Okay, last week
we had a couple of postings on the first principle of economics, viz., that consumption is the sole end
and purpose of all production. This fits
in perfectly (in our opinion, of course) with basic principles of the natural
law as found in (for example) Catholic social teaching. That’s because Catholic social teaching is
based on the dignity of the person and sovereignty of the individual under God
— as is the Just Third Way.
 |
| . . . at least, according to Thomas Hobbes. . . . |
From the perspective
of the Just Third Way, we decided that Keynesian economics doesn’t quite fill
the bill. That’s because in Keynesian
economics the purpose of production is not consumption, per se. According to Keynes,
supply and demand don’t balance unless the government takes steps to make them
balance . . . such as creating money out of nothing in order to stimulate
demand, and artificially encouraging production to get the money-out-of-nothing
into the hands of people who will use it for consumption of goods other than
what was produced to generate the income.
 |
| Keynes: the State can re-edit the dictionary and change reality. |
For Keynes, then,
the purpose of production is not consumption, but job creation. Keynes’s ideal product was one that could not
be consumed! Waste is essential in the
Keynesian system in order to increase demand to clear existing production
without increasing the supply of marketable goods and services. In this way, people who don’t own the capital
that produces the bulk of marketable goods and services can consume what
capital produces by being paid to pretend to do something productive in order
to be able to consume what capital produces.
Simple, no?
Simple, no!
Now, if we were
thinking logically, we might reason that, if capital is producing the bulk of
marketable goods and services in the world, the obvious solution is not to
create fake jobs so people can have enough income to consume all that was
produced by avoiding producing anything more to add to the presumed problem of
market gluts. No, given that production
equals income, the “demand” needed to clear “supply” already exists. It’s just in the wrong hands, i.e., of people who will reinvest it
instead of spending it on consumption.
 |
| Not really his law, just named for him. |
The problem then
becomes figuring out some way that people who don’t own capital can own capital
and become productive once more, bringing supply and demand back into balance.
Today, then,
we’re getting into why it’s better to make people productive by owning both
labor and capital, then to redistribute what belongs to owners of capital to
owners of labor by messing with the money supply or taxing people beyond
endurance.
It’s called
“Say’s Law of Markets.” It starts from
the principle that consumption is the sole end and purpose of all production.
It is simple
common sense to realize that if you want to consume something, it must first
exist. And for something to exist, it
must first be produced. Consumption
cannot precede production.
Everything else
being equal, there are only two ways to have something to consume. One, you must produce what you want to
consume. Two, someone else must produce
what you want to consume.
 |
| You got is, Saul . . . I mean, Paul. |
So far, so good,
right? You don’t have to produce
anything yourself. You just have to be
strong enough (or be friends with someone who is strong enough) to take what
someone else produces for yourself.
Wrong. Here’s the catch: if you want what someone
else has produced, you have to produce something to trade with that someone
else to get what he or she produced.
Otherwise, you’re just a thief.
Couldn’t you just
ask for it? Sure, and you might get it,
too . . . but keep in mind that we’re keeping everything else equal. That means that everybody around has the
equal ability and means to produce something.
Why should I just give you something that I worked for, when you could
do exactly the same thing for yourself if you weren’t a lazy slackass.
And please don’t
start adding, “But what if . . .”
Everything else being equal means no ifs, ands, or buts. We’re working out the rule here, not the
exceptions. And the rule is, if you want
to consume, you must produce. Period.
#30#
