3.1 Consumption
The study of economics has placed great focus on the act of production and the materials necessary to produce, but little consideration of the act of consumption. This is a significant deficiency, as production itself is occasioned by consumption: it is the desire to consume something that drives us to produce it.
Consumption is also castigated as the destruction of utility, which is also not necessarily so: it is the extraction of utility, or the enjoyment of the very benefit that leads a physical object to be consumed - but again, that was the very purpose of its production.
On that note, the consumption of an item is not necessarily the extraction of its full value - this varies by the nature of the product. To enjoy the benefit of food, its value is quickly extracted in the act of consuming. A person may enjoy the benefit of a house, then sell it to another person and it remains just as able, or nearly so, to provide value to another owner.
Aside of the nature of consumption, the durability of an object determines whether it may be consumed at leisure, or must be consumed immediately. Food will rot if it is not consumed within a certain time, losing its value. A theatrical performance delivers value only during the coursed of the performance itself. Of special importance is the perishability and impermanence of labor: where a workman sits idle, his time is forever lost.
The destruction of an item in a manner that does not extract its intended benefit is another matter, though this is by act of wonton destruction, accident, or natural decay. When a house is burned down by an arsonist or blown over by a storm, the benefit for which it was created is lost. If the ravages of time cause the beams to rot and the house collapses, it is no different.
There are instances in which it can be said that a given thing does not lose its value by use, and is never consumed. The land of an estate is used, but it is not destroyed by hundreds of years of use. Arguably, the productivity of the soil may be diminished by use, yet the land itself remains.
In terms of those things we classify as "products," all are consumed sooner or later, and this was well known even before the act of production was undertaken. Any producer who imagines he is creating something of permanence is merely demonstrating hubris.
The question arises: if all products are consumed, what possibility is there of accumulating capital? Over the course of millennia, capital cannot be accumulated. But during the life of a man, he may consolidate value in objects of greater durability. This in turn begs the question: what is the point in accumulating capital? It is not to have it permanently, but merely to preserve it for future consumption.
Say also draws a distinction between barren consumption, in which the value of a product is enjoyed in a manner that destroys the product and leaves nothing material, and productive consumption, in which a product is transformed into another product that has utility. The labor used to fashion an object is not destroyed, but produces a different product. In the same way, the food consumed by the laborer is not destroyed, but provides the fuel for an organic machine that produces other values.
When you consider the production and consumption of an individual, a market, or a nation, what is found that the two are in balance. While a person may consume different things to what he produces, or consume them at different times than he produced him, he does tend to consume roughly the equivalent in value over the course of his lifetime, the imbalance being reflected in the inheritance or the debt that exists on the occasion of his death.
In the same way, consider a manufactory: it consumes raw materials, produces a product. The value it receives for its product replaces the materials, pays the labor, buys the equipment, returns interest to investors, and the like. It consumes as it creates in roughly equal measure.
In each country, it is the wants of the customer that determine the quantity, quality, and nature of goods consumed - and every act of consumption requires an act of production to have taken place.
There are instances in which one party may consume the product of others while offering nothing in return - such as occurs in instances of theft, taxation, and charity. What is consumed still must be produced, it is a question of whether it is the producer, or another individual, who receives the benefit of production. One may argue matters of ethics, as to whether it is right for an individual to consume without producing, but this does not change the fact that consumption requires production, whatever the arrangement between the parties involved.
Productive nations are greater consumers than poor ones, but only because they are also greater producers. The amount of resources at their disposal (capital) is of far less significant than the productive use they may make of them. In general, a productive nation recycles its capital more frequently than an unproductive one, and derives from it greater benefit.
Production and consumption are quite a different thing from capital, and it is a common mistake to consider one indicative of the other. The act of production and consumption may involve the same capital several times over. The shoemaker makes shoes of raw materials: he receives coin for his product and spends it to purchase more materials, several times over in a given year. One might imagine that he uses the same ten coins to buy materials (and provide for his own needs) as he gains from producing each pair of shoes. The same amount of capital is involved, whether he produces one pair of shoes or a thousand.
There is also a cultural difference between nations where much is consumed and little is consumed, and some writers will extol the virtue of a nation in which little consumption is done: the Spartans and the Stoics claim an ethical superiority by their ability to refrain from gratifying their desires, and as such had little need to be productive - but say considers such "civilized" men to be little better than the savages whose crude lives are deprived of pleasure and value by their inability, rather than unwillingness, to produce and consume. Taken to its logical extreme, the ethics of asceticism maintain as the acme of human existence the consumption and production of nothing. In effect, this is the equivalent of annihilating human existence altogether.