers can be considered the best judges of their needs and preferences and therefore best capable of making choices most likely to satisfy themselves only if they can learn by trial and error what to avoid and how to choose better. Choice by trial is easy in many goods and services but not where purchases are made infrequently (a house, furniture, etc) or where the effects or performance of a commodity are not immediately or soon apparent (tobacco, medicines, etc.) Here consumers' sovereignty may need to be restricted by authority or strongly influenced by disinterested advice unless consumers show they are aware of the experience of other consumers in learning of the properties of commodities or services they are unable to test themselves.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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