That this garbage nonsense continues to be the holy basis for the Republican cult after decades of failure and enough empirical data to choke an elephant (see what I did there?) is proof positive that Right Wing intellectualism is inherently bad faith propagandizing and manipulative argument from an imagined authority.
Here’s the counterargument in simple terms: Supply cannot create demand. Therefore, focusing capital and fiscal policy on the supply side cannot drive economic growth. If you create a product that has no demand – demand being the driver here – you will not sell that product. Supply exists solely to meet demand. Supply without demand is waste, demand without supply is still demand.
In any real world example, this is obvious, that the arrow of economic drivers goes in one direction: necessity is the mother of invention because every product must fill a need or solve a problem. Even if that need is a purely emotional manipulation by marketing (economic propaganda), it is STILL demand-driven. It is not created by supply, it is still demand created by marketing. You still have to fabricate a need for the product.
This is hilariously obvious to anyone who actually has to budget, but it’s also obvious in the Classical Liberal SEM (Standard Economic Model) used to teach Econ. The whole point of the indifference curve to demonstrate utility relies on consumer adherence to a rational examination of need, to determine which product best meets their needs. There’s no chart for the inherent utility of a generic widget simply willed into existence. Mises himself defines utility as the primary force by which consumers make their decisions, immeasurable on its own, but portrayed as a series of choices when presented with products. This remains a through line across Economics.
Regardless of whether or not one agrees with the “rational actors” nonsense upon which the expanded universe of NeoLiberal Economics depends, if we look at Mises and Hayek in good faith, it is clear that demand is the starting point of economic activity. If one does not want, one does not consume. It’s really that simple, and they fucking know it.
So why do they fuck about with this obviously disingenuous horseshit? Because it allows them the imprimatur of intellectual authority to give all the power to capital. Because let’s be crystal clear here, Capitalism rewards exactly one thing, and one thing only: access to capital. There is no other way to succeed under Capitalism. It is Capitalism’s entire raison d’etre.
If we view Capitalism’s primary innovation as the creation of a “market of markets”, moving from the direct investment model to one of fungible debt vehicles to fund development, we see how this both democratizes investment by allowing broader participation, and how it amortizes risk across a larger investor pool. This is not inherently a bad thing, honestly. However, without restriction and regulation, the focus becomes the markets, not, you know, markets. Like, stock over farmers, right?
The supposed point of capital mobility is to fuel real products innovation, which itself is driven by demand. The idea is that capital flows to the area of greatest need. I’ll pause here for laughter. Take your time, catch your breath, grab a tissue if you need. Again, the idea of utility rears its head, but now, we see a shift of the focus of utility from solving problems and producing goods with demand to a more modern making obscene amounts of money. And here’s where the economic argument goes sideways.
Whether Mises’ concept of “psychic utility”, with money having utility beyond purchasing power (demand) to feeding production on its own (supply), Hayek’s critique of social welfare programs as stifling the ability of rich people to make more money, or Rothbard’s complete adoption of wealth as morality (also exemplified by noted sociopath Ayn Rand in her concept of Galtian Supermen who are just fucking better than you are), inequality and the exploitation of mismatches on power and access become the bedrock of this cult ideology, that this is somehow not only the best system, but the apotheosis of moral and ethical action, one that creates an imperative to implement and defend this fascist dogshit as being of greatest benefit to humanity as it poisons our environment, collapses our real economy, feeds global warmongering, leaves people dying of preventable or curable illness, or just lets them starve on the streets.
The functional result of “supply-side” economics isn’t even “trickle-down”. It’s a closed loop of financial fiction completely outside the real economy. It’s to by pass demand altogether and shove value created by absolute fictions into your laundered money accounts with both hands. From venture capital/private equity ripping companies apart to find the millions in the couch cushions to crypto pump-and-dump schemes so easy even a backwater Tennessee drunk girl famous for a blowjob catchphrase can do it, from no bid government contracts for never-ending boondoggles to the complete fabrication of new security vehicles based on debt that just fucking vanishes when it collapses, it’s all about creating fictional value discrepancies and then getting rubes to subsidize the fraud by jumping in just in time to be left holding the bag.
When a Silicon Valley startup creates vaporware with billionaire money, makes grand claims in the media, pays themselves huge salaries and bonuses out of that investment pool, and then either sells to Google or just declares bankruptcy when the investment money runs out, this is a scam run entirely on supply. There’s no demand, because there’s no fucking product. How much did the makers of that shitty ass AI pin thing make as individuals while “delivering” a completely useless ChatGPT widget less functional than a $10 phone? Fucking ridiculous.
When GameStop gets manipulated by a bunch of Redditors, there’s no increase in demand for GameStop products, there’s no increased financial sustainability or product innovation. A bunch of dipshits just make up a cool story bro to inflate the value of investment vehicles – functionally a corporate debt security – and as long as you find a sucker to buy at the top of the market, congrats, you’ve just made money for nothing. If we all just pretend some bullshit is now magically more valuable today than it was yesterday, we can push this lie as far as possible and then get out before the whole thing collapses, and we don’t give a fuck who or what gets hurt by this. We ARE the Galtian Supermen! Praise Saint Ayn!
When your theoretical framework does not match the real world effects of the practice, your theory is fucking wrong.
Economics has a long history of supporting a variety of autocratic systems. The field itself is so corrupt with its toxic cycle of intellectual, academic, and regulatory capture, that people who graduate from Econ and especially Finance/Business degrees know LESS about the topic than lay people who have never read a single word on the subject. It’s clear by who supports these notions who benefits. Self-serving capital interests simply don’t care about demand, labor, broad aggregate consumer spending, utility, nothing. They only care about exploiting the market of markets to pad their stats and run up the score. Money for nothing and your invite to Diddy parties and Epstein’s island for free. Allegedly.
The imagined solidarity between these psychos and actual business owners still invested in their products – see the Boeing documentary for where that line is – is also superweird. None of this policy helps anyone actually trying to make a quality product that fills a need. The job of a corporate CEO is to make fucking money, not serve the consumer. As soon as you make that turn, you’re not in the same economy anymore. As VC/PE firms buy legacy brands for their reputations, and promptly enshittify every product in the line to maximize the amount they can siphon off the corpse on this now-dead company, their policy needs become completely antithetical to actual business development and health. Every true business owner should oppose these fucking ghouls at every turn.
If Economics wants to be taken seriously as a discipline, this needs to be corrected within from the top down, that this absolute dogshit be yeeted into the Sun along with any and all policy that allows for the continued manipulation of capital itself without any connection to the real economy. If politics wants to retain any integrity of rationality, anyone who espouses this goatfucking garbage needs to be consigned to the dustbin of history.
The spiraling of the global political economy into elevating narcissistic kleptocrats hellbent on creating their weirdly religious fantasies of endless parties full of underage girls (I mean, it’s a thing, apparently) to power while they talk down to us like we don’t understand Economics and hate freedom is fucking ridiculous, and we have to oppose this regardless of ideological stance.
Whatever the fuck Capitalism is supposed to be, this is an obvious corruption of both the theory and the practice, and is irredeemably fatal to humanity.
Kelsoland.Institute 