Notes on consumer sovereignty and production

This paper reexamines the continued relevance of "consumer sovereignty" as first exposited by William Harold Hutt. As an economist who sat in the seat of Adam Smith, Hutt understood that the driving force of production in the market process is the discovery and satisfaction of consumption ends. The greater is the amount of this satisfaction, the greater is the amount of production. Under the conditions of exchange and production in anonymity, the only reliable source of information about how much satisfaction is generated by different production activities is market prices. Only insofar as consumers are sovereign- that is, only insofar as individuals as consumers are free to spend their incomes as they choose and businesses are free to compete as they choose for these expenditures- is there a flow of reliable information to guides businesses, entrepreneurs, investors, and workers to 'produce' in ways that are truly productive.