Consumer sovereignty

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Consumer sovereignty is a normative and descriptive term used in economics. It states in a descriptive reading that the consumers (consumers) control the type and scope of production through their consumption decisions ("primacy of consumer interest"). This means that the consumer determines how much of which goods are produced or services are offered. He also influences the quality of the products.

In normative economics, a meaning of consumer sovereignty dominates as a liberal model: It is good if every person receives what they would like - as long as they stay within the limits drawn by the same wishes of other people.

The term consumers' sovereignty was probably first used by William H. Hutt in economic literature.

History of ideas

Since the classical liberalism of Adam Smith , both normative and descriptive aspects of the role of consumers in the economy have been discussed. Smith emphasizes that the satisfaction of the interests of the consumer is the sole end and purpose of production. Only in relation to this task are the interests of the producers important. On the other hand, Smith points out functional and causal dependencies: For example, market demand has a steering effect on the type and quantity of production. The factual coordination effect of competition, called the " invisible hand ", would align the interests of the producers with the interests of the consumers and unite the individual interests in the general interest.

Wilhelm Röpke describes consumer sovereignty as "consumer democracy". The prerequisite for producers to recognize the wishes of the consumers is a device that indicates these wishes, and the only device that can achieve this is the market .

Delimitation of consumer sovereignty and freedom of consumption

In some cases, the concept of consumer sovereignty is explicitly separated from that of freedom of consumption.

Model of competition policy

Since the consumer controls production in this model, the state only has to pursue competition policy so that market concentrations or monopolies cannot come about. This can be done e.g. B. manage through a cartel office. In a normative sense, the model of consumer sovereignty includes the mandate to strengthen the control function of consumers in the event of impermissible restrictions.

Realization

Depending on the type of market , the extent of consumer sovereignty varies. There is a high degree of consumer sovereignty in the case of complete competition , while a supply monopoly is associated with a loss of consumer sovereignty.

A central prerequisite for consumer sovereignty is that it is about marketable goods. In the case of non-marketable goods, however, a market failure can be assumed. This is assumed, for example, for social benefits.

criticism

Critics of the idea of ​​consumer sovereignty often assume that it is linked to the model of complete competition . That is, there is an atomistic market and a perfect market. This assumes that there are no personal, temporal or spatial preferences of the consumer and that the goods are homogeneous . In addition, there is market transparency ( complete information ). There are also no "time lags", which means that the providers can react to reactions within the market without any delay. It must also apply that market entry is free.

Since the ideal-typical models can never be found in full in reality, when looking at real economic systems it only makes sense to ask about the degree of consumer sovereignty.

Furthermore, there is no complete market transparency in reality . Depending on the real conditions of a business, this can lead to more or less strong deviations from the model of consumer sovereignty. In the case of technically complex products, for example, consumers often lack the knowledge of where, under what conditions and with what quality standards the products were manufactured, especially since the consumer often has little time to make a purchase decision.

Competing performance

The opposite pole to the idea of ​​consumer sovereignty is the thesis of producer sovereignty . Accordingly, the steering forces do not come from the consumers, but from the producers, who could shape the needs of consumers through marketing at will; the consumer has no significant influence on production. The need for strong consumer protection is normatively derived from this idea .

literature

  • Hermann van Bömmel: Consumer sovereignty. Metropolis Verlag, 2003, ISBN 3-89518-411-X .
  • Dietmar Jeschke: Consumer sovereignty in the market economy: Idea, criticism, reality. (Economics writings. Volume 225). Tesis doctorales, Philipps University of Marburg. Duncker & Humblot, 1975, ISBN 3-428-03300-0 .
  • Ludger Heidbrink, Imke Schmidt, Björn Ahaus (eds.): The responsibility of the consumer. Campus Verlag, Frankfurt am Main 2011, ISBN 978-3-593-39537-1 .

supporting documents

  1. ↑ cf. Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 33.
  2. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 19f.
  3. ^ Robert Sugden: The Opportunity Criterion: Consumer Sovereignty without the Assumption of Coherent Preferences. In: The American Economic Review. 94 (4), (2004), pp. 1014-1033.
  4. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 20.
  5. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 16ff.
  6. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 27.
  7. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 32ff.
  8. ↑ Hermann May (Ed.): Handbook for economic education . Edition 9. Oldenbourg Wissenschaftsverlag, 2008, ISBN 978-3-486-58740-1 , p. 83.
  9. ↑ Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 219.
  10. ↑ Birgit Wiese: Consumer sovereignty in the field of social services: a means for social integration ?: A qualitative study using the example of help for the homeless. Peter Lang, 2009, ISBN 978-3-631-58541-2 , pp. 97 ff.
  11. ↑ Cf. Dietmar Jeschke: Consumer sovereignty in the market economy. 1975, p. 210.
  12. ^ Willi Albers, Anton Zottmann (ed.): Concise dictionary of economics (HdWW) . Volume 4, Vandenhoeck & Ruprecht, 1978, ISBN 3-525-10254-2 , p. 530.
  13. ^ Alain Anderton: Economics. Pearson Education India, ISBN 81-7758-207-0 , p. 426.
  14. ^ Alain Anderton: Economics. Pearson Education India, ISBN 81-7758-207-0 , p. 426.
  15. ^ John Kenneth Galbraith: The new industrial state. New edition 1967. Princeton University Press, 2007, ISBN 978-0-691-13141-2 .
  16. ↑ Marina Tamm: Consumer Protection Law. 1st edition. Mohr Siebeck, 2011, ISBN 978-3-16-150880-6 , p. 146f.