Study Guide to Man, Economy, and State with Power and Market

Chapter 10: Monopoly and Competition 123
Chapter Outline
1. The Concept of Consumers’ Sovereignty
A. Consumers’ Sovereignty versus Individual
Sovereignty
Consumer preferences ultimately drive a market
economy; many have termed this outcome as “consumers’
sovereignty.” Yet this is an inappropriate political
metaphor; on a free market, individuals have complete
control over their bodies and other property. Consumers
can’t force producers to make certain goods; they can
merely try to influence producers (to the extent that they
seek monetary returns) by their spending decisions.
B. Professor Hutt and Consumers’ Sovereignty
Hutt’s treatment is the most comprehensive and yet
is riddled with problems. Consumers truly exercise “sovereignty”
over production only if we treat certain decisions
by producers (when they pass up higher revenues in
order to achieve psychic satisfaction) as implicit acts of
consumption. In this formal sense, then, “consumption”
always rules production decisions—but this isn’t a useful
way to approach the exchange relations on a market. In
any event, Hutt inconsistently drops the tautologous
approach and then holds up consumers’ sovereignty, not
as a necessary condition, but rather as an ideal benchmark
against which to compare the actual economy.