Comment: Still holds true tho

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Still holds true tho

Even with all of that considered, society still only produces enough to fit the demand, which is measured using the current rate of consumption.

Sure, people invent new things, and try to create a demand for them, but if that demand doesn't show up, the new thing will not continue to be produced.

Consider a scenario where there are people on an island, and lets assume for a moment that having enough fish is all anyone really wants. At first, every fish that is caught is like gold. In this scenario, it feels like the only thing holding up the consumption of fish is the ability to produce (or catch) more fish. there are lots of starving people, so there is incredible demand for fish. people will spend every waking hour trying to get fish, just to make ends meet.

There comes a tipping point though when suddenly there are enough fish to feed everyone as much as they actually want. Would we continue fishing like mad-men catching every possible fish, "saving" them up... maybe some people will feel the need to do this, but by and large, people are lazy.

Once the demand for consumption is met, people will start working fewer hours, doing non-productive things with most of their time. There will be people who choose not to fish at all. But if the supply of available fish goes below comfort level, then they kick in and start fishing again.

Society is made up of lazy people (practically everyone would prefer to be non-productive, given the opportunity). So, we only produce what we have to in order to get what we need for the near future, with a little bit of saving for a rainy day.

Society simply wont produce more than the rate of consumption before it stops. This is not simply on an item by item / market by market analysis. Dropping the price on items over-produced only creates "demand" for them until the potential purchasers feel like they have more than they really need.

If there was suddenly a huge overstock of socks in america and they went down to nearly free prices, I'd go by a few boxes full of socks. But once I had a few years worth of socks to replace my ugly old ones, I'd stop buying them. No amount of production of new socks is going to make me want more. If you brought me boxes of free socks, I'd tell you to take them elsewhere, I don't have room for them in my house, and I have enough socks.

Companies cant produce things above consumption demands because if they do they risk the likelihood that prices will have to drop below their cost of production in order to sell off inventory.

Sure, companies shift from one thing to the next hoping to find new markets to tap. But, if we honestly had surplus across the board, companies would fire everyone and stop making stuff. There is no incentive to produce unless there is first demand which manifests itself in the form of consumption.

Consumption drives production. Society will never overproduce, it has no incentive to do so.

But, to the heart of the real question. The answer to getting the economy running smoothly isn't a consumption/production question at all. The question that needs to be considered is this... what barriers exist that make it difficult for people to produce the things that are in demand? The answer to that question is almost always "government intervention". eliminating all of the government's attempts at fixing the economy would heal it almost overnight. The only thing the government need concern itself with is providing an environment where people can buy/sell/produce on equal grounds one with another (no favoritism, all laws applied equally, and contracts are upheld by the law)

Focusing on more or less than that causes problems.