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Producers and consumers

July 13th, 2003

I was struck by a recent exchange in the comments thread to my post on libertarianism” in which commenter 24601 took violent exception to the suggestion by another participant in the debate that libertarians focused on the concerns of producers rather than consumers. This, 24601 said, was like asserting that libertarians are “greedy, nasty, evil people who like to kill babbies and don’t care about those silly consumers.”

Allowing for the overstatement characteristic of comment threads, this captures an important point about the free-market side of the policy debate in Australia. Concern with the interests of people considered as producers, in preference to the interests of the same people, considered as consumers, is regarded, quite literally, as evil.

I wrote about this in the Fin last year, also covering the themes of managerialism and professionalism. Some extracts

The last ten years have not been good ones for producers in Australia, whether the item produced is as basic and solid as steel or as abstract and intangible as academic research. Work is central to life, but disillusionment with and demoralisation about work has never been greater. Demoralisation is particularly evident among those groups of workers who derive meaning from theh good or service they produce, rather than just their paypacket. Examples include nurses, teachers and many workers in skilled trades.

It is not surprising that producers are having a hard time. Public policy has been dominated by economists who are openly hostile to ‘producer interests’ and see their mission quite explicitly as ‘shifting power from producers to consumers’. …

The fable of the straw that broke the camel’s back is, among other things, a warning about overburdening those who actually do the work. Economic reformers and enterprising managers have been adding straws to the bundle for at least a decade. It’s time to reduce the burden.

The alignment of free-market economics with a focus on consumers is not surprising. The most appealing feature of capitalism, after all, is the shopfront glittering with an unimaginable variety of goods. It’s during the eight (or nine or ten) hours a day spent producing those goods, if you have a job at all, that you get to see the less pleasant aspects of the system.

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  1. July 13th, 2003 at 15:19 | #1

    “Concern with the interests of people considered as producers, in preference to the interests of the same people, considered as consumers, is regarded, quite literally, as evil.”

    I think you’ve put that the wrong way around, which has misled you into leaving out something important. Who said “people” were the subject of the trade-off? Producers and consumers are. Many producers are not natural persons at all; this tips the balance for what we want to measure, weights the average, towards consumers – despite the fact that people’s experiences as producers have been unnecesarily downplayed.

    Each person’s producer experiences count as much as his or her consumer ones; but producers in aggregate are STILL not as relevant to this question as consumers, since here we only care about people.

  2. July 14th, 2003 at 12:27 | #2

    Modern Libertarianism is a mismash of two different philosophies:
    Kantian deontological moral liberalism
    ie Civic Autonomism (CA)
    Benthamite teleological economic liberalism
    ie Consumer Utlitarianism (CU)

    The two philosophie overlap in the area of individual choice in consumer or personal relations.

    They diverge in the area of professional and political spheres.

    Thus, as a matter of moral principle, CA may actually require intervention over capitalist property rights in the work place in order to protect the moral autonomy of workers from harassment by bosses.
    Also, as a mattr of economic fact, CU may require intervention against capitalist property rights to enable a more progressive utility maximising distribution of income.

    In general, any public philosophy that ignores social utility must end up putting the formal rights of some individuals over the substatntive interests of many individuals.

    This includes Leftists who oppose machiavellian utlitiarianism in favour of the “rights” of nations and due process of the “international community”.

    That can’t be right.

  3. July 14th, 2003 at 12:56 | #3

    Jack – libertarianism is not a ‘mismash’, but does include both the deontelogical ‘kantian’ arguments and the utilitarian ‘benthamite’ arguments. Most libertarians do not believe that they clash. Most libertarians believe that a non-interventionist government would allow more freedom (kant) and this would lead to better outcomes (bentham).

  4. woodsy
    July 14th, 2003 at 13:17 | #4

    “Work is central to life”. I much prefer ‘learning is central to a satisfying life’. I find that, since downshifting (the new buzzword for semi retirement) and consuming less, I have become more discerning. Perhaps more people would choose more carefully and not indulge in thoughtless consumerism if they had less to spend.

  5. derrida derider
    July 14th, 2003 at 17:49 | #5

    Oh, come on, John – as you must know, the reason free marketers seem hostile to producer interests is because they’ve read their public choice theory, not cos they consider one more naturally virtuous than the other.

    Producer interests tend to be fairly concentrated, so the potential benefit to them from lobbying governments is high relative to the information and organisational costs incurred. Consumers, OTOH, are very dispersed (so individual costs and benefits are often low) and face both asymmetric information (asymmetric WRT the producers) and co-ordination problems.

    All but the most ideological ecorats will agree that government intervention vs free market solutions ought to be judged on a case by case basis – its just that they think that the above mechanism tends to bias governments’ judgements. And as a practising bureaucrat I think they have a point – I’ve seen the effect in operation firsthand many times.

  6. John
    July 14th, 2003 at 18:09 | #6

    DD, I am of course aware of this, though I realise now I didn’t mention it in the post.

    In this, as in many other respects, public choice theory has a lousy empirical record. Studies of tariff rates show that, other things equal, industry concentration is negatively correlated with protection. Textiles, for example, are heavily protected in most developed countries (there are other factors such as the ‘need’ for protection in the case of textiles, but the general finding is robust).

  7. July 14th, 2003 at 18:10 | #7

    24601 says that
    Most libertarians do not believe that [Kantian autonomism and Benthamist libertarianism] clash.

    Most capitalistic libertarians naturally believe that all circles can be squared and lions may lie down with lambs, and that total utlity/economic liberty can be maximised under the minimal state.

    Just as most socialistic egalitarians naturally believe that total utlity/social equity can be optimised under a maximal state.

    But both beliefs are wrong, as preferences for efficiency tradeoffs against both social equity & economic liberty differ through time and accross space.

    In general, Mill was correct in isolating the personal sphere of self regarding actions and contemplations as being sacred and inviolable.

    In the professional sphere, a certain amount of government intervention regarding externalities is utility maximising.

    And in the political sphere, virtually any amount of coercion and government intervention is justifiable as utility maximising, depending on the nature of the threat to national security.

    Hence the massive violence inherent in both NORAD and ECHELON are produced under Jefferson’s libertarian-Kantian US constitution.

  8. Steve Edwards
    July 14th, 2003 at 22:42 | #8

    It’s natural that there will be tension between consumers and producers. Consumer rights advocacy tends to run from concern about monopolistic behaviour to safety and health issues. Producer rights advocacy, can often be about subsidies, grants and protection, which are often financed by consumers.

  9. July 15th, 2003 at 07:48 | #9

    (As the person who raised the producer vs consumer issue, I’d like to reiterate that I did not mean my statement as any sort of value judgement about libertarianism.)

    John’s comment about how the same people are both producers and consumers reminded me of a central Marxist claim about capitalism: that, from the perspective of the business owner, there is a conflict between seeing his employees as consumers (in which case he’d like them to have lots of money to spend) and as producers (in which case he’d like to pay them as little as possible). This contradiction is said to be unsolvable within the capitalist framework and thus will bring that framework down (nb: I don’t buy this claim). It seems, though, that Marxism (or at least far-left economics in general) has shifted its emphasis over the years from worker qua producer to worker qua consumer. Marx wrote a lot about labor conditions and the alienation of the worker from his product, but little about who was buying these products. These days, though, (perhaps because of the increased availability of consumer goods and because of environmentalism) you hear a lot more about the effects of capitalism on consumption — changing availability and homogenization of products, monopolies, commodification of more aspects of life, etc.

  10. July 15th, 2003 at 12:29 | #10

    24′s

    “Most libertarians do not believe that they clash.”

    one is a orange, another is an apple, they look fine in the still life of one’s preferences

    its a pity the rest of us are bananas, or feijoas, or mandarins!

  11. Terje Petersen
    July 18th, 2003 at 00:41 | #11

    Some modern capitalists of the supply sider variet (namely Jude Wanniski etc) are very much of the view that true capitalism should involve a focus on producers rather than consumers.

    The current obsession with consumers as the engine of economic growth is one that I think we will one day look back on as a foolish blind alley.

    To focus on consumers is a very Keynsian offshoot.

    Before anybody can consume somebody must produce. Robinson Crusoe does not become rich due to his ability to consume but rather he becomes rich by his ability to produce. Trade may complicate the picture but it does not change the underlying reality.

    Karl Marx understood the central role of the producer as did Adam Smith. Somewhere in the mid 20th century we lost our way intellectually.

    An interesting primer on the topic:-

    http://www.polyconomics.com/searchbase/km1.htm

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