Sometimes Consumers Aren’t King

Madeleine Delcambre

In 1845 Frederic Bastiat wrote a satirical fable commonly known as the “Candlemakers’ Petition” in which candlemakers petition the French government to pass laws to remove their biggest competitor – the sun.[i] The “candlemakers” argue that like foreign competitors with their superior production and prices, the sun, as an essentially free light source, floods the candlemakers’ market. The candlemakers suggest that by forcing people to resort to other forms of light, the consumers will ultimately create more jobs for society in all departments related to candle and oil production, which in turn will help the economy. [ii] In Bastiat’s essay “Obstacle and Cause,” Bastiat uses similar sarcastic banter to discuss society and the obstacles within it. Bastiat describes society as having multiple obstacles, e.g., hunger, ignorance, or cold weather. He continues, by saying society uses the division of labor to make it possible for each person to overcome only one obstacle instead of trying to weather all obstacles. Bastiat’s contends that because each producer’s well-being depends on completing a particular task, producers’ motives work directly against the well-being of society. [iii] Moreover, the best scenario for a producer, is for there to be a limited market and a high demand of the product, which simultaneously is the worst scenario for consumers. [iv] This idea of conflicting interests is seen within the “Candlemakers’ Petition” in that the candlemakers want to eliminate the sun as a light source for the sake of jobs. Moreover, while the petition suggests a bigger market for the candlemakers, it would do so only by creating more obstacles for society. [v] Therefore, one can assume that if producers’ desires do not coincide with the prosperity of society, it is for general interest of society that the government and economy side with consumers over producers. [vi]That then being the case, society must determine how to promote the consumer while still respecting the integrity of the producer in a way that promotes the good life of society.

Firstly, it is necessary to clarify the “good life” previously discussed. Most would agree that the good life is happiness, but people tend to find disagreement on what happiness is. Philosopher John Stuart Mill argues in his work Utilitarianism, that happiness is intended pleasure and the absence of pain. Mill continues by saying that something is right or wrong as it tends to lead to pain or pleasure. [vii] However, Mill’s point is flawed, for it treats humans similar to animals as though neither can use reason. Following Mill would suggest that humans have no instincts outside of what feels good or bad. Conversely, philosopher Aristotle agrees that the ultimate goal of man is happiness, but claims that happiness is a “certain kind of exercise of the vital faculties in accordance with excellence or virtue.”  With this definition, Aristotle continues by saying that things are moral or immoral based on whether or not they lead a person towards happiness.[viii] If it is then true that happiness is the ultimate goal of man, then anything that interferes with personal happiness or the happiness of others should not be considered right.

In that regard, one must then determine the necessities of happiness. Aristotle offers that since happiness is in a sense living with reason and virtue, one must have the things necessary for reasoning or contemplation. Moreover, “the body must be in health, and supplied with food, and otherwise cared for.” This point goes along with Pope Leo XIII’s beliefs stated in Rerum Novarum which discussing private property. The letter reads that men work, so that they can receive a wage which in turn lets them receive “what is necessary for the satisfaction of his needs.” Pope Leo XIII continues by saying that because man is endowed with reason it is his right to possess things for more than a temporary period of time.[ix] In conclusion, both Aristotle and Pope Leo XIII support the case that humans have reason which should be used towards the ultimate goal of happiness. In order to reach this happiness, there are certain external goods required, which leads to the right and need for private property.

Economist Ludwig von Mises in Liberty and Property agrees that private property is good in that it “is the means to stimulate a nation’s most enterprising men to exert themselves to the best of their abilities.” Moreover, von Mises believes that motivating people to earn their own property leads way to the betterment of society. In this manner, private property helps everyone. Capitalism is additionally favorable because it a form of mass production that revolves around the needs and desires of many. This allows consumers in von Mises words to become king or the real boss in the economy. Because consumers are “the sovereign customers who are ‘always right,’” it prevents the wealthy from exploiting the working class.[x] This leads back to Frederic Bastiat’s idea of the continuous battle between consumers, producers and the prosperity of society. While von Mises believes that consumers should be “king” of the market, it does not necessarily mean they should be. Moreover, society should not forget the ultimate goal of each man, which is to promote happiness. Von Mises thoughts on capitalism primarily revolve around capitalism, the free market system, and how to attain wealth. Although his ideas are significant, they fail to respond to the moral obligations of society even within a free market system.

In The Politics, Aristotle discusses the role of government and the state. Historically the state comes into existence in order to fulfill the bare needs of life like food, but over a period of time, the state continues to exist to promote the good life.[xi] Aristotle expands on the idea of the state with his definition of true forms of government. He contends, that whether the government is run by one, few, or many, a good government rules with a view of the common interest of the people. [xii] Based on this, one should assume that although a free market is good for the community, it is also necessary for occasional government intervention to insure that there is always a way to insure the common interest of all parties. To this degree, it is the duty of the government monitor the economy.

Ludwig von Mises support for consumers ruling the economy is an appealing idea. Everyone is a consumer, and people want to have things their way. They prefer it cheap. However, this desire for cheap goods is challenged with the simultaneous desire for high paying wages. That is to say, with the pressure placed on producers to compete with equilibrium prices, they try to cut costs, typically in the employment department. This can often lead to an unjust relationship between the workers and the employer. Pope Leo XIII states in Rerum Novarum that “to exercise pressure upon the indigent and the destitute for the sake of gain, and to gather one’s profit out of the need of another, is condemned by all laws, human and divine.”[xiii] In this case it is wrong, for it leads away from the happiness of others, which is not exercising one’s own faculties with reason and virtue. When this relationship starts to occur, history shows that unions will begin to form.

Unions were originally formed to support underrepresented groups, but today unions are too often used to exploit public policy and the economy. How often is it heard in the news that teacher unions have gone on strike? Or that auto industries are forced to cut jobs to meet union demands? It is necessary that society allows the producers to reach appropriate solution on their own. In a way that pleases both producers, consumers, and employees. If producers do not fairly provide for their employees, it is the responsibility of the government to intervene. However, as stated by Pope Leo XIII, this should only be occurring in cases of injustices.[xiv] Unions distract from the free market economy which should be focusing on the relationship between the consumer and the producer. Furthermore, unions often are not working towards the ultimate goal, because they think about the interests of only their members and not necessarily what is beneficial to society. When deliberating on how to correctly answer to the producers and employees in society, it is essential to remember the ultimate goal of man and how the government can fulfill its duty of supporting this.

 

 

[i] “Claude Frederic Bastiat.” New World Encyclopedia. December 22, 2012.

[ii] Bastiat, Frederic. “A Petition.” In Selections from Economic Sophisms. 1845.

[iii] Bastiat, Frederic. “Obstacle & Cause.” In Selections from Economic Sophisms. 1845.

[iv] Bastiat, Frederic. “Abundance & Scarcity.” In Selections from Economic Sophisms. 1845.

[v] Bastiat, Frederic. “A Petition.”

[vi] Bastiat, Frederic. “Abundance & Scarcity.”

[vii] Mill, John Stuart. “Chapter 2.” In Utilitarianism. 1863.

[viii] Aristotle. “Book X.” In The Nicomachean Ethics.

[ix] Pope Leo XIII. “Rerum Novarum.” Encyclical of Pope Leo XIII on Capital and Labor. 1891.

[x] Von Mises, Ludwig. “Liberty and Property.” 1958.

[xi] Aristotle. “Book I: Chapter 2.” In The Politics.

[xii] Aristotle. “Book III: Chapter 9.” In The Politics.

[xiii] Pope Leo XIII. “Rerum Novarum.”

[xiv] Pope Leo XIII.

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