The Influence of Consumption on Production

The Influence of Consumption on Production - anxiety and...

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John Hawkins Policy Ideas in the History of Economic Thought Mario Rizzo September 27, 2010 John Stuart Mill: The Influence of Consumption on Production In The Influence of Consumption on Production , John Stuart Mill says that there can be no good of which everybody wants (nor would it be desirable) because by the nature of the fact that somebody is selling that good, he desires to buy something else. This truth is confounded by the use of money. In the practice of barter, the buying of the “other good” by the seller is immediate, whereas with money his assets can remain in purely cash form for as long as he desires. This has the possibility to create scenarios where a large majority of people would want to sell a product for cash and keep their profit in cash form, deferring their spending to a later date. Mill calls this a “period of general excess,” or what we might call a recession when products go unsold despite the
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Unformatted text preview: anxiety and desire of the sellers to do so. In these times where prices of certain products fall due to an increase of savings of the buyers of that specific product, the price of that commodity then drops and sellers then decide to keep their products, in effect investing in what they were at first trying to sell in the hope that its price will rise. Mill then argues that, taking the first case, that not every single person can be in desire of a product at once, takes money and turns it into a commodity to make the theory apply in the case of deferred spending. That there, cannot be an excess of all other commodities, and an excess of money at the same time. In this instance, it is often said that there is an overabundance of all commodities (which oversimplifies and leaves the case of money out)....
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The Influence of Consumption on Production - anxiety and...

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