The Natural Model of Consumption

The Concept of Pleasure, Utility and Harm By Istvn Samu1 I. Summary In the center of economics and more specifically microeconomics of our age there is the rational man whose rationality reveals in the maximization of satisfaction. The individual needs commodities to meet his demands which have certain utility for him as they contribute to fill his wants and they cause satisfaction to him. Thus the final aim of consumers is to maximize their utility, which can be achieved by enforcing their interests. The utility can be defined as the property of commodities that they are able to meet the demands emerged and provide satisfaction this way. Even Pareto called attention to the fact that the argument mentioned above was not satisfactory. Desirable commodities cannot be considered to be useful at the same time as harmful commodities can also be desirable for a person. As he saw that the concept of utility had different meaning in economics from the everyday usage, he recommended to use the expression ophelimity instead to differentiate between the two concepts. Irving Fisher did the same creating a new term wantability for utility. These trials were not really successful so the pleasure provided by commodities that is satisfaction is expressed by utility in modern day word usage. The aim of this paper is to find solution to the problem bearing the hall-marks of Pareto and Fisher and to develop the natural model of consumption. If the concept of utility is not used in the sense of subjective value theory but in the natural (objective) meaning of the word as entirety of useful, positive things to life or things which are able to prevent harm, then not only one but three elements of consumption can be differentiated. These three factors are pleasure (subjective utility in economics), objective utility and harm. The model of consumption has been completed with two factors which have always existed although they have been neglected before, drawing a full picture of the satisfaction of needs. The ultimate aim of consumers is to maximise their pleasure, choosing wants to satisfy based on the extent of pleasure and select goods independent on their real usefulness or harmfulness. Five categories of consumption can be distinguished according to the objective utility and /or harm resulted by consumption and the relationship between the utility maximum and the saturation point of the pleasure. These five categories are the following: ideal consumption, underconsumption, overconsumption, mixed consumption and harmful consumption. II. The two categories of value: use value and exchange value Value is one of the principles of economics which can be used in several different ways. Aristotle was the first to differentiate between the two kinds of value even if he did not call them the same way as we do today. Use was considered to be natural, exchange was considered to be unnatural economy by him.
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Published: Budapest College of Management, Scientific Proceedings, 2005/12, 179-194. (E-mail: sss3@freemail.hu)

This concept by Aristotle needed two thousand years to develop into something new by Adam Smith. Many had dealt with the question before the rise of the modern age of economics but they did not succeed to create a real value theory. Smith in his work The Wealth of Nations defined the notion of value differentiating between use and exchange value2. Smiths value theory was refined by David Ricardo, who introduced his main work with Smiths value interpretation paragraph which was completed by him3. The concept of utility did not play an important part in Ricardos work similarly to that of Smith, but Ricardos idea concerning utility can be gathered from his train of thought and this can be a further basis of comparison. As he wrote, a commodity can be useful if it can satisfy a want in a particular way. Later this point of view was shared by Marx as well4. In this sense, as utility from the beginning, use was related to the satisfaction of needs. It is a fact that every human deed originates directly or indirectly in some kind of fulfilling of a want. The demands emerged can define what we do and why we do it, what goods we consume and how often we do that. The commodities satisfying particular wants and utility could be equalled only if both wants were useful to the individual. According to the utilitarian point of view, which was explained by Bentham the most perfectly5, one can decide what is right and what is wrong based on the principle of utility and pleasure maximum, and every human deed is derived from this foundation. The concept of utility was defined differently by Bentham from the representatives of the labour theory of value6. According to Bentham, the main motivators of individual deeds were considered to be pain and pleasure, latter of which was used as a synonym for utility by him. He did not think that only
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The word value, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called `value in use'; the other, `value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. Adam Smith [1776]: A nemzetek gazdagsga (The Wealth of Nations), Kzgazdasgi s Jogi Knyvkiad, 1991, p. 37.
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Utility then is not the measure of exchangeable value, although it is absolutely essential to it. If a commodity were in no way useful, - in other words, if it could in no way contribute to our gratification, - it would be destitute of exchangeable value, however scarce it might be, or whatever quantity of labour might be necessary to procure it. David Ricardo [1817]: A politikai gazdasgtan s az adzs alapelvei (On The Principles of Political Economy and Taxation), Kzgazdasgi s Jogi Knyvkiad, 1991, p. 9.
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The utility of a thing makes it use-value., Use-values become a reality only by use or consumption., Karl Marx [1867]: A tke I (Capital, A Critique of Political Economy), Magyar Helikon, 1967, p. 44.
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Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. Jeremy Bentham [1789]: An Introduction to the Principles of Morals and Legislation, in: Mrkus Gyrgy (edit.): Brit moralistk a XVIII. szzadban (British Moralists in the 18th Century)(pp. 677-761.), Gondolat kiad, 1977, p. 680.
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By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness, (all this in present case comes to the same thing) or (what comes again to the same thing) to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered. Jeremy Bentham [1789]: An Introduction to the Principles of Morals and Legislation, in: Mrkus Gyrgy (edit.): Brit moralistk a XVIII. szzadban (British Moralists in the 18th Century) (pp. 677-761.), Gondolat kiad, 1977, p. 682.

one factor could be the origin of every human action, but he saw that pleasure matched with avoiding pain. Thus he drew an almost full spectrum of human actions, only half of which, namely utility maximization was taken over by the Marginalists, but the idea that pleasure and pain, utility and harm match each other was excluded from their theory. Bentham did not associate utility to satisfying needs, but he did not use this everyday meaning of the expression either. That is why the greatest joy or greatest pleasure calculi were used later. In connection with Bentham, he is often remarked to be one of the forerunners of the marginal utility theory as he was the first to refer to the intensity level of pleasure, although, as it was said above, he used the notion of pleasure in a completely different way from the Marginalists following him. Besides, he did not connect the intensity of pleasure with the exchange theory. In connection with utilitarianism the most important question is whether the idea, which practically means the same as the idea of right is what everything focuses on by Aristotle7 is true to consumption. In the same age when Bentham and Mill made this view universal, Darwin thought utilitarianism to be true to natural selection as well, according to the requirement of which, the only species and structure changes of living creatures which can survive are the ones which are objectively useful to us. If it were not like this, we would extinct in this struggle for life. The body parts which are not important to their owners will atrophy or will be stunted because of not being used. If people while consuming lead a self-destructive lifestyle which is disadvantageous for them, this does not mean that they would give up consuming harmful commodities after a few generations or they would extinct. Man does not have any natural competitors, so he is not affected by the struggle for life. Addictive commodities are good examples for this. Thus the theory of utilitarianism cannot be used for consuming. The representatives of marginal utilitarianism, Jevons, Menger and Walras had the same ideas about the concept of utility as Ricardo did, all of us connected the utility of commodities to their ability of satisfying needs, with the decided difference that in the neoclassic theory it is determined by the subjective judgement of the individual how much utility he contributes to the commodity units consumed8. Recognizing the final degree of subjective utility, Jevons was able to explain the DiamondWater Paradox.9. Applying ultimate utility as a scientific term to the commonly used expression, Jevons chose the word utility deliberately influenced by utilitarianism. Vilfredo Paretos name reminds everyone of the law named after him and the Pareto optimum, but his other great discovery of the logical contradiction of utility used in economics was hardly referred to (Anderson [1911], Fisher [1918], Abay [1929], Heller [1943], Schumpeter [1949], Stigler [1950], Kauder [1965]) and if so, it was quite incidental. Pareto could not accept the
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Arisztotelsz (Aristotle): Nikomakhoszi Etika (Nichomachean Ethics), Gondolat, 1969, p. 5.

Menger defines utility in the Principles of Economics as the following: things that can be placed in a causal connection with the satisfaction of human needs we term useful things (Ntzlichkeiten), Carl Menger [1871]: Principles of Economics, in: Bekker Zsuzsa (edit.) [2000]: Alapmvek, alapirnyzatok (Essential Works, Essential Schools), Aula, 2000, p. 232.
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We cannot live without water, and yet in ordinary circumstances we set no value on it. Why is this? Simply because we usually have so much of it that its final degree of utility is reduced nearly to zero. We enjoy, every day, the almost infinite utility of water, but then we do not need to consume more than we have. William Stanley Jevons [1871]: The Theory of Political Economy, in: Bekker Zsuzsa (edit.): Alapmvek, alapirnyzatok (Essential Works, Essential Schools) Aula, 2000, p. 241.

traditional term used for utility as a desirable good could be harmful to the individual, and they could not be interchanged. Thus he recommended the expression ophelimity to use indeed of using the word utility so as to distinguish it from its every day use. Expressions for alternative utility can be classified into two groups. The first group includes the ones which were used when the concept of utility started to spread, such as Werth des letzten Atoms by Gossen, raret and intesit du dernier besoin satisfait by Walras, Wertintensitat des letzten Teilchnes by Schumpeter, Cassels Knappheit or the marginal desirability by Marshall and Gide or Irving Fisher. The second group includes expressions which were created by authors knowing that utility could not be applied to the procedure which it was used for. This group contains ophelimity, wantability and want. Pareto was one of the economists who saw that the subjective explanation of utility could lead to the situation that a commodity which is objectively harmful to the individual can be viewed useful in economics, however, what is harmful cannot be useful at the same time. Besides Bentham, Pareto considered the fact that goods can be detrimental that is harmful to the individual as well, but unfortunately he did not include this fact in his theory, which did not go beyond that goods can only be useful economically and he did not deal with real utility. He used a new expression but he did not redefine utility and did not introduce the concept of harm to economics although he was aware of that goods can be harmful to consumers. Thus Pareto did not solve the original problem. Similarly Irving Fisher also raised the question whether utility was the most appropriate expression for the concept which it was used for10. Fisher used the word desirability as an alternative for utility, but finally he created two new terms for this which were want and wantability. Later the expression utility was not questioned any more, however ophelimity, wantability or desirability, which was used earlier, did not become established in economics. In connection with Pareto, the meaning of the term ophelimity has been mentioned by many recently11 (McLure [1996, 2003], Marchionatti s Gambino [1997], Bruni s Guala [2001], Aspers [2001], Bruni [2004]), but Fishers wantability has sunk into oblivion so the conceptual reconsideration of utility has not been dealt with. Everybody has accepted the final form established by Neoclassicists and only the ordinal and cardinal properties of utility have been disputed, of which the latest actualised edition of Economics by Samuelson is a great example12. III. The three elements of the satisfaction of needs: natural utility, harm, pleasure (satisfaction, desirability)
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Fisher, Irving: Is Utility the Most Suitable Term for the Concept It is Used to Done, American Economic Review, 1918, volume 8, pp. 335-337. [http://www.ecn.bris.ac.uk/het/ fisher/utility.htm]
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Pareto defined ophelimity as the relationship of convenience, which makes a thing satisfy a need or a desire, whether legitimate or not ([1896] 1964, sec. 5). Luigino Bruni and Francesco Guala: Vilfredo Pareto and the Epistemological Foundations of Choice Theory, History of Political Economy, 2001, No.1, pp. 21-49. You can find the same citation in a shorter form in: Patrik Aspers: Crossing the Boundary of Economics and Sociology: The Case of Vilfredo Pareto, The American Journal of Economics and Sociology, 2001, April, pp. 519-545.
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In the lexicon (Kislexikon), which serves as a glossary in Hungary, utility is defined as the total satisfaction derived from the consumption of commodities. Samuelson, Paul A. and Nordhaus, William D. [1985]: Kzgazdasgtan (Economics), KJK-KERSZV, 2000, p. 716..

The approach of economic history of utility requires to be corrected to some extent, which was mentioned by Pareto and Fisher as well when they expressed that subjectively useful commodities could be harmful to people. The same problem appears in case of dealing with the concept of pleasure, which is currently used with the same meaning as utility. The two basic problems are: 1. Even the Classicists connected utility to the satisfaction of needs, but they interpreted it objectively. 2. The Neoclassicists defined utility as a subjective judgement of the individual. If the term utility is substituted with the expression which it means in reality (pleasure, satisfaction, wantability) we finally get all the three factors of the satisfaction of want. The terms listed above were finally named utility by Javons in economics and these terms, which previously expressed different concepts separately, became one and finally one of them covered all the others. Table 1 Correspondence of terms Everyday (colloquial) use 1) desirability, pleasure, satisfaction, desire (2)usefulness (3) harm (4) dislikes Scientific (economic) use) (1) utility (4) harm, negative utility, disprefered goods My use (1) pleasure (2) natural utility (3) natural harm (4) disliked, disprefered goods Subjective Objective Objective Subjective

The three factors are natural utility, natural harm and pleasure. I use the term pleasure for the currently used term utility, Paretos ophelimity, Fishers wantability. Desirability and pleasure as other alternatives express the expected result of consuming a good. Satisfaction refers to a real satisfaction of needs, similarly to pleasure. It is not sure at all that pleasure is the most appropriate term to express the process or result which is caused by the consumption of a commodity. The only thing that is sure is that using the term pleasure is a much better solution than using a wrong term for utility. The adjective natural expresses the fact that we can talk about (natural) utility, (natural) harm and pleasure because of the nature of consumption. On the other hand, it can be a certain distinction from utility used in economics today. The word natural expresses that this term is used in everyday life.

According to the traditional economic schools use value expresses the utility of commodities and utility means that a commodity is capable of satisfying human needs giving pleasure this way. As a result of this argument, every good is economically useful (as it can satisfy human needs indirectly or directly) and every good has use value. In an everyday sense utility does not mean whether consuming a good can give the individual pleasure or not, but it means whether it has a positive or a negative influence on his life. Take for example a stimulant such as alcohol, coffee or a tobacco product, and so on.. A cigarette can satisfy the need of smoking, this way it can be considered to be economically useful, but can it be considered useful to human life? No, it cannot, as it is well known that smoking is harmful to health. Following Fishers and Paretos course it is obvious that besides subjective utility (want, wantability and ophelimity) there is objective utility and harm as well. Commodities can be determined to be useful to the individual or not by consuming them. The Marginalist subjective view of utility has no sense because in this case commodities that are harmful to the individual can be considered useful, and these options are mutually exclusive. From the point of view of life there is only one type of utility, which can be determined by a simple exclusive condition. A good can be considered useful consuming which it is not harmful to the individuals life, body, environment and which is able to inhibit harm from happening. The concept of harm has been neglected in economics so far. This can be derived from the wrong definition of utility shown above according to which every good is economically useful. Everybody has felt that harm can and does result from the satisfaction of needs but despite this, because of the wrong definition of utility, the nature of harm has been misinterpreted as well. For example there is Hals definition [2001] which says that harmful commodities mean commodities which are disliked by consumers, however the term negative utility has come into general use as the simplest definition of harm. If economic utility refers to goods liked by consumers, that is goods that can give them pleasure, utility, etc., then harm logically represents a group of commodities which are disliked by consumers. Starting from natural utility, in reality harm means commodities which are harmful to the individual. This time a new question came up to face with: why do individuals consume goods which are objectively not useful but harmful to them? The cause of satisfying needs cannot be the utility as consuming harmful commodities does not involve any utility however we do consume them. Obviously, there must be something good in their consumption to the individual, which good is nothing else but the satisfaction or pleasure caused by terminating the feeling of want. The phenomenon, which is an attribute of commodities and has been referred to as economic utility in economics, is pleasure in fact. The individual consumes harmful commodities to receive pleasure by them. Time plays an essential part in this problem. To consume a harmful good the individual needs not only the pleasure given by it but the harm caused by it to occur later, because as long as the harm appears immediately, the individual will not satisfy his need. Satisfying a harmful need the individual accepts the future harm for his present pleasure. Between two or more wants or between two or more commodities satisfying the same demand the individual will satisfy the demand or choose the good (independent on its harmful or useful effect on him) which gives him greater pleasure without limitations.

The fathers of the theories above have always seen their main task to define exchange value, thus price as a limiting factor has always appeared in various consumption models. Aristotles natural wealth, honourable human behaviour and choice must be examined without limitations. There are several limiting factors which can influence personal choice. The most examined condition is the available income, as it can determine what goods the individual should buy. Besides this there several other limitations which can define consumer behaviour, such as cultural, social, religious customs, faith, conviction, commitment, believes, various impressions from different fields of life. For example, let us take an average consumer who likes beef. If our consumer is deeply religious, in spite of the fact that he likes beef, he will not eat this food keeping fast. Our consumer might not eat beef any more because of being afraid of getting mad cow disease. He might have decided to become a vegetarian, or might have eaten some tainted meat and he has not been able to bear the sight of it since then. He might be working or spending his holiday in India, where cows are sacred animals and no matter how much he likes it, he will not be able to consume it. This is why dispreferred goods must be dealt with on this level as without some limiting factors, some kind of compulsion, individuals will not consume these goods as they dislike them. Thus when consuming, the individual chooses between the commodities available, deciding which to consume on the basis of the possible pleasure given by them. It is not an evaluation process, it is only a simple choice. Evaluation includes that one of the commodities is objectively more valuable than the other and this conception can lead (led) to a misapprehension. For example, if the individual consumes drugs, it does not mean that drugs are objectively more valuable than other goods, but it means that in a certain moment drugs can give subjectively the greatest pleasure to the consumer. Thus while consuming we do not evaluate but choose between goods, and the good chosen is not valuable but can give the greatest pleasure. Thus the basis of personal choice is pleasure. The concept of objective utility differs from pleasure; they are not synonyms as they were considered to be according to the utilitarian and Marginalist view. As a consequence of this only commodities which satisfy useful wants have objective use value. If a good satisfies a want, it does not make it objectively useful, it can only deserves the right to be called a good. At the same time, there are commodities which have only exchange value but they are not useful. Smoking is a harmful need and consequently tobacco products cannot be useful either. The first essential question of economics is differentiating between harmful and useful needs. Knowing all these, the exchange value of commodities to consume could be grouped according to the fact whether they can satisfy useful or harmful needs and we could see to which direction economy has moved recently. Unfortunately determining this is not so simple as there are goods consuming which can be useful and harmful at the same time and there are goods which are consumed to a great extent and this overconsumption is also harmful. Overconsumption is caused by that satisfying needs

the saturation point of the pleasure received from the good exceeds the utility maximum of the good. Optimum can be reached when the utility maximum coincides with the saturation point. Commodities cannot be useful or harmful in themselves. The effect of consuming a good can depend on in what function they are used and in what quantity. In different ages and societies, the same goods have been used in different functions which could have been useful or harmful as well in a given time and place. In consequence of this, utility and harm resulting from commodities vary in time and space. Similarly quantity also matters as a good can be useful in small quantity, but in large quantity it can be harmful to the human body. Determining utility does not rest upon wants but man or rather life. The first thing to determine is whether a certain want is useful or harmful to human life. Then it can be followed by the process of satisfying needs, which cannot be strictly useful. The solution of the Diamond-Water Paradox is the following: water is essential to life and the total utility gained by it is maximal but as it is available almost unlimitedly to individuals (although it is limited on macro level) this way the final degree of pleasure received from it (that is the limit of contentment resulting from the satisfaction of needs) is practically zero, consequently its exchange value is zero as well. Thus the exchange value of a good does not depend on utility in the real sense but it depends on pleasure or contentment, desirability and desire. The Marginalist theory could not relate exchange value to objective utility. The diamond-water paradox is a manifestation of the utility-pleasure paradox. One can support himself only with commodities satisfying his useful wants, but he does not rank commodities according to this but according to the pleasure received from them. This paradox also means that the supposed human rationality is subjective by nature. In economics rationality means that man can differentiate between useful and less useful and while choosing he will prefer the former. In consumption it means that the individual can differentiate between different consumer baskets according to their economic utility and he strives to optimalise his satisfaction of needs. This condition is not sufficient in itself. If somebody needs to consume alcohol and gets drunk, then nobody would say that this man acted rationally while this consumption completely corresponds with the condition above. There is another condition of rationality which is the individual should be able to differentiate between useful and harmful and while choosing he should choose the former. Both the diamond-water paradox and the pleasure-utility paradox are about the fact that the individual cannot fulfil the second condition yet. The individual can reach a higher level of development, the level of rationality, if he can determine what is useful to life and he will not express his preference according to the pleasure given by goods because it can be harmful to life and his environment. As scarce goods and free goods by Classicists, consumer goods and production goods by Marginalists, substitute and complement goods were dealt with by the Ordinalist revolution, today useful and harmful goods should be brought into the focus of economics. IV. The natural model of consumption

According to the recent microeconomic model of consumption the individual satisfies his needs to terminate his feeling of want. (Economical) utility is derived from consumption and the final aim of the consumer is to maximize the utility deriving from the satisfaction of needs. Utility, which is the pleasure of contentment caused by the satisfaction of needs, is a quality of commodities which makes them capable of satisfying needs13. The individual can make a decision on the basis of this which good to consume. Consuming commodities the total utility increases diminishingly until the maximum corresponding with Gossens first law and decreases from then. The marginal utility of good units consumed decreases constantly and where the total utility reaches its maximum point, the marginal utility equals zero (Figure 1). In the natural model of consumption the individual satisfies his needs because of his feeling of want. The satisfaction of needs causes pleasure, that is contentment resulting from the termination of the feeling of want. Besides consumption results both natural utility, that is positive things to life and harm, that is things that are harmful to life. The final aim of the consumer is to maximize pleasure, choosing which one of his wants to satisfy and with which good to do it by the extent of pleasure received from them. Fortunately there are some exceptions from the principal which are some physiological needs such as breathing and sleeping. If we took the principal of consumption for the basis of breathing, we would hardly breathe. Air in nature seems to be unlimitedly available (although as in case of water, its quantity can be measured) so consuming it can give only minimal pleasure to us. The marginal utility of air as a good just like that of water is almost zero, but fortunately breathing is a basic need which is satisfied by the human body without thinking. The theory of diminishing marginal utility cannot be applied to the nature of objective utility and harm. The utility of a glass of water in the desert is the same as in the city, only the pleasure given by them is different. Water, wherever is consumed, contains the very same minerals and nutrients. Similarly the utility of the first and the fifth draught of water is the same, only the pleasure received from them differs. Every unit of good consumed results the same amount of utility or harm. Utility increases linearly until its maximum point and then consuming the good results harm. Utility and harm are objective phenomena, as it can be defined what effect a good consumed has on the human body but pleasure in contrary is of subjective nature as it was written by the establishers of the school of marginal utility. Gossens first and second law are entirely true not to natural utility but to the concept of pleasure. As a result of this pleasure and marginal pleasure do not need to be dealt with here as every phenomenon has been explored under the concepts of utility and marginal utility. For the sake of simplicity, further on, I will present the consumption model through the example of consuming a commodity. As long as only natural utility derives from consumption exclusively, on the basis of the relation of the utility maximum to the satiation point of pleasure there are three consumption categories in theory. The utility maximum can exceed, can coincide or can stay below the satiation point of pleasure. In the latter case every unit of commodity consumed after the utility maximum is

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For example in: Samuelson, Paul A. and Nordhaus, William D. [1985]: Kzgazdasgtan (Economics), KJKKERSZV, 2000, p. 77.

harmful to the individual so this type can be considered mixed consumption. Thus the solely useful consumption has two kinds. If there is only harm deriving from consumption, then theoretically there are three kinds of them, but the relation of the maximum point of harm to the satiation point of pleasure is not important as the possible points can be interpreted one way, the consumption can only result harm. As a consequence of this there is only one type of harmful consumption. In case of mixed consumption, theoretically any combination of the consumption categories mentioned above could be possible, but the location of the maximum points and the satiation point could be interpreted only one way that both utility and harm would derive from it. It follows from the foregoing that there are five different categories of consumption according to the fact whether objective utility or harm derived from it and what the relation of the utility maximum to the satiation point of pleasure is. Table 2 The five categories of consumption Consumption types The satiation point of pleasure and the utility maximum Coincide Stay below Exceed The possible utility or harm resulting from consumption Solely utility Solely utility First utility then harm

(1) Ideal consumption (2) Underconsumption (3) Overconsumption (4) Mixed consumption (5)Harmful consumption

All the three at the same time Utility and harm at the same time Solely harm

(1) In case of ideal consumption, the utility maximum and the satiation point of pleasure coincide. In this case, only utility derives from consumption in a way that every single unit of commodity consumed is useful for the individual. The consumption of which commodities is useful to the individual varies individually (Table 2). However fruit and vegetables can typically be classified into this category, and even books, which can broaden the readers mind. Of course it can only be true if the individual likes fruit, vegetables or reading that is the consumption of these goods can give them maximal pleasure to him. (2) Underconsumption appears when the consumption of a good results only utility and the utility maximum exceeds the satiation point of pleasure. The individual consumes the good until it can give him pleasure. He stops consuming at the satiation point, although consuming another unit of commodity could be useful to him. Thus this time the individual does not consume all the possible utility given by the good and stays below the ideal situation (Figure 3).

As a matter of fact the commodities mentioned above could also be listed here if the consumer does not like them. Vegetables can be useful to the body in vain if one has a sweet tooth. Books can broaden the mind in vain if the owner does not really like reading. (3) Overconsumption results both utility and harm at the same time. The satiation point of pleasure exceeds the utility maximum in this case. For example, if the utility maximum is at 4 units of commodities, but the satiation point is at 7 units, as pleasure is the force for the satisfaction of needs, the individual will consume 7 units in spite of the fact that the last three units will be harmful to him. Of course, the overconsumption of any goods is harmful but there still are commodities, for example stimulants, which typically belong to this category (Figure 4). Coffee, tobacco products and alcohol tend to be overconsumed by many. Watching TV, drug abuse and all addictive goods belong to this group. Consuming a glass of wine can be considered healthy today and it could be mentioned as an example for ideal consumption, but ten glasses of it would definitely belong to overconsumption. (4) Mixed consumption results the same or different amounts of utility and harm. In this case it does not matter the relation of utility maximum to the satiation point of pleasure. Theoretically three subtypes could be differentiated concerning utility, but as harm is resulted from it, it is of only theoretical importance, what matters practically is the proportion of the two effects. Mixed consumption occurs in case of commodities where one of them takes its effect directly while the other one does it indirectly (Figure 5). Travelling can be a typical example for it, when individuals use a vehicle to reach their destination as gaining utility from the service. At the same time the fuel consumed by the vehicle causes harm polluting the air and destroying the ozone-layer. Here can be mentioned for example the use of aerosol deodorants, the refrigerator and the fire extinguisher. (5) In case of harmful consumption, as the term suggests, it is only harm which derives from the consumption. Based on the facts above because of the time factor, nobody will consume goods which can cause pain. Smokers smoking a cigarette do not feel that they can die of their habit in 20 years and they will give up smoking only when their illness reaches a point when consuming another unit causes pain to them. Alcoholics will give up smoking if drinking does not give them pleasure any more. In case of addiction, the individual might not feel pain and it can even be fatal to him (Figure 6). V. Macroeconomic effects of the real model of consumption There are contradictory processes in our world today, and a lot of people in politics think that consumption equals the growth of welfare while others question it. To be able to find the way in this jungle of pros and cons, it must be explained what consumption really means. It can be helped by defining the term utility and its significance of economic history. Consumption is the satisfaction of objectively useful and harmful needs with different goods. As a result of the definition if the volume of consumption increases, Paretos ophelimity will increase that is economic utility, but the natural utility will not definitely.

While consuming, every produced and consumed commodity represents positive value, because every good is economically useful as every good directly or indirectly satisfies a human need. Petrol consumption, purchasing guns, watching TV etc. are economically useful because these goods satisfy our travel, security-defence and TV watching needs. The utility of money raises an interesting question, according to the prevailing theory the marginal utility of money as a medium of exchange can be defined by the subjective utility of the good received from the last unit of it independent on whether it is harmful or useful. Thus consumption and the growth of welfare do not correlate totally. An economically useful good can be harmful in reality. If, in spite of the fact that consumption increases, we feel that welfare in a wider sense declines, the only thing it can mean that behind this growth of economic utility there must be the consumption of some mostly mortal goods. The Utility-Pleasure Paradox is the reason why man destroys his environment and does not care about his fellow-men. As the aim of the individual is to maximise his pleasure, he does not care whether the good consumed is harmful or useful to himself or his environment. These are only the demand side of consumption. On the supply side there is the production of goods which have solvent demand but there are not essential goods. Besides, while consuming goods with exchange value are aggregated, free goods and relating externalities are not included in this estimation. We have to be aware of that human welfare can be expressed by use or exchange value. As it was revealed above, exchange value expresses a goods real value to human life while exchange value derives from the evaluation of the good in terms of scarcity concerning economic utility and sacrifice. Only economic goods have exchange value as these goods participate in the exchange process, however free goods have and economic goods can also have use value. Thus human welfare is expressed by use value that is the estimation by real utility. Concerning the Pleasure-Utility Paradox we have to be aware of that the original ranking of goods can be altered by the possibility of exchange, as it was written by Farkas Heller 14. To make it more complex, the exchange value can be expressed easily in money while use value can be measured only on ordinal scale. The fundamental problem with the current estimations is the following. Goods not having exchange value are excluded from calculations, the really useful and harmful commodities are not distinguished as a result of the false conception that every good is economically useful. Bibliography Abay (Neubauer) Gyula: Hatrhaszonelmlet brlata (The Critiques of Marginal Utility Theory), Danubia, 1927. Abay (Neubauer) Gyula [1958]: Oeconomia Aeterna: egy j tudomnyg megalapozsa (Oeconomia Aeterna: A Foundation of a New Science), Pcsi Tudomnyegyetem, 2001.
14

exchange can influence the value of goods in two ways: it increases the value of goods for which others will pay more than the utility which is given to us by a certain amount of them and it decreases the value of things for which we have to pay less than it would be sensible according to their use value. In both cases, the possibility of exchange means that goods are not evaluated according to their use value but according to their change value., Heller Farkas [1919]: Kzgazdasgtan, I. ktet: Elmleti kzgazdasgtan (Economics, Volume I: Teheoretical Economics), Kzgazdasgi s Jogi Knyvkiad, 1988, p. 34.

Anderson, Benjamin McAlester Jr.: Social Value: A Study in Economic Theory, Critical and Constructive. Chapter 4: Jevons, Pareto and Bhm-Bawerk, Houghton Mifflin Company. [http://spartan.brocku.ca/~lward/Anderson 1911/anderson 1911 04.html] Bekker Zsuzsa (szerk.) [2002]: Magyar kzgazdasgi gondolkods (Economic Thought in Hungary), Aula Kiad. Berde va - Petr Katalin [1995]: A klnfle hasznossgfogalmak szerepe a kzgazdasgtanban. (The Role of Different Utility Concepts in Economics), Kzgazdasgi Szemle, XLII. vf., 5. szm. Bruni, Luigino: A Note on The Obscure (to Mirowski) Giovanni Vailati, History of Economic Ideas, 2004/1, 119-121. Deane, Phyllis [1978]: A kzgazdasgi gondolat fejldse (Evolution of Economic Ideas), Aula Kiad, 1997. Dobb, Maurice [1973]: Az rtk s a jvedelemmegoszls elmletei (Theories of Value and Distribution Since Adam Smith), Kossuth Knyvkiad, 1977. Eszterhain Daruka Magdolna: Mikrokonmia (Microeconomics), Tvoktatsi Universitas Alaptvny, 1997. Hal, Varian [1999]: Mikrokonmia kzpfokon: egy modern megkzelts (Intermediate Microeconomics: A Modern Approach, 5th edition), KJK-KERSZV, 2001. Heller Farkas [1943]: A kzgazdasgi elmlet trtnete (The History of Economic Theory), Aula Kiad, 2001. Jevons, William Stanley [1871]: The Theory of Political Economy, Macmillan, 1924. Kauder, Emil: A History of Marginal Utility Theory, Princeton University Press, 1965. Marchionatti, Roberto Gambino, Enrico: Pareto and Political Economy as a Science: Methodological Revolution and Analytical Advances in Economic Theory in the 1890, Journal of Political Economy, 1997, Vol. 105, no. 6, pp. 1322-1348. Mtys Antal: A korai kzgazdasgtan trtnete (The History of Early Economics), Aula Kiad, 1999 Mtys Antal: A modern kzgazdasgtan trtnete (The History of Modern Economics), Aula Kiad, 1999 McLure, Michael [1996]: The Evolution of Paretos Economic Man, Working Paper Series, University of Technology Perth Western Australia,1996, January. McLure, Michael: Dualistic Distinctions and the Development of Paretos General Theories of Economic and Social Equilibrium, Working Paper Series, Universit di Torino, 02/2003. Schumpeter, Joseph Alois: Vilfredo Pareto, Quarterly Journal of Economics, pp. 146-173. Stigler, George J.: The Development of Utility Theory II, Journal of Political Economy, 1950, October, pp. 373-396.

Figure 1 Recent consumption model

Utility Satiation point

Quantity

Marginal utility

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Figure 2 Ideal consumption

Pleasure

Satiation point of pleasure

Total pleasure

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Marginal pleasure

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Utility maximum

Total utility

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Figure 3 Underconsumption

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Satiation point of pleasure

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Figure 4 Overconsumption

Pleasure

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Figure 5 Mixed consumption

Pleasure

Satiation point of pleasure

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Utility Utility maximum Total utility Quantity Harm

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Figure 6 Harmful consumption

Pleasure

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