Lerner 1972

Basic Idea

• Consumer sovereignty: everyone gets their preferences met without extra sacrifice from others.

Objections and Considerations

• Focus on fulfilling wants, regardless of origin.

• Aligns with democracy and efficient resource use.

• "Ideal output": achieving consumer sovereignty.

Market Mechanism

• Free markets need enforced laws and habits to establish property rights for buying/selling.

• Rights originate from conflicts, resolved through economic transactions.

Imperfections and Corrections

• Consumer sovereignty hindered by:

  • Imperfect competition

  • Suppressed knowledge

  • Ignorance and fraud

• Corrections require changing/enforcing laws.

Denigration of Consumer Sovereignty

• Deviations from marginal costs (political, sentimental reasons) reduce consumer sovereignty.

• Critics argue consumers are manipulated by advertising.

• Price approximates marginal cost; without restrictions, price equals average cost.

Inequality of Income

• Market may prioritize rich over poor, but marginalism isn't to blame for income inequality.

• Paying factors based on marginal productivity aims for consumer sovereignty, not justice.

Public Goods

• Market mechanism inapplicable because everyone benefits, so no one pays.

• Privatization necessary for efficient production.

Ecology

• Awareness of Earth's finite nature.

• Developing charges for environmental damage turns public goods into private goods.

State of Plenty

• Marginal economic mechanisms unnecessary when everyone has enough.

• Market mechanism might still be needed to indicate what to produce.