With this mixed foundation the feeling remains in full force. It serves to check the normal activities of those who “do not have to work,” and to belittle the importance of those who do. It shows, for one result, this pretty paradox: a human creature absolutely helpless, doing nothing whatever to maintain himself or anyone else, depending for the meanest service as for the greatest, on the assistance of others; and then calling himself “independent,” and believing that he “supports” those who keep him alive, by “furnishing them employment”! And—still more paradoxical—the active and valuable persons who so laboriously maintain this ornament believe it, too.
A minor fallacy in our popular economics, but one doing much mischief, is that familiar phrase “the law of demand and supply.” It is in part a logical derivative of the want theory; in part based on a true natural law, and for the rest weakened and confounded by the conditions of our own artificial “market.”
Spencer refers to this with great solemnity in “The Man vs. The State”; showing how smoothly and beautifully great London is provided for by the working of this “law.” He points out the immense numbers of people to be supplied daily, and the immense amount of materials brought in daily, by ship, by rail, by horse and cart, under the wise guidance of individual self-interest and this governing “law of demand and supply.” It sounds very attractive! and when stated by so great a thinker it seems as if it were so. But is it? Are the millions of inhabitants in London thus accurately provided for? Do none starve and freeze? Do none dwindle and sicken, and become hopeless cripples and invalids for lack of proper supplies? Or again, do none waste and spoil, receiving far more than they need? Are the demands of the human body, of the human mind, of the human heart, really supplied in London, or anywhere else, by this alleged law?
What do the words really mean, if they mean anything? For “demand” read “purchasing power”; “the law of supply and purchasing power.” What does “supply” mean? It means the product of human industry. The product of human industry is equal to the purchasing power. This does not sound so smooth, but is more accurate. And what does it mean now? That those who have purchasing power can get what they want. Can they—always?
Why, yes—if there is any. But if all the purchasing power in the world should happen to demand a few more of the works of Phidias—they would not be forthcoming. There is frequent complaint even among the very rich of their inability to get some things they want; such as ideal servants. This is a very common demand, and the air is filled with protest because, at any price, the supply does not equal the demand. This law is a common vagrant—“having no visible means of support.” All it amounts to is that if you demand a thing—and can pay for it—and there is any such thing—the previous owner will sell it to you—if he wants to.
On the other hand, nothing is more frequent than our upsetting this supposed equilibrium by what we call “overproduction.” If the supply were equal to the demand the demand is certainly not alleged to be equal to the supply. “It’s a poor rule that doesn’t work both ways.”
What does govern the supply, if demand does not?
“Supply” is human production—the output of our social energies. If it can be called “equal” to anything, it is equal to the combined action of heredity and environment, modified by our volition. The product of a race depends on its stock, its inherited characteristics; on its education, physical and mental, on its nutrition and stimulus, on its governing concepts.
To make such and such a product forthcoming you must have such and such a producer; he must have the capacity and the wish to produce such a “supply.” If he has not the capacity, no power on earth—be it a reward of the princess and half the kingdom, or a penalty of thumbscrews and boiling oil—can get it out of him.
Turn your “supply” round and apply it to the producer. Supply him with all the necessary conditions for rich production. Then we might say in a general way “the supply is equal to the supply.” But “demand” is not a producing agent. It does not make people create, invent, or discover. It does not make them sell unless they want to—see Ahab demanding Naboth’s vineyard—or Frederic and his Miller of Sans Souci. It does not make them work even, unless they are able and willing. Demand what you please of the tramp and pauper—he cannot produce it.