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2004-07-29

 

Supply/Demand

I watched a movie last night that helped me put together a lot of vague
thoughts about life in the "western" world.

Capitalism, and other economic systems that rely on the economic
concept of "Supply and Demand", have a fundamental weakness. If
there is no demand then it doesn't really matter if there is supply or not.
Thus, to make the system work when there is no demand, then demand
must be created. This is why we have advertisements, to create a
feeling of need for a particular product, to create a feeling of being
"better" than the neighbours, to create a feeling of completeness having
bought all the "right" things.

But does does this achieve? Well, you can feel happy and content
knowing you are wearing the "right" things to any given occasion (like
going to church). You can show off your flash new car as you drive
down the road. I think this is what is called "conspicuous consumption",
although I have no idea what it's good for.

A thought. If the 3 major credit card companies (American Express,
Mastercard and Visa) were destroyed, what would happen to society? I
suspect that everything would collapse in on itself and we would have a
new "Great Depression". This is due to another weakness in the "Supply
and Demand" model. If you have created great demand, and plenty of
supply, but the method used to link the two (i.e. purchasing) is severely
restricted then the model fails as the cycle doesn't complete fast enough
to keep itself going.

What was the name of the movie? It doesn't really matter as it just
helped me to organise my thoughts.


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