commissioner.org
| Source | Jim Devine |
| Date | 09/10/07/11:27 |
| Carrol Cox wrote:
> > Has anyone in those previous discussions made the point that both > > "overconsumption" and "underconsumption" are nonsense [terms]. There is > > only consumption, and it is merely a personal prejudice of an observer > > that can speak of that consumption being "over" or "under." Your > > proposition is neither correct nor incrroect. It is literal non-sense > > (or empty). That's bull. This suggests that "underconsumption" is merely a moral term (and, in addition, there are no moral standards available here -- but I'll ignore that point). In economics, the definition of "underconsumption" depends on one's conception of how an economy works. For me, "underconsumption" is defined in terms of the relations between sectors required to maintain stable growth of the economy (say, as measured by real GDP) to prevent rising unemployment. This might be defined using Marx's schemes describing expanded reproduction in CAPITAL vol. II. In the simplest possible terms, if consumer spending does not rise as a percentage of GDP, it must be replaced by other, often less stable, components of aggregate demand. That means that stagnant consumer demand (again as a percentage of GDP) implies either increasing instability or a growing role for government purchases in the economy (with the private sectors falling into the sheltering arms of the state). More completely, in recent decades, the US has seen stagnant wage income (as a percentage of ...), which (all else equal) would cause stagnant consumer demand and a stagnant economy. I call this an "underconsumption undertow." It's an undertow (rather than a phenomenon on the surface) because the actual path of consumption may move out of step with wage income, due to rising consumer credit. (This is what actually has happened.) Further, the economy can be boosted by bubblish investment booms (as in the late 1990s) or government deficits (as currently). In these terms, "overconsumption" would involve consumer spending _rising_ as a percentage of GDP, which has a different effect (likely, squeezes on profit incomes, leading to stagnant fixed investment). However, we might also define "overconsumption" in different completely terms, i.e., rising consumer debt relative to assets. (In fact, this definition jibes more with current popular usage.) In this second sense, the "underconsumption undertow" has been largely canceled by "overconsumption," i.e., consumers accumulating debt. Doug's discussion and those that followed are about the _reason_ why overconsumption of the second sort has occurred, i.e., due to rising medical costs (due to the gross inefficiency of the private medical sector) and the like rather than due to consumer profligacy. > > It is obvious (if one is to use these non-sense words) that most of the > > world's population are underconsumers of leisure. It is also obvious > > that most of the world's population (including Americans) are > > underconsumers of health care. But of course these propositins are as > > empty as the cotnraries would be. It is "obvious" (to use a nonsense word) that the meanings of "over-" and "under-" consumption depends on the context. It is also obvious that the meaning of (almost?) all words is based on convention. |
Copyright (c) 1998, Joongpil Cho