The main task of leadership management science is to study the three most important types of consumption in practice.
Throughout human history, consumption has been the starting point and ultimate destination of the cyclical development of economies, and also the sum of all human activity. One result of the three most important types of consumption practice is to act on the human brain, resulting in awareness of consumption and new ways of thinking. This is not only the conclusion of this academic theory, but there are also the products of theory and practice, and at the same time an authentic new system theory of consumption. Therefore, the study of leadership management science must study all leadership management phenomena generated in the three most important types of consumption practice.
To this end, some basic ideas of consumption must be briefly introduced.
1. The scientific meaning of human consumption.
Here the concept of human consumption should be distinguished from the original concept of consumption. Traditionally, economists have regarded consumption as merely a part of the social production process, whereas in fact the concept of human consumption is a complex process of all economic and social life.
Definition of human consumption. Human consumption is the result
of the consumption process of demanding materials from nature and of creating new consumption desires and awareness, which leads to new material (including spiritual and cultural) products driven by the human metabolic instinct, including consumption in a narrow and generalized sense. This process is manifested in the activites of micro- and macro- consumption chains.
The consumption chain is divided into macro- and micro-consumption chains. A macro-consumption chain is the sum of countless micro- consumption chains, while a micro-consumption chain is a cell and building block of a macro-consumption chain. The study of macro- consumption chains will help us to understand the general trend and the general law of the economic and social development of mankind; the study of micro-consumption chains will help us to seize an opportunity, occupy the commanding heights of the competition, avoid killing, and stand in an invincible position in the in-coming tide of a market economy.
Macro-consumption chains. A macro-consumption chain comes into
being in the exchange process in which the production of goods and exchange of capital become cross-regional and cross-country by means of currency and financial tools, especially after the first and second Industrial Revolutions. The rapid development of international trade makes the three most important types of consumption between countries, regions and enterprises much more interdependent and mutually promoted, which generates macro-consumption chains.
Micro-consumption chains. A macro-consumption chain is the ultimate
expression of the micro-consumption chain. The micro-consumption chain is the specific performance of the macro-consumption chain (consumption chain developing in an interlinking format). The consumption chains of economic movement move in a dissipative structure system, so that living consumption (including spiritual, cultural and information consumption), social consumption, and scientific research and production consumption are mastered unknowingly, and the awareness of consumption and consumption behavior can be manipulated anytime.
Human consumption in a generalized sense refers to social consumption, namely public consumption, which includes social management; national defense; national security; public security and administration of justice; education and scientific research; healthcare; environmental protection; social relief; public welfare; and international trade. In traditional research, consumption in a generalized sense has always been considered to be a secondary distribution of economic benefits, which means to study it only in the field of distribution. However, this book studies it in the field of consumption, through which questions of national macro-economic laws of control can get an appropriate answer.
Human activity constantly creates new consumption desires and understanding, which then create new consumption needs and products. Consumption directly depends on the presence and level of the maturity of people’s needs, so that the whole consumption process can be determined according to the nature and diversity of those needs. Conversely, only by means of consumption, can the needs of the subjects (human beings) be met. The richer the consumption, the greater the realistic possibility of it continuing to develop. If the development of needs is the motivation and purpose of consumption, then consumption is a necessary precondition of maintaining and continuing the development of needs.
In less developed areas of commodity production, due to a self- sufficient organic economy, living consumption and labor consumption are closely linked without any clear distinction. However, in more
developed areas of commodity production, living consumption and labor consumption are distinctly separate, and their division of labor is clear.
Human consumption, of course, includes spiritual cultural consumption. Traditional economics has not paid much attention to human spiritual cultural consumption and does not regard it as an economic variable worth studying. But this book regards it as an important economic variable, and scientific research and production, as well as living consumption and social consumption, all contain spiritual cultural consumption, and lists them in the same important position as human material consumption. Although people’s spiritual cultural consumption does not occupy an important position in the economic life in less developed areas of commodity production, with social progress and economic development, as well as the rise of people’s spending power, spiritual cultural consumption shows a rising trend in terms of both quantity and quality. This has been proved by developed countries, and also by the changing consumption structure of the developed areas in China. Therefore, the role of spiritual cultural consumption within the structure of human consumption will be more and more important and with a growing proportion. Not studying it means neglecting a series of economic phenomena surrounding spiritual cultural consumption, including a series of phenomena surrounding spiritual culture such as labor, production, types of consumption, and socio-economic effects. One of the features of this book is to emphasize spiritual cultural consumption as an important aspect of human consumption.
The nature of human consumption activities is different from that of animal consumption activities. Human consumption activities separate production and consumption in space and time. It is this separation that reflects the sociality of consumption and the subjectivity of human beings, and is also the performance of social attributes of human beings. Human consumption in this sense becomes part of the existence of human nature.
2. The academic position of consumption.
Consumption is the sum of consumption processes demanding materials from nature and creating new consumption desires and awareness, as well as further new materials and spiritual cultural products driven by the human metabolic instinct.
After a comprehensive analysis of Western classical and modern economic works, it is not difficult to find that Western mainstream economics has always focused on production and that consumption has always been dependent on it. The system of Neo-classical economics has major defects on the issue of consumption, which is represented by a lack
of an abstract concept of consumption in production axiology; a lack of a concept of consumption gaining value in production capital; a lack of a concept of autonomous consumption in production teleology; as well as a bias towards production throughout the process of industrialization, resulting in an economic crisis again and again. During the process of transformation from an industrial economy to an information economy, this habitual negligence of the value of consumption has become a major flaw in Western mainstream economics.
This book firmly restores the value of consumption in the economic cycle, and gives it due academic status to improve people’s concept of a consumption revolution, which is of great academic significance both in the East and in the West; otherwise a change of concept and a change in the development pattern of economic growth cannot be achieved.
Traditional study has always categorized consumption as an important link in the process of social reproduction. It refers to meeting people’s various needs by means of a social product. Consumption is divided into two categories: production consumption and living consumption. The former refers to the use and consumption of production goods and the labor force during the process of the production of materials. The latter refers to the behavior and processes in meeting the needs of people’s personal lives with man-made materials and spiritual products. It is an essential condition of carrying out everyday life duties outside the production process and of restoring people’s labor force and the reproduction of labor force. In general, living consumption means personal consumption.
In macro-economics, consumption refers to the total expenditure on consumption goods by a person or a country over a period of time. Before the 1930s, research on consumption theory was relatively simple. The most dominant theory at that time in orthodox economics was Marshall’s theory of supply and demand. The main point of this supply and demand theory is that assuming consumers’ incomes remain unchanged, the number of consumer goods is in inverse proportion to the price. Engel’s Coefficient is also an important factor in measuring the level of consumption. Thus it can be seen that consumption has an important place in macro-economics.
Consumption in micro-economics is the study of a single economic unit, such as a single producer, a single consumer and the economic activity of a single market, and of analyzing how a single producer allocates limited resources in the production of various commodities to achieve maximum profit and also of how an individual consumer allocates limited income in the consumption of various commodities to obtain the greatest satisfaction. Moreover, micro-economics also analyzes
the means to define output, cost, and the number of factors of production and profit; the means to determine the income of suppliers, which affects production; and the means to determine the utility, supply, demand and price of a single commodity. From here we see that consumption also has an important place in micro-economics.
Micro-economics studies the actions and consequences of individual participants in economic activity, while macro-economics studies the economic behavior and consequences of society’s participation, namely the running of the economy as a whole, including production, income, price level and employment of the whole society.
Though many scholars in history have noted the importance of consumption, it has not been given due attention. Marx did not make a specialized exposition of consumption theory, and his masterpiece
Das Kapital had no chapter on consumption theory. China’s early works
on economics had almost no theory on consumption. In spite of China’s achievements in reforms and opening-up since the end of the last century with consumption being mentioned on the agenda, the academic status of consumption has not yet been determined.
In fact, not only in the West, but also in China, there has also been a tradition of neglecting and even curbing consumption, which has dominated people’s concept of consumption for a long time and has even become part of mainstream ideology. So the author believes it is urgent to restore the value of consumption in the economic cycle, and give it due academic status, as well to improve people’s concept of a consumption revolution; otherwise, a change in concept and a change in the pattern of development of economic growth cannot be achieved.
The historical mission of this book is to truly establish the academic status of consumption. With a comprehensive study as its method, it carries out an overall study of the origin, development, classification, law and application of consumption and thus forms a system theory. The study includes related disciplines, such as philosophy, history, economics, management, leadership, the market, marketing, and merchandise to form a system theory on consumption that is multidisciplinary, cogent and integrated.
3. The classification of human consumption.
The classification of consumption is an important theoretical basis for its study. An inappropriate classification will result in many wrong conclusions. Here a new method for classification will be proposed.
First, the traditional classification of consumption includes production consumption and living consumption (excluding the spiritual cultural consumption). Traditional economics divides the overall process of
social production into four factors: production, distribution, exchange, and consumption. As the most basic link, production does not only determine distribution and exchange, but also determines the consumption. Product variety, quality and quantity produced by social production define subjects, structure and the mode of consumption objectively. Without production, there will be no consumption. The conclusion is that production is the foundation.
Second, a new classification for human consumption includes three parts: living consumption, social consumption, and scientific research and production consumption.
Living Consumption. The first and most fundamental part, human
living consumption, refers to the most basic material and spiritual cultural consumption of an individual family. It is the transition from human survival consumption to leisure consumption. The second part is living consumption in a collective form. In general, the collective pays the consumption costs (an individual rarely pays or does not pay) for spending within the group, such as tourism, meetings, events, and entertainment activities, as well as the most vital group consumption needed by work and the important living consumption of food, clothing, shelter, and transportation.
Social Consumption. Social consumption refers to the administrative
spending of the national superstructure: military and defense spending; public security and ther administration of justice; education and scientific research spending; sports and health consumption; national infrastructure investment consumption; urban infrastructure consumption; aerospace consumption; and harbor and seaport consumption.
Scientific Research and Production Consumption. Scientific research
and production consumption is determined by living and social consumption. Production consumption generates living and social consumption, thereby creating new consumption patterns and a new level of consumption. Without consumption demand, there would be no production, and without scientific research and production consumption, new desires and lifestyles cannot be achieved. Scientific research and production consumption also includes exploration, acquisition, smelting and tool manufacturing and it is the basis of the three most important types of consumption.
In the process of production and reproduction, consumption is the motivation and the goal. Consumption decides production. If the products are consumed in the commodity exchange process, the purpose of production is achieved, namely, consumption – research, and production – distribution – exchange – consumption. Consumption is
present throughout the entire process. Without consumption, there would be nothing. So consumption decides everything.
Consumption determines production, and the process of scientific research and production is a type of consumption leading to production consumption mode. Consumption determines the development of production competition, and the products themselves can in turn create new production needs in the consumer. The purpose of production is consumption, but the products to be made by manufaturers should also create social and corporate benefits after their consumption; otherwise businesses cannot survive. The conclusion is that the consumption decides everything.
Third, the levels of the three most important types of human consumption. Human living consumption is divided into two levels: minimum life-sustaining consumption, and more affluent and enjoyable types of consumption. The main pursuit is for ever higher types of enjoyment consumption.
Social consumption is divided into three levels. First, all types of material and spiritual civilization consumption. Second, that of greater enjoyment and technology. Third, the pursuit of ever higher levels of technology and enjoyment; material and spiritual civilization consumption is there to maintain the security of countries and regions in order to safeguard public order and safety, and the survival of a suitable environment for common survival and development of the masses.
Scientific research and production consumption is equally divided into three types of levels: first, to meet the consumption of scientific research and production, tools and equipment are needed as minimum requirements for maintaining human survival. Second, the pursuit is needed for the general enjoyment of living and social consumption which must come under the premise of consumption of general scientific research and technology and all the material conditions of production techniques. Third, living and social consumption goods at an ever higher level should be conditioned by ever more scientific research and production technology. Only with this ever increasing scientific research, technology and material conditions for production technology, can better consumption goods be produced.
Fourth, consumption patterns and standards of consumption.
Das Kapital studied consumption patterns from the point of view of commodity production and exchange processes, and focused on the capitalist mode of production and areas related to production.
The formula for consumption in this book goes: Consumption desire, understanding and nature – the creation of a scientific research and production consumption pattern – scientific research and production
consumption – the creation of consumption products and consumption patterns – consumption products used by consumers – the creation of a certain level of consumption and progress of social civilization.
The relationship between consumption patterns and production. The
government superstructure, on behalf of the total mode of production and areas related to production; on behalf of the total productive forces of social consumption; and on behalf of the fundamental interests of the citizens, determines the income pattern of the members of a society in terms of social wealth redistribution and social security patterns through laws and policies. Boards of directors and owners of businesses represent the means of production, areas related to production and the productive forces of social consumption. They develop corporate rules and regulations, institutions and disciplines relying on national laws and policies, and they formulate specific allocation and reward policies based on the three powers (material power, spiritual power and information power). It has a direct impact on the awareness of living consumption and the consumption patterns of one family. Therefore, the State superstructure is very important for the regulation and control of microscopic consumption patterns.
Consumption classification and standards. Consumption patterns are
divided into macro-consumption patterns and micro-consumption patterns. Macro-consumption patterns refer to those of the three most important types of consumption process in human social development, and mark the level of consumption and progress of social civilization within the overall development of human society. The consumption patterns in different historical periods of human development (the Stone Age, Bronze Age, Iron Age, the era of the steam engine and the internal combustion engine, the electrical and electronic era which reaches the present day) mark the level of consumption and progress of social civilization during different eras. Conversely, if products are not consumed, there is no level of consumption or progress in social civilization.
The microeconomic consumption mode refers to the consumption level of one family, and specific types of consumption within overall social consumption. Personal household consumption represents an individual family’s consumption level, and this depends on the spending power and awareness of the individual household income. Even with enough spending power, the level of consumption appropriate to income