🚀 go-pugleaf

Fabrizio J Bonsignore wrote:
> fbonsign...@beethoven.com wrote:
> > Say's Law states that production doesn't create demand. This places
> the
> > engine of economies on the consumer. If the consumer wants it,
> somebody
> > will produce it and will make an income (profit), but if consumers
> > don't want it, production won't make them demand it, so they won't
> make
> > a profit. Yet this is true only if the principle of biological
> > diversity is overlooked! Humans are diverse, actually we are the
most
> > diverse of all living beings! This means there will always be
demand
> > for *any* good we can conceive of. (This is particularly true if we
> > take into account great fortunes, as they will demand any goodto
make
> > their consumption efficient: they will buy it because they can).
> >
> > So Say's Law is a matter of equilibria, as always: producers will
> make
> > a profit only if demand is sufficient, but for demand to be
> sufficient
> > doesn't mean a big market size, it means efficient technology!
Given
> an
> > efficient technology cost will be so low that even a small demand
> will
> > be enough to make profits *even if those profits are not enough to
> make
> > a living*.
> >
> > So prodction can create demand, or rather, any produced good can be
> > matched by some potential demand waiting to be expressed. This is
the
> > value of novelty, for instance, and it is guaranteed by the
principle
> > of biological diversity.
> >
> > Fabrizio J Bonsignore, now Danilo J Bonsignore
>
> On another venue of thought, Say's "Law" has a hidden, nasty meaning:
> it places a constraint on production! In other words, don't produce
> variety, as there may be no consumers for the new goods!
>
> The fact is that with computers and flexible production techniques
(are
> they in place?), in fact, with taylored production, which ought to be
> possible by now with appropriate technologies, any product should be
> able to be produced not only efficiently but in the right amount to
the
> demand. While Say's Law may have been adequate for the century it was
> conceived in, with advances in technology it becomes not a law but
more
> like a pattern. Of course, it has also been argued that it can be
> defeated with marketing, though marketing is a cost of production too
> and establishes another tradeoff and equilibrium.
>
> I want to emphasize that as wealth increases this law loses meaning
and
> becomes an *inferior* law, in terms of theory (metaeconomics! even
> economic theory is ubject to economic "laws", i.e. theoretical work
is
> also subject to economics! Economics is a fnudamental Science.)
Higher
> leveks of wealth (and income) will produce more diverse economies in
> terms of diversity of goods (standard deviation higher).
>
> Fabrizio J Bonsignore, now Danilo J Bonsignore
> (don't believe the rumor: I am not drug addicted, though I do smoke
> tobacco...)

Actually, from a very theoretical point of view, Say's Law is not
consistent with consumer theory; it defeats it. Rational consumers are
able to establish a hierarchy of preferences for *ALL* goods. This
implies by necessity that even nonexistent goods will have a place in
the hierarchy function of *ANY* consumer, even if the consumer doesn't
know the good exists! Preferences hierarchies are demand hierarchies;
as Hegel said, the superstructure of human needs is inexhaustible and
is only limited by budgetary constraints. So stating that production
won't *create* demand is like saying that the good produced won't be
included in the hierarchy of predferences of consumers. But by
definition preference hierarchies are such that they can *accept* any
good. They are a theoretical construct that is open and abstract and
embeddable in the space of all possible goods. Production will create
"demand", even if that demand cannot be effective given budgetary
constraints.

Fabrizio J Bonsignore, now Danilo J Bonsignore