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Consumption

wealth, process, tion, desires, consumed, production, direct, satisfaction and human

CONSUMPTION. There have been two meanings given by economists to the term con sumption of wealth. By one group it has been made to include any utilization of wealth in which the wealth is used up or destroyed in the process. By another group it means only such utilization as gives direct satisfaction to a consumer. Under the first definition, coal is consumed when it is burned to make steam for the running of machinery as well as when it is burned to supply warmth for the comfort of the human body. Under the second defini tion only the latter use of coal would be called consumption. They who hold to the first defi nition are compelled to divide consumption into two kind.s, namely, productive consumption and unproductive consumption. It is always ex plained, however, that the term unproductive consumption does not mean useless or unneces sary consumpuon. It means merely that wealth thus consumed, in contradistinction to that which is productively consumed, is not used up in the process of producing other wealth. It is used, rather, for the final purpose for which all. wealth is produced, namely, the direct satisfaction of human desires or needs.

The tendency among recent writers is to use the term consumption in the narrower sense. By the consumption of wealth under this definition is meant the culmination of the whole economic process, namely, the satisfac tion of human desires. Wealth which is used up or worn out in the process of production is not itself yielding consumers' satisfactions di rectly. It is helping to produce other things which will directly satisfy consumers and may therefore be said to be indirectly satisfying desires. By the consumption of wealth, under this narrower definition, is meant its utiliza tion in the direct satisfaction of human desires. The physician's automobile which is used in his profession is being worn out, but it is not being consumed in the technical economic sense. But when it is used for his own enjoyment or that of his family it is being consumed. Again, a thing may be in the process of consumption even though it is being used up very slowly. A diamond which is used as an article of pleasure or adornment is in the process of con sumption even though it may never be really worn out. A substantial piece of furniture, when used for direct satisfaction, is being con sumed. While it is in a furniture store, the immediate purpose of the owner is to in a profit from it rather than to enjoy it. There fore it is not yet in the process of consumption. In short, the consumer of an article is the one whose desires it satisfies directly. The article begins being consumed whenever it begins satis fying a consumer's desires directly, that is, when it has passed through all the channels of business and trade, where it was used for the purpose of getting an income, and passes into the possession of someone for whose satisfac tion it was designed.

Most textbook writers on economics have regarded the consumption of wealth as a de partment of the subject, co-ordinate with such departments as production, exchange and dis tribution. None of them, however, has given as much space to it as to these other depart ments. The reason apparently has been the general opinion that consumption is essentially an individual matter with which the public has had little or no concern. Laws relating to consumption have been called sumptuary laws, and have generally been condemned, or only half-heartedly approved. There is a growing opinion, however, that consumption is quite as important; from its effects on national pros perity, power and greatness, as any department of economics. Even the regulation of consump tion, as in the case of laws regulating or pro hibiting the use of alcoholic beverages, is be coming popular. Probably no movement of the present day in America is quite so popular or so democratic as the prohibition movement.

The importance of the consumption of wealth is further emphasized by the consideration that as many and as dire calamities have overtaken nations and peoples because of their irrational habits of consumption as because of inefficient systems of production, exchange or distribu tion. In fact, there is a very profound reaction of consumption upon all the other departments, particularly upon distribution. The standard of living of the laboring classes, which is a part of consumption, has much the same influence upon the price of their labor as that exercised by the cost of production upon the price of a material commodity. Again, the rate of the accumulation of capital, upon which so many things depend, is largely determined by the habits of consumption. The effect of luxury upon industry and general national strength is one of the largest of all questions. These illustrations are enough to show that the sub ject of consumption deserves the most careful study and the most serious treatment which economists can give it. Systematic work on the principles of consumption has been done by Cuhel, tZur Lehre von den Bediirfnissen) (Innsbruck 1907), and Brentano, (Versuch einer Theorie der Bedurfnisse) (Munich 1908). Examples of the application of the principles of consumption to the problems of progress are found in Patten, (Theory of Prosperity' (New York 1902), and Sombart, (Der moderne Kapitalismus) (Leipzig 1902). See DISTRIBU TION ; INCOME; WEALTH.