– December 21, 2019

Conservative scholar Oren Cass wants to “redefine the economic orthodoxy that guides the nation’s politics and public policy.” He’s convinced that economists wrongly discount the importance of work while naively giving pride of place to consumption.

Consistent with his conviction, Cass proposes that government policies – including trade policy – pay more conscious attention to our roles as producers and workers and less attention to our roles as consumers. Cass believes that a policy of free trade – in which workers lose their jobs merely because consumers change their spending patterns – undermines human dignity by overlooking the deep yearning that each of us has to be productive rather than merely consumptive.

Production Is Truly Admirable

Superficially, Cass’s proposal seems sound. We can’t consume that which isn’t produced. And temporally, production does indeed precede consumption. Further, the significance of productive efforts is too often ignored in public-policy debates, especially by people on the political left. For example, Thomas Piketty writes – and Elizabeth Warren campaigns – as if production simply happens.

In addition, while many of us admire refined tastes, no one admires acts of consumption in the same manner that sensible people admire acts of production. The reason is that consumption is easy, requiring no skills or real effort. After all, consumption is done even by infants. In contrast, production requires effort, sacrifice, prudence, and skill. No infant produces anything of value. There is much to admire in production.

So isn’t Cass correct to strive to reorient economics and policy toward greater solicitousness for us in our roles as workers and, hence, to remove consumption from being the ultimate goal and guiding light of economic activity and policy?

No. He’s hopelessly incorrect.

A Dickensian Tale

To see why, study this long passage from pages 110-111 of Bas Van Der Vossen’s and Jason Brennan’s 2018 book, In Defense of Openness; it’s a passage that on its surface seems to support Cass’s notions but that, upon reflection, powerfully refutes them:

When theories of human rights or global justice focus almost exclusively on consumptive rights, they give us a certain picture of human life. They presume that what matters most – even exclusively – is what people would be given, what they should get. But this picture cannot be right. People matter just as much (if not more) in terms of what they have to offer, what they bring to the table. We are producers, as well as consumers. Perhaps we’re even producers first.

In the 1990s film version of Great Expectations, protagonist Finn, then a young boy, encounters an escaped convict. He decides to feed the convict and gives him tools to remove his bonds. Years later, Finn becomes an artist. Not only do his paintings sell, but he sells every painting he puts in gallery. In the end, Finn learns that his paintings were all purchased by one collector – who turns out to be the escaped convict, now rich. Finn’s entire career is just a façade created by the convict to, in a sense, repay a debt.

When Finn learns this, he isn’t delighted to discover that he lives in a world of communal reciprocity. He isn’t delighted to discover that his good deeds have been rewarded. On the contrary, when Finn discovers the convict has been buying his art, he thereby learns that he, Finn, is a failure. Finn wants other people to want his art not as a favor to him, but because they see the art as contributing to their lives. He doesn’t want his customers to think, “Finn needs money, so out of a concern for you as an end in yourself, we’re buying your art.” That attitude expresses respect for Finn as a stomach to be fed, but not as an artist. Finn craves recognition as a producer of art, and he can’t get that unless his customers want his art for themselves.

Sure, Finn wants to eat. Perhaps given the choice between being utterly destitute or being paid to make art for people who don’t actually like the art, he’d pick the latter. But Finn wants a good life, not just a life. For most of us, having a good life means making our own way in the world. We want to be able to produce for others such that, in the end, we can say the world was better off with us than without us.

When economists argue (as Adam Smith did, forcefully) that consumption is the sole end of production – and therefore that production should be guided by the demands of consumers and not by those of people in their roles as producers – they’re often misunderstood as asserting that consumption is more important than production. (Cass operates with this misunderstanding.) But in fact they assert no such thing.

Genuine Production Contributes to the Satisfaction of Consumption Demand

What economists mean when they insist that consumption is the sole end of production is that there is no economically meaningful production if the materials or activities that are the outcome of the exertion of human time and toil satisfy no human desire. That is, to produce is to generate some output that satisfies a human want or wants. Merely toiling to transform physical materials from arrangement X into arrangement Y is not productive unless arrangement Y contributes to the satisfaction of some consumption desire.

To use my favorite example, if I work hard to bake a sawdust-and-maggot pie, the result of my work is not really production. I’ve produced something when reckoned in a purely physical dimension: a concoction featuring wood shavings and fly larvae. But economically I’ve produced nothing. Indeed, economically I’ve wasted time and resources that could instead have been used to produce something that does satisfy human desires. Economically I’ve reduced production from what it could have easily been.

Of course, it’s possible that I derive for myself sufficient satisfaction by performing the actions necessary to bake such a pie. If so, the consumption value is in my performing the pie-baking actions and not in the actual pie. Some people find satisfaction in taking naps, while the hypothetical me in this example finds satisfaction in performing these peculiar pie-baking acts. 

If this is the case, no waste has occurred because I personally paid for the time and resources used to bake this pie, and I subjectively value the process of doing so highly enough to have done so. But if instead my chief goal in baking such a pie was to offer it for sale to you in the hopes that you’d pay me a handsome price for it, I’ve wasted time and resources. Economically I’ve produced nothing and wasted something.

And so we get to the heart of the quotation above from Van Der Vossen and Brennan: not only is toiling for the sake of toiling not economically productive, such toiling is unproductive – destructive, even – because it doesn’t contribute as much as is possible toward the satisfaction of consumption desires. Such toil does not make the world a better place. But in his support for trade restrictions, such unproductive toil is precisely the sort that Cass promotes.

No Dignity in Being Parasitic

Cass wishes to put workers in a position even worse than that in which Finn finds himself. Finn is upset to learn that demand for his paintings reflects only a charitable impulse voluntarily directed at him. Tariffs, in contrast, are no charitable impulse: they’re coercive impositions that artificially create demand for the outputs of workers in protected industries.

Finn understandably feels unworthy for producing outputs that a buyer doesn’t really value as highly as the prices paid for them, but he at least has the satisfaction of knowing that demand for his paintings isn’t the result of buyers being coercively denied better options. Not so for workers in protected industries. Their incomes result from fellow citizens being coercively denied better options.

That Oren Cass believes that such coercion is necessary to enable workers to retain their dignity is astonishing. Far from being dignified, jobs that exist only because of tariffs and other coercive restraints on peaceful human beings are shameful. One core reason that economists insist that work is worthwhile only insofar as it contributes to the satisfaction of consumption demands is to make plain the fact that work that does not contribute to the satisfaction of consumption demands is work that produces nothing and wastes much. Workers in such occupations are not producers; they’re parasites.

Donald J. Boudreaux

boudreaux

Donald J. Boudreaux is a senior fellow with American Institute for Economic Research and with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University; a Mercatus Center Board Member; and a professor of economics and former economics-department chair at George Mason University. He is the author of the books The Essential Hayek, Globalization, Hypocrites and Half-Wits, and his articles appear in such publications as the Wall Street Journal, New York Times, US News & World Report as well as numerous scholarly journals. He writes a blog called Cafe Hayek and a regular column on economics for the Pittsburgh Tribune-Review. Boudreaux earned a PhD in economics from Auburn University and a law degree from the University of Virginia.

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