The consumption or demand motive is one of the most important maxims of Adam Smith’s economic system, aside from the
Effort Theory of Value
. This maxim states that all economic activity is rooted in the people or the demanders in society and not in the producers or suppliers.
This is easily seen in the concept of the human family which is the smallest and most common type of society. We see parents work to provide or produce food for their children who are their consumers. Humans do this by instinct because this is how our species has evolved to be so advanced over animals.
This means that there were proto-humans that did not have the same mentality to provide for their children and so naturally became extinct. For example, they might have done the opposite and have eaten their children as a food source just like some animals species.
In Neoclassical Economics, the Supplier is King
The maxim that the parents must provide for the children is the opposite of the current maxim of Economics of Say’s Law which states that production* is the root of all economic activity and is the source of demand. The maxim of Economics thus makes the children subservient to the parents instead of the parents serving their children.
This propensity is rooted in ego and is seen in the animal nature of survival of the fittest or those who can produce the most. This is seen in modern societies like in Cambodia where parents sell their children,
It’s common to hear that investment bankers (the ones that fund production) being called wolves, as in ‘The Wolf of Wall Street’. Smith very clearly explains that such a Production Motive is a mercantile sophistry:
By such maxims as these, nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations,as among individuals,a bond of union and friendship, has become the most fertile source of discord and animosity.. But the mean rapacity, the monopolizing spirit of merchants and manufacturers,who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected may very easily be prevented from disturbing the tranquillity of anybody but themselves.
The Wealth Of Nations Book 4, Chapter 3
Economics vs Superphysics
These differing paradigms can lead to different supply curves and business behaviour:
Economics Of Marshall, Keynes, Samuelson, Jevons
Superphysics Of Smith, Hume, Socrates, Lao Tzu
Either cut-throat competition or monopoly
Friendly competition with natural moral limits
Big suppliers can cut supply to achieve shortage and high prices, or build demand for unnecessary products
Supply is generated depending on real needs
Sellers have more economic power. Buyers have no choice of sellers but instead must compete with each other
Buyers have more economic power. Buyers can choose the seller they like
The success of the producers is the measure of the economy’s success, as Gross Domestic Product
The success of the people to buy what they need and want is the measure of the economy’s success, as Purchasing Power
Human creatures are customers and sellers of each other, isolated by ego, connected by money
Human creatures are friends and family of each other, connected naturally by morals and virtue
Without a doubt, it was the spirit of monopoly which originally invented and propagated this doctrine. Those who first taught it were by no means such fools as those who believed it. In every country, it is always the people’s interest to buy whatever they want the cheapest. This proposition is so very manifest that it is ridiculous to take any pains to prove it. It could never have been questioned had not the sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is directly opposite of the people’s interest.
The men of business stoop as they walk. They pretend not to see those whom they have already ruined. They insert their sting—their money—into someone else who is not on his guard against them. They recover the parent amount many times over multiplied into a family of children amounts. And so they make drone and pauper to abound in the State. The evil blazes up like a fire. They could extinguish it by restricting a man's use of his own property and letting everyone enter into voluntary contracts at his own risk. But the men of business will not do this as this will lessen this scandalous money-making.
The Simple Republic By Plato, Book 8
Update: July 2020
We can thus say that the Economics is best for animalistic humans or those who love to prey on others – a player who wins big in the stock market does not care that his winnings directly come from the losses and suffering of the losing players. He feels that it’s alright to prey on others because he himself is fair game for those players if he loses.
Superphysics, on the other hand, focuses on loans and real goods and services instead of equity and money (the favorite tools of the gambler).
It would be extremely difficult to convince a gambler not to gamble, or a wolf not to be a wolf, especially if his society has moral systems that promote gambling or even wolf-like behavior.
In the Republic, Socrates explained how societies could easily fall into a “might is right” philosophy. He advocated a modular system of city-states that was to be led by incorruptible Guardians who deploy social contracts that can work even without money. In this way, the Guardians can check against predatory behavior while spurring economic activity.