The People’s Republic: The Forces At Work

CONTINUED FROM LAST WEEK

Each family would produce what it could on the areas of land under its control, with each member of the family specialising in what he could do better than the rest of the family. Ifeach family produced for its own consumption all that it needed and most of what it wanted for a decent living. no problem of exchange or distribution would arise.

There is no doubt, however, that as time went on, the co-existing families discovered that some members of one family did certain things better and much more cheaply than the others, so that there would be mutual advantages in the exchange of goods, each family concentrating on what it was best fitted to do.

If such exchange of goods as was, therefore, necessary took place directly between the producers and consumers, and granting that the basis of exchange was equitable, and there was at the same time a double coincidence of wants, not much of a problem would arise. But when these assumptions do not hold good; when exchange becomes some stages removed, remote, or anonymous, as between the actual producers and consumers, and money is introduced as a medium of exchange, then important problems of exchange and distribution arise.

It must be borne in mind, however, that the problems of exchange and distribution are strictly connected with, and arise directly from those of production. If it were possible to contrive a situation in which production did not take place at all, then there would be no problems of exchange and distribution. Similarly, if all the things that man needs and wants were as plentiful as air, even the problem of production would not arise.

It becomes quite clear, therefore, that the impetus for production . is consumption. We may put this in another way and say that the sole object of production is the satisfaction of man’s needs and wants, which are the objective manifestation of man’s desire for consumption.

From this brief analysis, we find ourselves face-to-face with the problems posed by the four well-known departments of economic science, namely: consumption, production, exchange, and distribution. It is in the effective and successful solution of these problems that man can enjoy the fruits of his labour and benefit from the inherent advantages of: (i) division of labour; (ii) exchange of goods; and (iii) the increased productivity and higher standard of living made possible by (i) and (ii). Indeed, it is in the effective and successful solution of these problems that, in a material sense, man can live a full and happy life.

We will, therefore, proceed now to consider the problems of consumption, production, exchange, and distribution. Specifically, we will consider what these problems are, how they arise, and how they are solved. In this consideration, we will take these four departments one by one.

 

CONSUMPTION

Consumption is defined as the satisfaction of human wants. Human wants, on the other hand, can be grouped into three categories, namely: necessaries, comforts, and luxuries.

Necessaries are things without which life cannot be maintained; indispensable things; requisite and desirable things not generally regarded as comforts or luxuries. Food, clothing, and shelter, of such quantity and quality as make for a reasonably decent living, are examples of necessaries.

Comforts are things that make life easy. Fashionable food, including alcoholic beverages, and fashionable or festive dress are examples of comforts.

Luxuries consist of choice or costly food and dress, prestigious shelter and furniture, and, in general things desirable but not indispensable. Examples of these abound.

To live at all, man needs air, water, and food. He must breathe and eat to live. The hazards of living are considerably reduced by the over-abundant provision of air by Nature. Man cannot live for .more than a few minutes without air. He can only survive for a few days without water. And he also needs clothing and shelter for a reasonable degree of decent and happy living. This is not all. He must marry and procreate children. Nature urges him to do this. And until his offspring are grown up and strong enough to fend for themselves, he must feed, clothe, and shelter them. He must educate them to the best of his means and ability, and he must take care of them, just as of himself and his spouse, in times of sickness or disability arising from any cause. It is easy to discern that the motive of all human activities is the desire to satisfy these needs of man, of his spouse, and of his offspring, and that within and beside the ambit of his basic needs for water, food, clothing, and shelter, there is an infinity of wants. There is a large variety of water, food, clothing, and shelter from which to choose for the satisfaction of his wants. This variety increases with time, advancement in civilization, science and technology. With time, tastes and fashions change, and the whims and caprices and eccentricities of the opulent classes create new ranges of wants as well as what the economists term ‘the paradox of value’. What are regarded as comforts and luxuries in one epoch respectively become necessaries and comforts in the succeeding era; and so on and so forth.

Besides, the more a man has of a given commodity the less of it he desires. This being so, he most scrupulously sees to it that he does not have a surfeit of one thing, whilst he completely goes without another which he also desires. Furthermore, in addition to his material wants, man also has need to polish his mind and improve his capacity to think. To this end, he engages in intellectual pursuits, religious devotion, philosophical speculations, scientific explorations, and many other mental and spiritual adventures. Each of these pursuits is a life-time venture in itself; and in order to avoid monotony, man tries to diversify his interests as much as possible. It is common knowledge that, for all the infinitude or multitude of his wants or ends, the means at his disposal for their satisfaction are limited and have alternative uses.

CONTINUES NEXT WEEK

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