Sunday, September 2, 2012

Expense and Consumption? - Jean-Baptiste Say



Jean-Baptiste Say

What difference is there between the words Expense and Consumption?
Expense is the purchase of a thing to be consumed, and as, in general, one only buys what one intends to consume, the words expense and consumption are often used for one another. It is, however, proper to remark, that when one buys a product, we exchange the value we are willing to give up for one of which we are in want: the value of a crown, for instance, for the value of a handkerchief. We are still as rich when we have made the purchase as we were before, only we possess in the form of a handkerchief what we before had in the form of a crown. We do not begin to lose this value until we begin to use the handkerchief, and it is only when the consumption is finished that we are poorer by a crown. It is not then in buying, but in consuming, that we dissipate our property. That is the reason why, in the middle ranks of life, the character and economical talents of the woman, who directs the greater part of the consumption of the family, assists materially to preserve fortunes.
What do you understand by economical talents?
It is the talent of deciding judiciously what consumption may be permitted, and what must be prohibited, in that state of fortune in which we are placed, and according to the income we have.
What do you understand by avarice?
We are avaricious when we deprive ourselves, or those dependent upon us, of those consumptions which we might permit according to our incomes.
Is it avaricious not to expend the whole of one's income?
No; for it is only by the savings which are made from unproductive consumption, that we can hope to enjoy repose in our old days, and to procure an establishment for our families.
Do we do any wrong to society by thus amassing a productive capital, for the sake of enjoying ourselves, or suffering those belonging to us to enjoy, the profits it will produce?
On the contrary, capitals, accumulated by individuals, add so much to the total capital of society; and as a capital placed, that is, employed reproductively, is indispensably necessary to give activity to industry, every person who spares from his revenue to add to his capital, procures, to a certain number of persons who have nothing but their industry, the means of deriving a revenue from their talents.
Are not some consumptions better managed than others?
Yes: they are those which procure greater satisfaction, in proportion to the sacrifice of the values which they occasion. Such are the consumptions which satisfy the real, rather than fictitious, wants. Wholesome food, decent clothing, convenient lodgings, are consumptions more fitting and better regulated than luxurious food, foppish clothing, and stately habitations. More true satisfaction results from the first than the last.
What do you consider besides as well regulated consumptions?
The consumption of products of the best quality of every sort, although they may cost more.
For what reason do you consider them as well regulated consumptions?
Because the workmanship employed on a bad article will be more quickly consumed than that on a good one. When a pair of shoes is made with bad leather, the work of the shoemaker, which is used up in the same time as the shoes, does not cost less, and is consumed in fifteen days instead of lasting two or three months, which it would have done if the leather had been good. The carriage of bad merchandise costs as much as that of good, which is more advantageous. Poor nations have, consequently, beside the disadvantage of consuming less perfect productions, that of paying dearer for them in proportion.
What consumptions do you consider as the worst regulated?
Those which procure more chagrin and mischief than satisfaction: such as the excess of intemperance, and expenses which excite contempt, or are followed by punishment.


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