Consumer sovereignty or producer sovereignty?
With the idea of ”consumer sovereignty”, standard economics may seem to claim or assume that consumer utility is more important than producer utility. Notwithstanding the impossibility of scientific interpersonal comparisons of utility, one objection is that this hierarchy is arbitrary, normatively if not also positively. As every worker and every rentier is both consumer and producer, the utility of one is indistinguishable from the utility of the other. Moreover, many socialists and many traditional conservatives have argued (against classical liberals) that it is in his role as a producer that an individual’s life is meaningful. Thus, according to the objection, an economic system based on the sovereignty of the producer would be as efficient, if not more efficient, than a system wrongly based on the sovereignty of the consumer.
Perhaps due to the influence of Marxism (and other post-Enlightenment philosophies such as Hegelianism) over the past two centuries, these ideas have gained some intellectual respectability. Frank Fukuyama’s latest book Liberalism and its discontents provides an illustration. There is no reason, he explains, “why economic efficiency should trump all other social values”. Do human beings “consume animals” or “produce animals”? he asks. “It is a choice that has not been offered to voters under the hegemony of neoliberal ideas.” As I note in my forthcoming review of this book in the fall issue of Regulationthe absurdity of submitting such a choice to the voters can be seen by imagining a referendum which would ask “the people”: “Which animal do you want to be, a consumer animal or a producer animal?”
After a victory for the production animal campaign, an injunction would likely follow from whoever believes they represent the collective: Now get back to work!
More fundamentally, I think the answer to the question of the primacy of the consumer or the producer is as follows. If it is the producer who strives to satisfy the consumer, he will automatically strive to satisfy his own preferences because he gets income to the very extent that he satisfies the consumer. If instead it was the consumer who strove to satisfy the producer – leaving the latter with the easiest working conditions and generally deferring to him – he would not simultaneously maximize the satisfaction of his own preferences, quite the contrary: producers would have no incentive to produce as much as possible for consumers. The individual, both producer and consumer, would therefore have less to consume. Seen from another point of view, an individual who, as a producer, does not work for the consumers, nor as a consumer tries to obtain as much as possible from his suppliers, would not go far in the maximizing its utility. (Remember that maximizing one’s utility simply means putting oneself in one’s most preferred situation.)
Assuming that an individual generally wants to maximize his utility, he will naturally adopt a posture of command vis-à-vis his suppliers and a service mentality vis-à-vis his customers. There is therefore a good positive reason to suppose that, in a context of individual freedom, most individuals will adopt the behavior just described. And if we make the normative judgment that the well-being of individuals as natural equal (to use a classic liberal expression) is what matters, we will favor a politico-economic regime of consumer sovereignty, not producer sovereignty: only the former, where the interests of consumers and producers are well coordinated without coercion, may we hope for equal liberty and a good chance of prosperity for all. This is the main argument in favor of consumer sovereignty as opposed to producer sovereignty.
The political word “sovereignty” can be misleading in this context. Consumers are not sovereign over producers in a coercive sense. Every producer is also a consumer. Moreover, production often has a component of consumption or pleasure (even if it is stressful or even agonizing): think of artistic work as a paradigmatic case. And in a free society, although the typical individual is expected to produce in order to consume and not the other way around, eccentricity is not forbidden, nor is affection or charity (producing for the benefit of others). What is pretty clear is that a regime of generalized producer sovereignty makes no sense at best.