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> You cannot make things without taken into [consideration] who would consume them and by how much. A business is based on how many people actually USE what it
by dpatru 15y ago
> You cannot make things without taken into [consideration] who would consume them and by how much. A business is based on how many people actually USE what it makes, and are ready to pay for it.
Exactly. Perhaps a good way to view this would be to resrict the definition of supply to be only something that has a demand. So a fisherman that "supplies" rotten fish that nobody wants is not providing a supply, he is just wasting resources.
The hard part of economics is always the supply part: how can you increase supply? (Supply defined as what people want.) When productivity is below the subsistence level, increasing supply consists in just producing more food. But as productivity grows beyond the subsistence level, the challenge becomes an informational one: out of all the things you could do, what should you do to increase the total supply the most? A man who is hungry just wants more food, any food. But a man who is sated will only want certain particular kinds of food or maybe something else entirely.
This is what prices in a free market are for: they provide information about what the economy needs the most. In an economy of hungry people, any kind of food will sell. But as the population gets sated, prices will tell producers that common-place food is not needed anymore and that they should produce something else.
- icebraining 15y agoYou're just redefining terms without adding anything new. Parent's question is: what if people are stated, and like OP, they don't want different kinds of food, or anything else? What if, like OP, they're happy consuming only a small part of what can be produced by all those entrepreneurs?
- dpatru 15y agoThe point of trade is to allow each party to get what they want at less cost than they would be able to get independently. If one party wants to sell, but the other party doesn't want to buy, then trade does not happen. This is not bad thing. In fact, per Micah, it's even idyllic: "every man sitting under his vine and under his fig tree." That is, every man having his own food supply so that he is not dependent on someone else. Defining supply to require a corresponding demand makes this explicit. An entrepreneur can't just start producing stuff that nobody wants and then complain that there is no demand for his supply. He's not entitled to force a trade. Examples make this clear. The auto industry has the capacity to produce many more cars than they do. But they will not be heard to complain that people should be forced to buy more cars so that they can produce more. Likewise movie theaters with empty seats are not allowed to force people to buy tickets. By the way, there are industries that partner with government in order to be able to force trade. The money industry is the biggest one. See G. Edward Griffin's presentation of The Creature from Jekyll Island (http://video.google.com/videoplay?docid=6507136891691870450 http://video.google.com/videoplay?docid=6507136891691870450).