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The money earned by one’s work can be freely exchanged on the market place for any service or product available and affordable. Consumption is an extremely important component in the economic system. Everybody buys food, shelters, and many other goods and services.
Work and consumption are like the recto and verso of the same paper. It is impossible to imagine work without consumption, neither consumption without work. The worker and the consumer are two sides in the same person. The barter economy makes it always easier to understand. When a farmer would like to get some tools or some clothes for his kids, he goes to the shoe or the iron maker and asks him for some goods in exchange for some potatoes and some meat. Both the shoemaker and the farmer are workers and consumers. This is exactly what people are doing through the use of money in a globalized market.
It is important to notice that we are always educated in order to know how to work or how to produce something, but we are never educated to know how to buy and consume things. There are schools and universities for almost every way to be able to work and earn money, but there are no schools to teach the people how to spend their money and why. One can argue that it is much harder to acquire the skills of a doctor or an engineer than to be able to spend money on the market. It is true that consuming is not that hard. But the question is: Is it important to know how to consume or is it not important? And the next question is: for whom is it important or not important?
If we go back to the very old work of the farmer or the hunter, the work and the consumption are almost synonyms. The farmer plants potatoes and consumes potatoes. Even if those two activities do not occur simultaneously, the direct goal of the first activity is the consumption of what has been produced. There is no need for this farmer to work more if he does not need to consume more. But with the barter, the product of the labor and the product of the consumption started to be significantly different. The farmer can produce much more food than what he needs in order to exchange the surplus for clothes for example. In the barter economy, everybody is still a worker and a consumer. So, what did money change exactly?
There is no doubt that money changed many things, to not to say that it revolutionized the commerce and the economy in general. It is interesting to try to compare the psychology of the producer and consumer (which are the same person as it has been pointed out earlier) in a barter economy and the psychology of the producer-consumer in a money based economy. In the first case, the main focus of the producer-consumer is the product or the service he will create through his labor and the product or service he can get in exchange on the market. The final goal of this economic individual is the products and services themselves and how useful they can be to preserve and transform his life and the life of the community on the barter market.
When the economy is based on money, it is arguable that there was a switch within the psychological motivations of the producer-consumer. Even if there is still a focus on the product or the service created, this focus has been definitely directed towards a “higher” goal; and this goal is of course to earn money. Even if the service or product in itself is useless or harmful, its value is measured through its ability to be sold on the market and at which price. So the first shift in the personality of the economic agent is that as a producer, he doesn’t necessarily question what he produces apart from its value on the market. If it is legal and it makes money, the main goal of the producer-consumer, as a producer, is to bring it to make more money, to produce more or to sell it for a higher price. In the barter economy this thinking would be hard to maintain, because you don’t want to stock tons of goods and exchange them for other tons of goods. Apart from war times or specific needs, you don’t need to have too many things. But since money is not anymore those gold pieces that you have to store in a safe place, you can “store” of it as much as you want, in a totally virtual world, i.e. in a bank account. It does not take space, it does not perish, and you can exchange it for a good or a service when you want and where you want. This explains why we see the economic actors, whether they are governments, companies or individuals, spending most of their energy to fill their bank accounts with money, by trying to sell more services and products on the market, or by collecting more taxes in the case of governments.
If we look at the earth as the home for billions of humans, we can observe that when they are not sleeping, they are most of the time involved into exchanging services and goods, which means producing and consuming, almost continuously.
Now it comes to the consumption side. And here again it could be quite interesting to try to understand the shift in what we call the “consumer behavior” from an economy without money to an economy with money. In a barter economy, the production is directly related to the proper needs of the producer-consumer. This economic agent consumes what he produces and exchanges a certain surplus for other needs he has. If we try to imagine this theoretical consumer, and try to schematize his consuming behavior, we will probably find out that he is not that different from the modern consumer; he needs food, shelter, and as many other tools and objects possible to improve his work, his comfort, his health, etc., i.e., to improve what we could call his “quality of life”.
The modern consumer basically has the same needs. The main difference in his consuming behavior is that he has money in his pocket and an unlimited range of services and goods for which he could exchange this money for. It is a totally different situation, even if the basic needs of humans are quite universal. In the money based economy, the money earned through labor does not have any value if it is not exchanged for a service or a good on the market. If the money stays in the bank, or under a pillow, its value resides only in the future possibility to exchange it on the market; otherwise, it is just like paper, less valuable than a newspaper or a book for example. In this economy, the producer-consumer, now as a consumer, is most of the time someone who already has enough money to keep paying for his shelter and his food every month, but like in the barter economy, he will use the surplus of money (of production in the case of barter) he has to improve his food, his shelter, his comfort, etc., i.e., to improve his “quality of life”. For that purpose, he walks into the huge market of services and goods and exchanges the money he earned from his work for the production of someone else.
If we look at the work and consumption process on a larger scale, it is exactly like a barter economy, but where money made the number of transactions exponentially higher. If we look at the earth as the home for billions of humans, we can observe that when they are not sleeping, they are most of the time involved into exchanging services and goods, which means producing and consuming, almost continuously. The system has to be the way it is to maintain itself; if the consumption does not grow at the same pace as the production, then we have a serious problem. It is as if, in a barter economy, someone is producing too much of something that he is not able to exchange on the market. Because consumption is an absolute condition for this economic system to be sustained, it is globally encouraged and stimulated upon all levels. On the level of individuals, consumption is stimulated through all kinds of promotions, advertisements, and financial incentives like credit cards, or monthly payments, etc. On the level of companies, fiscal policies encourage them to consume as much as possible and to keep increasing their investments. Knowing that companies are the main engine of modern economies, governments encourage them to grow, to gain in productivity and to export. Banks provide them with loans and financial support, earning interest, and thus creating more money. On the level of governments, the investments (in infrastructure for example) are directed to produce more wealth, more money and of course more consumption.