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Economics and Sustainability: Targeting Demand Instead of Supply

By Abbas Ameli.

Published by The International Journal of Environmental, Cultural, Economic and Social Sustainability

Left to themselves, multi-national corporations (MNCs) seek to first and foremost profit-maximise. Every other act carried out by MNCs is merely a means to an end, which is profit maximisation. Consumers on the other hand have a more profound purpose to their being. They seek to maximise their satisfaction of life; and this satisfaction is not just maximised by material concepts such as money and wealth, but in many cases so much more by non-material aspects of life such as the urge to live in a clean and non-polluted atmosphere, to live a healthy and educated life and to ensure a suitable living environment for the future of their children and grandchildren.

Whilst the occasional clash and conflict of private and public costs and private and public benefits means that relying upon consumers’ decisions alone can be problematic, contemporary signs show that consumers are becoming increasingly conscious about what they consume. Not only do they care more about what directly affects their own health, especially about what they eat, they are also demanding their suppliers to be more ethical in what they produce and how they produce it. Suppliers have responded in more ways than one. Instead of focusing on government-imposed rules and regulations on the supply-side to enforce the sustainability of all that surrounds us, we should direct our attention at increasing consumer awareness and ensuring that consumers are well-informed of what is in their long-term best interest. This requires government attention and also a more active civil society. Initiatives already in place such as Corporate Social Responsibility (CSR) which are now being taken up by many MNCs are a direct result of increased consumer awareness and consumer demand for a more ethical economic activity. Influencing demand through directing consumer choice is a better option than influencing supply through government intervention, which may very well end up in government failure. We can still maintain sustainability by relying upon the basic rules of supply and demand.

The International Journal of Environmental, Cultural, Economic and Social Sustainability, Volume 5, Issue 6, pp.217-226. Article: Print (Spiral Bound). Article: Electronic (PDF File; 1.137MB).

Abbas Ameli

Student, Economics Faculty, University of Cambridge, Cambridge, Cambridgeshire, UK