A Simplification of Say's Law

[WillFarnaby]

From Wikipedia

Say’s law, or the law of markets, is the controversial assertion, found in classical economics, that aggregate production necessarily creates an equal quantity of aggregate demand. It was stated by the French economist Jean-Baptiste Say (1767–1832), who wrote:

A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.

and

As each of us can only purchase the productions of others with his own productions – as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase.

A simplification:

• You cannot consume a good or service without it being produced.

*production in this sense also including “finding” some natural resource and manipulating it in some way that it satisfies a desired end
So it follows from this that when economists, and especially tv and news pundits, urge folks to increase consumption, they are also necessitating an increase in production.

How do increases in production come about? Savings that in turn generate capital formation and increased capacity.

So why would someone urge - stimulate - and/or incentivize consumption? If you increase spending without an increase in production, you bid prices up. Rising prices is considered a good thing for many economists. It is often touted as a sign of a booming economy, but general welfare can only increase if consumption increases. As stated above, consumption can increase only if there are more goods and services to consume. There are more goods and services to consume only if there is increased production. Again, where does production come from? Capital formation - loan-able funds - savings.

One objection:

“If we shift money from rich to poor, they will spend it, allowing businesses to expand to handle higher capacity.”

Ok so your idea is to take money from rich people and corporations, give it to people, who will give it back to corporations, who will expand. How will they expand? They need to accumulate savings, or have access to other’s savings in the form of loan-able funds, which are being discouraged by taxation. Many economists ignore the role of the entrepreneur. His role is to foresee where the demand will be, take the funds made available from savings, and invest in production increasing activities. As stated above, increased production means increased general welfare because there is more to consume.

Another objection:

"WillFarnaby, your ideological devotion to entrepreneurial activities is blinding you to the realities of today’s economy. The rich invest in casino-like gambits that do nothing to increase production, but increase paper wealth without helping anyone. Derivatives! "

Wall Street entrepreneurs are terrible because you bailed them out. Those same characters who made bad bets still have control of large amounts of capital. Couple this with the access large firms have at the Federal Reserve. Federal Reserve policy inflates stock prices and prevents liquidation of bad investments.
The key to economic growth is the entrepreneur. If he receives good signals that relay consumer desires, and has access to savings, he can be a benefactor to humanity. Government intervention distorts his signals and limits his access to savings.

[Stringbean]

Say’s Law is valid provided the producer knows the demand exists.

Simply producing something cannot, by its own nature of existing, mean that people want to buy it.

[WillFarnaby]

@Stringbean

Say’s Law is valid provided the producer knows the demand exists.

Simply producing something cannot, by its own nature of existing, mean that people want to buy it.

If nobody wants to buy it, then it has no value. That’s why J.B. Say said “A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.”

[Steve_MB]

@WillFarnaby

Ok so your idea is to take money from rich people and corporations, give it to people, who will give it back to corporations, who will expand. How will they expand?

By investing the money they got from the consumers in the sentence immediately before the question. Do you need some entrepreneur to produce some sort of memory restorative for you?

[Hellestal]

From the Wikipedia article,

Today, the vast majority of economists believe Say’s law is incorrect.

I believe that’s probably true. (Of course, the cite they offer is shit so who knows the real percentages on that.) If Say’s Law is wrong, it’s worth investigating the reason why many economists believe it’s not true.

The easiest way to start is to define “aggregate demand” as nominal spending.

Say there’s an economy of ten people who each earn a wage of ten dollars producing things for each other. Total spending is 100 dollars. Now the shock. People expect bad times in the future, so they don’t want to spend quite as much. The next time period, only 90 dollars changes hands for the purchase of new goods and services, meaning that aggregate demand has fallen. If nominal wages are sticky (and they are), then instead of each person taking a pay cut of one dollar, we instead see the 90 dollars of spending going to people who are still earning 10 dollars a piece. It’s just basic arithmetic at this point. Somebody didn’t get paid. One person got pushed out of work. We have nine people working instead of ten, so total production has necessarily dropped. The drop of aggregate demand led to a drop in production.

For people who have inside their heads a perfect idyllic world where prices always magically adjust, and the fart of every unicorn smells like springtime daisies, this is a disturbing conclusion. Yet this is what we see from the data. Wages don’t adjust quickly, and they especially don’t adjust downward quickly. Economists as far back as Irving Fisher in 1920 have noticed the resentment from nominal wage cuts. People HATE when the number in their check goes down, even if their “real” purchasing power should remain constant after adjusting for other prices going down, too. They HATE HATE HATE it. Something is going on here. My favorite empirical book on the subject is Bewley’s Why Wages Don’t Fall During a Recession. Instead of assuming that the world must necessarily conform to beautiful models of perfect price flexibility, he goes out and asks businesses why nominal pay cuts are so rare. For both theory and more evidence, behavioral economists have shown human loss aversion in a variety contexts.

So there it is, a simple reason to believe that a drop in aggregate demand can itself lead to less production. More complex forms of this argument – like the IS-LM model – can be found in most intermediate macroeconomics textbooks. Advanced forms of this argument are used by economists every day in formal models.

[WillFarnaby]

@Steve_MB

By investing the money they got from the consumers in the sentence immediately before the question. Do you need some entrepreneur to produce some sort of memory restorative for you?

Reading comprehension is also a scarce resource it seems. In the example, corporations are taxed, discouraging investment.

[WillFarnaby]

@Hellestal

From the Wikipedia article, I believe that’s probably true. (Of course, the cite they offer is shit so who knows the real percentages on that.) If Say’s Law is wrong, it’s worth investigating the reason why many economists believe it’s not true.

The easiest way to start is to define “aggregate demand” as nominal spending.

Say there’s an economy of ten people who each earn a wage of ten dollars producing things for each other. Total spending is 100 dollars. Now the shock. People expect bad times in the future, so they don’t want to spend quite as much. The next time period, only 90 dollars changes hands for the purchase of new goods and services, meaning that aggregate demand has fallen. If nominal wages are sticky (and they are), then instead of each person taking a pay cut of one dollar, we instead see the 90 dollars of spending going to people who are still earning 10 dollars a piece. It’s just basic arithmetic at this point. Somebody didn’t get paid. One person got pushed out of work. We have nine people working instead of ten, so total production has necessarily dropped. The drop of aggregate demand led to a drop in production.

For people who have inside their heads a perfect idyllic world where prices always magically adjust, and the fart of every unicorn smells like springtime daisies, this is a disturbing conclusion. Yet this is what we see from the data. Wages don’t adjust quickly, and they especially don’t adjust downward quickly. Economists as far back as Irving Fisher in 1920 have noticed the resentment from nominal wage cuts. People HATE when the number in their check goes down, even if their “real” purchasing power should remain constant after adjusting for other prices going down, too. They HATE HATE HATE it. Something is going on here. My favorite empirical book on the subject is Bewley’s Why Wages Don’t Fall During a Recession. Instead of assuming that the world must necessarily conform to beautiful models of perfect price flexibility, he goes out and asks businesses why nominal pay cuts are so rare. For both theory and more evidence, behavioral economists have shown human loss aversion in a variety contexts.

So there it is, a simple reason to believe that a drop in aggregate demand can itself lead to less production. More complex forms of this argument – like the IS-LM model – can be found in most intermediate macroeconomics textbooks. Advanced forms of this argument are used by economists every day in formal models.

You haven’t responded to Say’s Law or my simplification of it, but reiterated a standard response to a distorted interpretation of Say’s Law. Would you make the claim that you can consume something that has not been produced?

Irving Fisher was laughably wrong in the 20’s. I wouldn’t hang my hat on his theories.

[Hellestal]

@WillFarnaby

You haven’t responded to Say’s Law or my simplification of it, but reiterated a standard response to a distorted interpretation of Say’s Law.

I might dispute that later, depending on how this thread goes, but for now I’m comfortable with accepting your interpretation for the sake of argument.

@WillFarnaby

Would you make the claim that you can consume something that has not been produced?

In the everyday sense of the words, no. To consume a thing – whether a tangible good or an intangible service – the thing must first be “produced” by some process.

[WillFarnaby]

Ok so how does decreasing available consumable things ( consumption) lead to an increase in available consumable things.

[Hellestal]

@WillFarnaby

Ok so how does decreasing available consumable things ( consumption) lead to an increase in available consumable things.

It’s very easy to think of a variety of scenarios that provide a direct causal chain of CONSUMPTION => MORE STUFF.

Scenario: Alone on an tropical island, I consume the last piece of fish I have. After it’s gone I think, “oh shit, I’m gonna need more” and grab my spear and head for the beach. When the day is done, 5 more fish will be produced. I do this instead of dieting. Scenario: Someone breaks into a bakery overnight, steals and eats several cakes on display. The baker arrives early in the morning and sighs because today is CAKE-DAY in the town and if they don’t replace those cakes now they’ll run out of stock on the most profitable day of the year. They work double-time and call in assistants to come in early. Scenario: Sales were sluggish last year and inventories piled up. Orders to the factory stalled to the point that the workers there were doing one shift of three. But when January inventory reports pop up from the accountants, sales are significantly more robust than expected and orders fly out to the factory, which adds a second shift, and then a third to replenish inventories.

All of these have two things in common: 1) A time frame that allows more action than just the consumption by itself. If we restrict our vision to the very second I eat the last fish, then I’m down one fish. But causation is chain, one thing after another. Consumption of the last fish causes me to spear some more. If I ate more wisely this past week, instead of packing on the pounds, I wouldn’t have to produce more fish today. Less consumption this past week would mean less production today. Less consumption in general – going on a diet – would mean less total production in general. 2) Excess productive capacity that is not yet being used. The consumption (or the purchases) send a signal to producers that they should finally tap this excess capacity. Higher consumption today can signal a higher expected path of future consumption out into the future. Inventories can increase again to meet that expectation.

In all of these cases, the immediate decrease of valuable things is exactly what sends the signal that work should be done to increase the available number of valuable things. Naturally, this isn’t generally applicable. If productive capacity is already maxed out this doesn’t work.

[WillFarnaby]

@Hellestal

It’s very easy to think of a variety of scenarios that provide a direct causal chain of CONSUMPTION => MORE STUFF.

Scenario: Alone on an tropical island, I consume the last piece of fish I have. After it’s gone I think, “oh shit, I’m gonna need more” and grab my spear and head for the beach. When the day is done, 5 more fish will be produced. I do this instead of dieting. Scenario: Someone breaks into a bakery overnight, steals and eats several cakes on display. The baker arrives early in the morning and sighs because today is CAKE-DAY in the town and if they don’t replace those cakes now they’ll run out of stock on the most profitable day of the year. They work double-time and call in assistants to come in early. Scenario: Sales were sluggish last year and inventories piled up. Orders to the factory stalled to the point that the workers there were doing one shift of three. But when January inventory reports pop up from the accountants, sales are significantly more robust than expected and orders fly out to the factory, which adds a second shift, and then a third to replenish inventories.

All of these have two things in common: 1) A time frame that allows more action than just the consumption by itself. If we restrict our vision to the very second I eat the last fish, then I’m down one fish. But causation is chain, one thing after another. Consumption of the last fish causes me to spear some more. If I ate more wisely this past week, instead of packing on the pounds, I wouldn’t have to produce more fish today. Less consumption this past week would mean less production today. Less consumption in general – going on a diet – would mean less total production in general. 2) Excess productive capacity that is not yet being used. The consumption (or the purchases) send a signal to producers that they should finally tap this excess capacity. Higher consumption today can signal a higher expected path of future consumption out into the future. Inventories can increase again to meet that expectation.

In all of these cases, the immediate decrease of valuable things is exactly what sends the signal that work should be done to increase the available number of valuable things. Naturally, this isn’t generally applicable. If productive capacity is already maxed out this doesn’t work.

I was presenting a dichotomy. If we have resources we can consume them or save them. In your first example you chose to consume. If you chose to save, you could have used the time to make a better net, and ate the fish after.

In the second example, I had no idea that economists were advocating petty theft in order to stimulate the economy. In this example you are flirting with the broken window fallacy.

In the third example, unmentioned individuals were consuming the inventories. If they had foregone consumption and instead saved, they could have invested in production enhancing endeavors. In fact, when you replenish inventories you are calling on accumulated capital and/or savings from others, without these savings, making payroll and paying suppliers would be impossible with your unsold goods.

[Nametag]

Say’s law is rejected by most economists. Furthermore, since Say formulated the law specifically to refute the idea that production and employment were limited by low consumption, any argument using Say’s law to refute that idea must be supported by external arguments supporting the law itself.

Say regarded money as a fungible article that was not desirable to hold, and his law holds that producers, having produced, are eager to sell; and that having sold, they are eager to buy, thus creating the demand he speaks of. In addition, since money is fungible and not desirable to hold, buyers who are not buying the producer’s product must be buying something else. In other words, Say rejected the idea that producers might hold their earnings, and therefore argued that a general glut of produced goods was impossible.

While his view of money was certainly correct as far as cash is concerned, he seems to have dismissed the role of personal investments, rainy day funds, and retirement savings. Sure, any money invested in any instrument will eventually make its way to a producer who wants to increase capacity, but it can take decades - even generations - to do so. And let’s not forget that such producers are not entrepreneurs by any but the broadest definition - true entrepreneurs start businesses, attempt to create or change markets, and usually fail. Most capital investment serves to increase or maintain capacity to meet existing demand - often reducing marginal costs in the process, which actually shrinks aggregate demand.

Oh, and this: “In the example, corporations are taxed, discouraging investment”? Governments spend tax money on infrastructure, goods and services. Their demand still drives production, and motivates investment by (and in) those producers with whom they do business. The infrastructure they build, maintain, and improve reduces marginal costs for many producers, thereby increasing the earnings available for investment. The money they pay their employees and contractors also contributes to demand.

[Voyager]

Production capacity in the form of factories is extremely sticky. If you see a drop in demand you cut back on labor, but you only close the factory as a last resort.
And while everything consumed must be produced, not everything produced must be consumed, case in point being the masses of computer equipment left after the bubble, which got slowly consumed at steep discounts until they became obsolete.
If you have a factory and see a drop in consumption, you can quickly reduce production by laying off workers or reducing hours, and of course by reducing your consumption of raw material. If you see an upcoming increase you can hire the workers back and given a decent credit situation borrow for raw materials purchases. No access to major capital is required. This assumes that production is not at full capacity.
And in some situations, like today’s, there is plenty of available capital without good places for it to be used. Tax policies which encourage capital investment won’t help the economy without adequate demand.

[WillFarnaby]

@Nametag

Say’s law is rejected by most economists. Furthermore, since Say formulated the law specifically to refute the idea that production and employment were limited by low consumption, any argument using Say’s law to refute that idea must be supported by external arguments supporting the law itself.

Say regarded money as a fungible article that was not desirable to hold, and his law holds that producers, having produced, are eager to sell; and that having sold, they are eager to buy, thus creating the demand he speaks of. In addition, since money is fungible and not desirable to hold, buyers who are not buying the producer’s product must be buying something else. In other words, Say rejected the idea that producers might hold their earnings, and therefore argued that a general glut of produced goods was impossible.

While his view of money was certainly correct as far as cash is concerned, he seems to have dismissed the role of personal investments, rainy day funds, and retirement savings. Sure, any money invested in any instrument will eventually make its way to a producer who wants to increase capacity, but it can take decades - even generations - to do so. And let’s not forget that such producers are not entrepreneurs by any but the broadest definition - true entrepreneurs start businesses, attempt to create or change markets, and usually fail. Most capital investment serves to increase or maintain capacity to meet existing demand - often reducing marginal costs in the process, which actually shrinks aggregate demand.

No mention of how consumption can occur without production. You are presenting a standard critique of Say’s Law. I am saying less than Say with this simplification. Again, I am saying that consumption cannot increase without a corresponding increase in production occurring before consumption.

Oh, and this: “In the example, corporations are taxed, discouraging investment”? Governments spend tax money on infrastructure, goods and services. Their demand still drives production, and motivates investment by (and in) those producers with whom they do business. The infrastructure they build, maintain, and improve reduces marginal costs for many producers, thereby increasing the earnings available for investment. The money they pay their employees and contractors also contributes to demand.

Yes their demand drives production into areas that are not satisfying a demonstrated consumer desire. You can not say that these govt expenditures better satisfy consumer desires because nobody has voluntarily exchanged for these “services”.

@Voyager

Production capacity in the form of factories is extremely sticky. If you see a drop in demand you cut back on labor, but you only close the factory as a last resort.
And while everything consumed must be produced, not everything produced must be consumed, case in point being the masses of computer equipment left after the bubble, which got slowly consumed at steep discounts until they became obsolete.

Again, Say states that "A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value."

The value of these produced items lowered once the bust took hold.

If you have a factory and see a drop in consumption, you can quickly reduce production by laying off workers or reducing hours, and of course by reducing your consumption of raw material. If you see an upcoming increase you can hire the workers back and given a decent credit situation borrow for raw materials purchases. No access to major capital is required. This assumes that production is not at full capacity.
And in some situations, like today’s, there is plenty of available capital without good places for it to be used.

Borrowing relies on savings. Any future increase in production means that factories will have to rely on these accumulated savings in order to acquire raw materials and grow payrolls. This production* must take place* before the desired increase in consumption.

Tax policies which encourage capital investment won’t help the economy without adequate demand.

I don’t want to encourage investment over consumption. I want no government intervention in either case.

Look. Human desire is infinite. We live in a world of scarce resources. In order to satisfy desires, there must be production. There is no lack of adequate demand. Only a lack of items that fulfill these demands.

[Little_Nemo]

@WillFarnaby

If nobody wants to buy it, then it has no value. That’s why J.B. Say said “A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.”

So Say’s Law says that when you produce something it might or might not have value.

I’m having a hard time seeing a practical application of this law.

On a deeper level, how can anyone claim that a product has an inherent value at the instant it’s created? Doesn’t that contradict the whole idea of the marketplace? In most cases you don’t know what the value of a product is until you offer it for sale and start finding out what people will pay for it. And what people will pay will often vary from day to day and place to place, which means you’ll never have an absolute value.

[septimus]

I think Will Farnaby’s OP has some validity. That’s why encouraging investment has advantage over encouraging consumption. But simply putting more money in the hands of the rich is not the way to trigger American investment – much of the money is diverted to financial shenanigans, and overseas investment.

Instead, public investment is the way forward from economic malaise. During FDR’s first term, giant dams and bridges were built, as well as thousands of smaller bridges, schools, over 600,000 miles of roads, other infrastructure, flood control, etc. In the midst of their Great Depression, glory came to the American people and their can-do spirit.

It’s a sad commentary that in today’s America any plan for public investment would be booed off the stage (… with the possible esxception of “investing” a trillion dollars to destroy a foreign country).

[WillFarnaby]

@Little_Nemo

So Say’s Law says that when you produce something it might or might not have value.

A typical way of stating Say’s Law is “supply creates its own demand”. IOW the corn I raise, when brought to market creates demand that is equal to its value.

I’m having a hard time seeing a practical application of this law.

Keynes General Theory rests on a shaky refutation of Say’s Law.

On a deeper level, how can anyone claim that a product has an inherent value at the instant it’s created? Doesn’t that contradict the whole idea of the marketplace? In most cases you don’t know what the value of a product is until you offer it for sale and start finding out what people will pay for it. And what people will pay will often vary from day to day and place to place, which means you’ll never have an absolute value.

You are absolutely right. Except Say isn’t saying that with this law despite its wording.

[Hellestal]

@WillFarnaby

I was presenting a dichotomy.

Maybe your intent was to present a dichotomy

That wasn’t the actual meaning of the question you asked. The question was: “Ok so how does decreasing available consumable things ( consumption) lead to an increase in available consumable things?”

I answered that question. It’s quite easy to see how consumption can lead to an increase in available consumable things. All three examples I used had direct cause-and-effect relationships that showed CONSUMPTION => MORE STUFF.

@WillFarnaby

In the second example, I had no idea that economists were advocating petty theft in order to stimulate the economy. In this example you are flirting with the broken window fallacy.

Nobody advocated petty theft. The second scenario is not a good scenario. People benefited who should not have benefited. People worked harder who should not have had to work harder. The consumption caused more production of consumable goods, which is what you requested in your question. It was not ideal or desirable.

That you believed it to be a good thing in my post does not speak well of your underlying motivations.

@WillFarnaby

In the third example, unmentioned individuals were consuming the inventories. If they had foregone consumption and instead saved, they could have invested in production enhancing endeavors. In fact, when you replenish inventories you are calling on accumulated capital and/or savings from others, without these savings, making payroll and paying suppliers would be impossible with your unsold goods.

As with the previous two scenarios, the third example shows how consumption can lead to an increase in available consumable things. Your question was answered.

If your argument is that we should save more, then I agree. Investment spending drops sharply in recessions, which is why we should try to avoid avoidable recessions.

@WillFarnaby

Human desire is infinite… There is no lack of adequate demand.

Human desire is infinite, and there can unquestionably be a lack of adequate demand.

I want the universe, but I’m on a limited budget. I want the universe, but I have to decide whether to buy things today, or buy things later with my limited budget. Desire is infinite, but demand today is not infinite because today is not the only day that exists and it is not the only day I have to plan for. There’s also tomorrow, and if the hookers and blow don’t kill me, maybe the day after tomorrow. Wednesday, too, if I’m really lucky. I have to plan my purchases. I have to look at my limited bank account and my limited salary and think of how I’m going to spread out my expected purchasing power to meet my expected purchases from today till maybe Wednesday, if I’m lucky.

I want to use my entire resources available. All of it. I want the universe, but I want the universe divided responsibly along the four days I have left. (Or forty years. Whatever.) And if I think tomorrow is REALLY going to suck, then I’m going to stop purchasing today. I’m going to try to shift my effective demand away from today so that I can have a buffer for the bad times tomorrow.

If I’m the only one who does this, then no problem. But if EVERYBODY does this, then there is a problem. Because my purchases are their wages. My outgo is other people’s income. And this is exactly the scenario that I was talking about in my first post, the scenario that you said was a “distorted” interpretation of Say’s Law. But what are you trying to do now? You’re trying to deny that there can be insufficient demand, which is exactly what I was talking about. My “distorted” interpretation cuts right to the heart of the argument you’re trying to make. If prices dropped with perfect synchronization when we all shifted out demand from today to tomorrow, then there would be no problem because the synchronized lower prices would coordinate our actions. But that’s not the world we live in.

[WillFarnaby]

@septimus

I think Will Farnaby’s OP has some validity. That’s why encouraging investment has advantage over encouraging consumption. But simply putting more money in the hands of the rich is not the way to trigger American investment – much of the money is diverted to financial shenanigans, and overseas investment.

Instead, public investment is the way forward from economic malaise. During FDR’s first term, giant dams and bridges were built, as well as thousands of smaller bridges, schools, over 600,000 miles of roads, other infrastructure, flood control, etc. In the midst of their Great Depression, glory came to the American people and their can-do spirit.

It’s a sad commentary that in today’s America any plan for public investment would be booed off the stage (… with the possible esxception of “investing” a trillion dollars to destroy a foreign country).

Put simply, you cannot be sure that public investment satisfies consumer desires because nobody voluntary exchanges for them, but I’m glad you don’t join the crowd in calling for “increased consumption” as a means for economic growth.

[Sam_Stone]

The problem I have with this is in treating ‘consumption’ and ‘production’ as aggregates. We do this as an abstraction, but the danger of abstraction is that we might abstract away the stuff that really matters.

As a simple example, let’s say that we incentivized our economy to make way more chairs than the marketplace demands. At some point, people stop buying chairs. Consumption goes down. If we ignore the fact that the problem is that we’re making things people don’t want, and instead just talk about production and consumption, we might be tempted to say, “Okay, consumption is down, and so is chair production. Let’s throw a big stimulus into the economy to get people buying chairs again!” Except people don’t want them, so they take the money and sit on it. And the people focused on aggregates instead of specific reasons scratch their heads and can’t figure out what happened.

And what if the problem is that the price signals are so distorted and government behavior so unreliable that there is too much uncertainty in the economy, and therefore investment risk goes up and investment in new ventures drops. Throwing more money at the economy on either the production or consumption side could have the effect of increasing uncertainty. Again, people just sit on the money. Velocity drops, and the money supply doesn’t increase.

Or perhaps the debt and the looming retirement/medicare crisis is creating uncertainty about future tax rates and economic growth, and people are rationally adjusting their expectations and consumption is dropping. In that case, borrowing money to stimulate the economy could easily have the opposite effect, or at least not as much positive effect as you would have predicted.

None of this nuance appears when you aggregate everything into ‘production’ and ‘consumption’.