It is said that \u201cunder capitalism, the consumer is the King\u201d. The Consumer, in a capitalist society, enjoys perfect freedom of consumption. It is his\/her preference which influences and regulates the nature of economic activity in a capitalist economy. The entire productive activity in the country is undertaken to satisfy him. Every producer, before he\/she initiates his\/her production, has to study the nature of requirements of the consumer. He\/she has to acquaint himself with the tastes and preferences of the consumer are the master, the king and the sovereign, who rules the capitalist economy. The producer is his servant.<\/p>\n
The prices of the goods are fixed by market mechanism. The tastes, preferences and valuation of the consumer influence and regulate the equilibrium price and volume of production through demand. In short period, supply is constant. Hence demand plays a dominant role in price fixation. Thus, consumer rules the market kingdom.<\/p>\n
The producer wants to earn the maximum possible profits. He invests his funds in that industry which is likely to yield him the maximum money returns on his capital investment. He will naturally choose that industry, the prices of whose products are likely to be high in the future. The prices of the products of an industry could not rise unless consumer extended his patronage to the industry. So ultimately, it is the preferences of the consumer which will guide the investor in the choice of industry. Though the goods are produced by the entrepreneur, in a capitalist economy, it is the consumer\u2019s choices that determine the nature and level of productivity activity. Hence, Dr. Benham states, \u201cThe consumer is the King\u201d.<\/p>\n
Limitation to consumer\u2019s sovereignty- (Consumer\u2019s sovereignty is a myth)<\/p>\n
Consumers express their demand for commodities in the form of the prices they are prepared to pay for them. The producers take prices as a signal for production and respond appropriately. When there is a shortage of a commodity, producers expand their supplies. When there is a surplus of a commodity, producers reduce its production to avoid losses. Since consumers are considered free to shift their demands from one set of commodities to another set, the producers are thought to bow down wishes of his customers at the risk of losses. On the other hand, a producer who would cater to the wishes of the consumers better would be rewarded with high profit. Thus, the consumer\u2019s right to choice of brands of commodities or to purchase more or less of the same commodities or to purchase more or less of the same is declared to be a big merit of a competitive market economy. Hence, the consumer is considered the king of capitalist economy.<\/p>\n
But economist J.K Galbaraith believes that the consumer\u2019s sovereignty is a myth. Rather there is a producer\u2019s sovereignty to which consumers have become captives. The limitations of consumer\u2019s sovereignty are as follows:<\/p>\n
Asst.Prof.of Manegement—- Subrashek Dey.<\/p>\n","protected":false},"excerpt":{"rendered":"
It is said that \u201cunder capitalism, the consumer is the King\u201d. The Consumer, in a capitalist society, enjoys perfect freedom of consumption. It is his\/her preference which influences and regulates the nature of economic activity in a capitalist economy. The entire productive activity in the country is undertaken to satisfy…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1363","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n