What is consumer sovereignty?
Consumer sovereignty is one of several economic theories that try to explain the dynamics that leads the relationship between the buyer and the seller. Economists who advocate consumer sovereignty theory claim that the element controls production and consumption is a consumer. The key stone of this theory lies in the belief that consumers will consistently act in a rational way. As a result, these advocates claim that there is a growing tide. Over time, this tide raises the population as a whole to a higher standard of living. This theory claims that the population will collectively bring a positive macroeconomic result through individual consumption decisions.
On the other hand, the argument is those who say it is connected in this theory. These critics point to advertising and marketing efforts that Desires artificially produced at consumers. This is referred to as demand.
As a result of the demand produced critics claim that the system does not bring rational decisiveHe is running among consumers. Critics say that the idea of a rational consumer reflects only the desires of manufacturers to sell more goods. Some environmental advocates argue that this economic system causes destructive effects by promoting excessive consumption.
advocates of this theory claim that the economy controlled by the consumer will eventually develop inequalities and raise all citizens in a growing tide. Others disagree that consumers are consistently rational. These people claim that suppliers have the power to create desires through marketing. In this point of view, these artificial desires leave consumers with an artificially created need. The impact of advertising on consumer sovereignty theory is the point of debates between economists.
John Kenneth Galbraith, a supporter of Keynesian Economics, dealt with the central principle of consumer sovereignty theory. This principle claimed that the economy could be distilled on the economic ofákons. Galbraith disagreed that interactions between consumers and suppliers include cultural beliefs and elements. He claimed that consumer sovereignty worked fairly without governmental influence. As a result, some supporters of Keynesian theory claim that consumer sovereignty in practice creates undesirable macroeconomic effects.
Consumer sovereignty has its roots in neoclassical economic theory that originated at the end of the 19th century. The previous development of neoclassical economic theory was classical economic theory in the 18th century. Adam Smith was a supporter of this theory that claims that the driver of the economy is the value of the goods produced because it concerns the basic costs.