CONSUMPTION 85 



A second application of the principle of least social cost refers to 

 differences in the capacities and tastes of producers. The things that 

 people want and are willing to pay for are the things that must be 

 produced. As consumers, the members of society determine how they 

 shall, as producers, spend their time and effort. As regards the 

 necessities of life, consumers have perhaps no very great range of 

 choice. They must learn to like those things that can be produced 

 most easily in the given environment. But only a part of the com- 

 munity's income is spent for necessaries. If it prefers as comforts 

 and luxuries articles which can be most advantageously produced in 

 factories where automatic machinery impresses its standards of 

 unvarying uniformity, not only upon the product turned out but 

 also upon the operatives engaged in making these products, then the 

 ranks of factory labor must be crowded and other occupations must 

 be neglected. A community's taste thus gives direction to its work 

 and decides for better or for worse the kinds of lives that its members 

 shall live. 



The law of least social cost has still another application. The 

 principle that large-scale production is more economical than small- 

 scale production is subject to important exceptions. In some cases, as, 

 for example, in the production of agricultural products from a limited 

 area, after cultivation has been carried to a certain point to secure 

 more products requires more rather than less proportionate labor. 

 From the viewpoint of social cost, it is obvious that increased consump- 

 tion of articles of this sort is less advantageous than increased consump- 

 tion of commodities whose cost decreases as the quantity grows. 



The aspect that it is important to note, in connection with all 

 these applications of the law of least social cost, is that the reductions 

 of cost which may be secured by a simple change of wants involves 

 no corresponding reduction in the pleasures of consumption. Con- 

 sumers continue to be as well off as before, while producers are better 

 off. Thus changes in wants may add to economic well-being just as 

 effectively as changes in methods of production and a?e quite as 

 worthy of the attention of economists. 



The most obvious relation between consumption and production 

 grows out of the fact that consumers are also producers, and what 

 they eat, drink, and wear, the houses they live in, and the amusements 

 they enjoy have a determining influence on their efficiency. At this 

 point attention will be called merely to the economy of different lines 

 of expenditure, especially expenditures for food. 



