Demand Driven Economy

Demand Driven Economy

Democratic society must have a demand driven economy.  The economy is the measure of activity serving the members of our democratic society.  As democrats we believe every person counts, matters and must be respected.  Therefore every person’s needs are paramount.  Very high bar perhaps, but that is nonetheless the point expressed by equality before the law.

On top of that, students of business know that a business with productive capacity to serve no demand has no purpose and is therefore doomed.

We have interesting industry examples which perhaps may be contrasted only by scale, some are one-to-one services such as dentists, lawyers, doctors, barbers and so on.  Others are one to many services such as banks, electrical utilities, automobiles, telephones, and so on.  In every case, there must be adequate demand for the business to exist and remain viable.

So I argue for an economic rethink, wherein demand leads creation and delivery of productive activity.  Currently, our industrial sectors have come a long way from Henry Ford’s famous suggestion, “You can have any color so long as it is black.’ 

We have supply side developments. 

Focus groups were started to figure out which option the firm should produce, which would be most likely to spread out the cost of overhead to make it as small as possible per unit of output.

We had mobility research done by Ford Motor Company in response to the Edsel which met total lack of demand.  Mr. Lee Iacocca included that research package and its outcomes in his severance package when he left Ford.  That research was a breakthrough in that it asked open-ended questions about people’s expectations for mobility machines. The result was Mr. Iacocca started the production of minivans in setting a supply specification to meet Chrysler’s interpretation of that demand specification.  Seems it was pretty close.

Even then, it took until the Financial Crisis of 2007 through 2009 to train automakers to not download their overproduction onto their dealership networks.

We now have terms like “patient-centred”, “user-centric” and other terms to suggest the supplier is focused on the needs of the end user.  Interestingly, the 1960 approach of open-ended research is still not the default user specification setting model.  For instance, check out the terms and conditions of use, privacy policy statements and other one-sided lengthy legal documents to which users are expected to simply, “Agree” or “Don’t Agree”, “Yes” or “No”.  Is it any wonder Ann Cavoukian’s institute promoting Privacy By Design has the importance it has?

So yes, we do need demand to lead our economic development, but we have a long way to go.

Michael Klein March 25, 2019