CONSUMER'S SOVEREIGNTY MEANING
Consumer sovereignty is a political, social and psychological concept. It means that under capitalism, a consumer is the king and dominates the entire economy. All the activities of production, exchange, distribution, and public finance are carried on according to the desires, orders, and preferences of consumers.
Consumers get income under capitalism, they are free to spend their income in their own way. Their tastes and preferences regulate and influence the nature of economic activities. Goods and services to be produced are decided to keep in view the taste and wants of consumers. Quantity in which these goods and services should be produced, channels of distribution, packing, colour, size etc., all are decided as consumers like.
Thus, a consumer is a king, the sovereign and the master who rules and dominates a capitalist economy. Every producer has to satisfy his customers.
IMPORTANCE OF CONSUMER'S SOVEREIGNTY
- Producers have to study and understand the wants, tastes, habits and preferences of consumers.
- Producers have to produce only those goods and services which are demanded by consumers.
- Goods and services are produced in the quantity in which they are demanded.
- Goods and services are distributed in the manner, most convenient to consumers.
- Size, colour, packing etc., are decided keeping in view the tastes and preferences of consumers.
- Producers can achieve their objects only if they follow the orders and directives of their consumers.
- Consumers regulate and control a capitalist economy through the price mechanisms.
LIMITATIONS OF CONSUMER'S SOVEREIGNTY
Concept of consumer's sovereignty establishes consumer as a king, a master and a sovereign in a capitalist economy, but this concept does not hold true in real life. There are certain limitations:-
Ignorance of Market-
Sometimes the concepts as follows consumers are not aware of the goods, services and sellers available in the market. Due to this reason, they cannot make the best buy of their money.
Limited Income of Consumers-
The wants of every consumer are unlimited while the resources available to satisfy these wants are limited and that too have alternative uses. He cannot satisfy all his wants. So he cannot behave freely.
Habits and Social Customs to Consumers-
Habits of consumers and social customs are the two importance limitations of consumer's sovereignty. Consumers have to buy certain goods and services which do not provide them as much utility as they should get.
Limited Production Capacity and Technique-
Every economy has a limited production capacity and technique. Due to this limitation, consumers cannot get everything, they like to get.
Effect of Advertisement-
It is the time of advertisement and salesmanship. Normally the consumers buy what producers want to sell. It also curtails their sovereignty.
Standardization-
Standardization is commonly followed nowadays. Producers produce goods and services in accordance with pre-determined standards. It also curtails the sovereignty of consumers because they have to purchase these standardized goods.
Monopolistic Tendencies-
Due to the monopolistic tendencies of producers, consumer sovereignty has been confined to a theoretical concept. The fact is that the consumers have to buy what is produced by producers.
Government Contortia Restrictions-
Due to restrictions imposed by Government, the controls and consumer sovereignty gets limited. Consumers cannot enjoy a number of goods and services due to these controls and restrictions.
FAQ
Ans: Consumer sovereignty is a political, social and psychological concept. It means that under capitalism, a consumer is the king and dominates the entire economy. All the activities of production, exchange, distribution, and public finance are carried on according to the desires, orders, and preferences of consumers.
