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I don't think you understand my point. I'll reiterate: 'To buy something, first you have to produce something worthy of exchange'. To understand this, don't i
by brc 11y ago
I don't think you understand my point.
I'll reiterate:
'To buy something, first you have to produce something worthy of exchange'.
To understand this, don't immediately jump to the business level, think of it at the individual level. If I want to buy something, first I have to produce something worthwhile, so I can exchange that thing for the other. It's unlikely that the exchange is going to be direct (barter) and it will take place using the medium of currency.
I think your understanding of demand is slightly askew from the economic definition of demand.
Entrepreneurism is precisely what you have described - the creation of new products where future consumption is uncertain. It is vitally important as an agent of change in any economy - and incidentally is the first victim to central planning.
But that is incidental to the issue of requiring production before consumption. If I want something, first I have to make/do something which has value for someone else, then they can trade the thing that they made/did and that I value. We are both better off, wealth has grown. The issue here is that people think that just giving currency to one of us so we buy the thing off the other is the key to growth. When it is patently obvious that 'stimulating demand' by giving someone money can't possibly grow wealth (and the economy in the same way).
- RobertoG 11y ago"When it is patently obvious that 'stimulating demand' by giving someone money can't possibly grow wealth" But this is not the claim. The claim is somebody trying to buy something with money create demand. We all agree that money is different of real wealth. Even in an alleged two persons barter economy I could buy from you with a promise of something in the future. If the promise is good enough you could even start producing more. And this is not even the correct framework, because what we are talking are systemic problems in modern economies that don't map well to hypothetical two persons barter economies.