27 March 2009

What happens when we deviate from the market

The market defines the consumption decision in terms of a trade-off, and the market defines the production decision in terms of a trade-off. Hence, in a market-based economy, all decisions are couched in terms of prices.

When we deviate from the market we can go in one of two directions: (1) consumption as production; or (2) production as consumption. Consumption as production is plunder. The plunderer simulates production by taking what already is there. Yes, the act of taking could by itself be a costly act that entails exertion and the expenditure of resources and energy, and sometimes plunder can be the mere extraction of natural resources, but in the end the actual productive act is not being performed by the agent who claims the booty, the extracted commodity, as his own. That claim to what someone else produces is the essence of what the market denominates as the consumption decision -- hence 'consumption as production'.

Production as consumption, on the other hand, is caring and contentment. The caretaker enjoys the consumption of the cared-for, and takes pride in having produced that which benefits the cared-for. Yes, the caretaker is getting something for what he produced but the satisfaction is inalienable, it comes out of the act of production and out of the sharing of the product with others. In the end, the pleasure comes not from the consumption of something that someone else made but from the consumption by someone else of something the agent made. That pleasure not from the product but from the making of the product and the delivering of the product to another is the essence of what the market calls the production decision -- hence 'production as consumption'.