Consumption and Management: New Discovery and Applications

By Bingxin Wu

The author's consumption theory has been known as the new ideas, new theories and new contribution to the reform and development in China. In practice, the author has rich experience of the Chinese state-owned large enterprise, and personal experience of building a business empire second to the postal system in China from a small firm to the comprehensive largest privately owned enterprise with 640 affiliated companies, 13,500 workstations, and 157,000 employees. In the fermentation field of medicine, he has 20 patents, two of which are international patents. These techniques have made some of the Chinese medicines more efficient, safe and non-toxic for the effect of conservation treatment. Therefore, this book has two parts: 1) new discovery of consumption and its significance and 2) application of the theoretical findings in real life management.

• Language: English
• Publisher: Elsevier Science
• Release date: Oct 31, 2011
• ISBN: 9781908818072

Bingxin Wu

Bingxin Wu is the Board Chairman of Sanzhu Group, Beijing Genetic Engineering Research Institute and Beijing Nuozhou Institute of Biology, and the director of Shizhen Institute of Biology. He is also a honorable professor at Shandong University, contract researcher for Shandong Academy of Social Sciences and for Oriental Institute and a honorable professor at the Institute of Micro-ecology of Dalian Medical University. Moreover, he is the executive member of China Association of Industry and Commerce, vice president of Shandong Jinan municipal Association of Industry and Commerce, master workman of Shandong Private Entrepreneurs Union, vice president the Association of Chinese Professionals, and the deputy director of Chinese Private Scientific and Technological Association and of National Private Technology Entrepreneur Association as well as the standing director of China Chinese Medicine Institute. He was awarded the 'China's meritorious figure in developing mart economy' by the China Seminar of Mart Economy and China Mart Economy Newspaper and won the 'Global Diamond Award' by American Association of Sciences. He has published the personal works of Collected Works of Wu Bingxin and more than 20 papers on consumption at home and abroad.

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1

Introduction

Consumption is a holy power.

Consumption creates everything in human society. It deserves a high position in society because of its holiness.

Consumption is the permanent focus in economics which draws attention not only of the economic circle and of economists, but also of the national functional departments and decision-makers. The mechanism of consumption shows that the operation of consumption has decisive significance for a wholesome national economic operation and its efficiency.

Consumption is the beginning and end of the economic development cycle, as well as the sum of all human activities. It is the sum of awareness, understanding, thinking, thinking pattern, and consumption awareness acted upon human brains by three important consumption practices. It is not only a conclusion of academic theories but also a product of theory and practice. We can say that this is a new revolutionary systematic theory of consumption.

This book is about the systematic theory of consumption science. It is a comprehensive study of the origin, development, classification, principles, application, and other systematic theories of consumption; it researches the origin of natural science and social science and concerns a great number of subjects, for example, philosophy, history, economics, management, leadership science, marketing, and merchandising. It is a large-scale multidisciplinary and academic work of penetration and integration.

Consumption is the sum of all the human activities. There is no society without consumption, no economy without consumption, no human-nature relations without consumption. Therefore, to guide all the scientific research of human beings and direct the consuming practice with consumption is the base of academic theoretical research. It is the starting point, foothold, and destination.

Subject definition

Human consumption is the sum of the whole consumption process that is driven by the metabolism instinct to obtain material from nature, then to create new needs and desires by human knowledge, and further to create new material products (including the spiritual culture). It includes the definitions of narrow-sense and broad-sense consumption. Consumption and Management puts consumption in the broad background of human social science and natural science. It studies the social position, social roles, and function principles of consumption. It is a science that focuses on the practice and function principles of production, living and social consumption.

At the same time, Consumption and Management deals with the relations between human consumption and nature, human consumption and economic development, human consumption and social civilization and progress, human consumption and consumption practice, as well as human consumption and consumption awareness and action.

The ladder structure

These are the levels of the ladder structure:

• the systematic theory of structure consumption science;

• the three important consumptions of constitutional structure;

• the sub-system structure of each consumption system

• the detailed classification of the sub-systematic consumption (the detailed classification is left out)

• the leadership management during the practice of three consumptions.

Three important consumption systems

In the three important consumption systems, scientific research and production consumption are the premise of the realization of living consumption and social consumption. Scientific research and production consumption can be divided into three sub-systems:

• the scientific research and production consumption for the realization of living consumption – the scientific research and production consumption which satisfies the increasing material and mental consumption needs of humans – the consumption realization of capital’s commodity production and exchange management process

• the scientific research and production consumption for the realization of social consumption – the scientific research and production consumption which satisfies the increasing material and mental consumption needs of society

• the scientific research and production consumption of basic industry which bases itself on the first and second sub-systems.

The realization of a continuous increase in living consumption, social consumption, and research and production consumption requires the development of the country itself. Only with continuous growth in productivity can the country promise the three important consumptions to promote the natural cyclic development of economy. Research and production consumption derive from consumption; research consumption is the production consumption for new knowledge and new techniques which constantly creates new consumption needs and consumption desires. It creates new consumption commodities for living and social life, and new consumption patterns, and pushes the development of new consumption levels.

Object of study

The research subjects of Consumption and Management are three important consumption systems (shortened as three systems) of humanity’s living consumption, scientific research and production consumption, and social consumption in light of human consumption.

Consumption and Management regards three systems as its main research objects and researches on the general rules and all the relations such as the relations between consumers; relations between consumption and demand; relations between consumption and commodity exchange; relations between consumption and distribution; relations between consumption and management; relations between consumption and nature; relations between consumption and the development of human beings; relations between consumption and human wealth; relations between consumption and productivity and production relations; relations between consumption and economic base and superstructure between the three systems and social activities in the perspective of human consumption. It tries to figure out the basic natural rules, market regulation rules, and macro-control rules of how consumption affects economic development, as well as the general and specific rules in developing the process of all kinds of economic relations.

Tasks of the subject

The basic research tasks of Consumption and Management are to use Marxist consumption theory to summarize the experience of consumption practice, to make clear the position and functions of consumption in social reproduction, to increase people’s consciousness to know and use the consumption mechanism and rules, to put the understanding of the consumption on a systematic, theoretical, and scientific basis, to study and borrow the general doctrine on consumption at home and abroad, to better master and apply consumption rules, to supply the scientific foundation for development of the strategic goals of national economy and the consumption plan, principles, and measures for the realization of these goals, to propose a scientific basis for the rationalization of the industrial and product structure of national economy, to cultivate talents, and to push the development of productivity of consumption society and the development of social civilization.

By making clear the consumption mechanism and its movement principles, Consumption and Management attempts through:

• research on the internal connection between consumption, production, distribution, exchange and consumption by consumers, to discuss the nature of consumption and features of socialism with Chinese characteristics under the premise of a market-oriented economy, and its position and function in cyclic national economic development

• the internal connections and interactions of consumption and economic development, to discuss the decisive function of consumption in promoting economic growth as well as the internal connection between consumption and industrial structure adjustment

• research on the internal connections and interactions among the needs of consumption, consumption structure, consumption pattern, and consumption level, to discuss the movement, general principle and effect-evaluation standard of consumption

• research on the interactions among the needs of consumption, consumption structure, consumption pattern, consumption level and their changing trends with superstructure, to discuss the conditioning and direction of national development strategies, principles, policies, plans and regulations for consumption

• comparative research on consumption theories and practice of China and foreign countries, to draw on the experience of domestic and foreign new research results on consumption and discuss the general mode and rules of consumption movement

• research on consumption activity and principles of consumption chain, to discuss the consumption psychology, consumption behavior of consumers and their families and their influence on social economic basis and superstructure

• research on the relations and rules among consumption and nature, scientific research and production consumption, distribution, exchange, consumer’s consumption process.

Aims of the book

The researching aims of Consumption and Management were to meet the needs of increasing human material and mental consumption, scientific research and production consumption, and social consumption to build harmonious and peaceful social relations and living environments for human beings. At the same time, the book will help people to adapt to the natural rules during the economic development process and obtain the happiness of human beings and a harmonious coexistence with nature.

The research work in Consumption and Management is based on cross-cutting penetration, integration, promotion, and co-development of philosophy, sociology, economics, management, leadership science, marketing, finance, and other natural sciences. It researches the productivity of consumption society from the perspective of the consumption of human original basic need and proposes 15 factors of consumption society mechanics. Economy, society, culture, and the developing process of human beings all belong to the sphere of research.

The breakthrough point of the research is to divide human consumption into three systems – living consumption, social consumption, and scientific research and production consumption; it discovers that this three-fold system is the rule that promotes the cyclic development of economy and the natural rule of economic development – the production and exchange of commodity run through the needs of three important consumption systems and create market-free (natural) financial and economic laws (Adam Smith called it ‘an ‘invisible hand"). After research, we find that it is a visible hand and can be understood and controlled. It has great active and positive functions as well as negative ones. It is the natural solution for micro and macro supply-demand contradiction of the unity of opposites. The principal aspect of the contradiction is the great active functions in market-free (natural) financial and economic process. The secondary aspect is the negative functions. In times of financial or economic crises, the secondary aspect will become the principal aspect, which will greatly harm the economy.

The solution of the contradiction is to stick to nation-centered economy and the living consumption-oriented macro market regulation system (composed of six aims, three means, and twenty factors), to continuously exercise the regulatory loop of imbalance to balance and balance to imbalance in the process of the three important consumptions. It is also necessary to guarantee the smooth development and function of the natural principles of three important consumptions in the macro market regulation process so as to ensure the increasing material, mental, and cultural demands of people.

Research methods

The Consumption and Management employs scientific research methods. The most outstanding one is that the author combines his practical experience closely with his theory at all times, especially his revolutionary method of tracking down the origin of consumption. He inspires new ideas through continuous theoretical study and abundant practice for 60 years, and extracts the essence of his practice to build a theoretical concept, which is full of descriptive and explanatory features. The five concrete research methods in Consumption and Management are discussed below.

The philosophical method

This method includes dialectical materialism and historical materialism. The philosophical thinking runs through Consumption and Management. A great number of analyses of the economic and social problems are based on philosophical wisdom.

The qualitative and quantitative analysis method

The Consumption and Management uses both qualitative and quantitative analyses. Based on the statistical data, a mathematical model is set up to analyze the indexes and their values. The method judges the nature, features, and developing regulations of the object through the instinct and experience of the author, as well as the past and present conditions and the latest information of the objects. The two methods are used alternatively in Consumption and Management.

The systematic analysis method

Consumption and Management regards consumption as a system and gives integrated analysis to the systematic factors to figure out the applicable solution for the problems. It investigates and researches the human consumption process using the perspective of a system. In the research mentioned in Consumption and Management, it always regards consumption as a complete and complex system so as to avoid one-sidedness.

The investigation and research method

Many conclusions in Consumption and Management are based on on-the-spot investigations, the usage of basic theories and research on internal rules of consumption. Another feature of this book is that it pays great attention to sampling survey and typical investigation, so the data in the book are reliable and the conclusions are correct.

The comparative research method

Comparative research methods are used a lot in Consumption and Management. The methods include theoretical comparative research, management comparative research, marketing comparative research, cross-cultural and cross-discipline comparative research, and so on. The vertical comparison in Consumption and Management focuses on the comparative analysis of the same comparable subject – consumption in different situations with different characteristics in different periods, and the horizontal comparison in the book focuses on the comparative analysis of the different consumption conditions and characteristics in the same period. Through the vertical comparison and horizontal comparison, readers can understand consumption – the core topic in economic and social development – from different angles.

Research formula

The research formula in Consumption and Management is consumer consumption –> scientific research and production consumption –> distribution consumption –> exchange consumption –> consumer consumption:

1. Consumer consumption creates scientific research and production. The process of scientific research and production is a process of consumption. Commodities as well as the consumption pattern and level of consumptions are generated in production.

2. Science and technology is the capability which transfers into the productivity of a consumption society during the production process; it is also the valuable wealth of new technical products which are consumed by direct consumers and realize the productivity of a consumption society on the market exchange process.

3. Distribution consumption is a distribution policy decided by the social system and national law; it is a method deciding how the social members acquire social wealth and the amount of wealth they get. It decides the consumption power, the consumption and its level of the social members. Distribution includes the distribution of production output, salary or profit sharing, and the redistribution of social wealth after tax.

4. The exchange consumption process is one part of a product’s value. The production exchange process is a consuming process. The dealer who takes part in the product exchange serves as the bridge between producer and consumer. Only through exchange can the final consumption of a commodity be realized. This is a rule that develops by consumption, which leads the cyclic development of economy. Its performance on the market is the free (natural) market financial and economic adjustment rule. The free (natural) market financial and economic adjustment rule has an important active function as well as a serious negative function. A national superstructure should control this rule on the macro level and ensure a continuous and orderly development of economy following the spiral loop of imbalance to balance and balance to imbalance.

5. Consumer consumption is the destiny of the production; a commodity is consumed by direct consumers so that the aims of scientific research and production and the value of productivity of a consumption society are realized. The consumption needs of consumers are developing and unlimited.

Theoretical references

Consumption and Management is a gathering of domestic and foreign theories about consumption. In order to write this book, the author studied and researched numerous Chinese and foreign economists’ theories concerning consumption. He obtained penetrating statements and unique ideas of these economists and drew their essence from them, which is a very important basis for the formation of this book. We can say that the author could not have written this book without the work of these predecessors. These theories mainly include:

• consumption theories from the traditional Chinese culture, including the consumption thoughts of Confucius, Lao zi, Mo zi, and Guanzi

• references from Western economic theories, including Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, Keynes’s The General Theory of Employment, Interest and Money and Samuelson’s Economics

• references from Marx’s consumption theory, such as Capital

• references from Deng Xiaoping’s consumption thought, mainly including Deng Xiaoping’s consumption strategic goal, the strategic focus of consumption and consumption policy and so on.

Major academic purposes of this book

To endow consumption with a lofty academic position

Discovering the value of consumption as well as endowing it with a lofty academic position is one contribution this book makes to Chinese economic theory research.

Consumption and Management is not only the first comprehensive treatise on consumption from the multi-disciplinary viewpoint in China, but also the first book regarding consumption as the basis of economic social research. The book researches consumption from the perspectives of economics, management, and marketing, as well as from the angles of philosophy, culture, and history. With systematic scientific theories, the book regards consumption as a complex dynamic system and uses the methods of qualitative analysis and quantitative analysis to describe the position, influence, and decisive significance of consumption in the economic field and whole of social life.

Consumption is the starting point as well as the end of production. Consumption –> scientific research and production –> distribution –> exchange –> consumption is a motion law as well as a logical process. Consumption is the motive of production; the scientific research and production process is also part of consumption, which produces commodities and creates new consumption needs and new consumption patterns. Consumption decides everything. We can say that these academic thoughts discover the essential characteristic of market-oriented economy from an academic viewpoint.

To propose new consumption classification

Traditional classification of consumption includes production consumption and living consumption (not including mental and cultural consumption). Consumption and Management divides consumption into three categories – living consumption, scientific research and production consumption, and social consumption (including mental and cultural consumption). Social consumption refers to public consumption in terms of state administration, national defense, research, education, public security, justice, aviation, aerospace, and scientific exploration. Compared with the traditional classification, the new one moves further and is creative.

Traditional economics divides the social production process into four sectors: production – distribution – exchange – consumption. Production is the most basic sector, which decides not only distribution and exchange, but also consumption. The variety, quality, and quantity of products which are produced by social production decide objectively the target, structure, and pattern of consumption. There is no consumption without production.

In fact, consumption is both motive and purpose in production and reproduction. Consumption decides production; the products which are produced in production are consumed in the commodity exchange process by consumers so as to realize the purpose of production. So consumption decides everything.

To discover and elaborate three rules

Consumption and Management discovers and elaborates three rules: natural economic law, market regulation law, and the law of macro-economic control.

Natural economic law refers to the natural rule (mother rule) that three important consumptions drive the cyclic development of economy. It means: consumption – market – demands (increasing consumption needs of desire – recognition – knowledge and inspiration – recognition) – scientific research – production – consumption of higher level. It is a natural economic law of spiral movement.

The market-adjusting rule says that currency appeared during the moving process of humanity’s practice in three important consumptions systems and the commodity production and exchange process. The developing process of currency produces the economic law of financial enterprise and the law of natural (free) market economy. This rule is not an ‘invisible hand’ but a rule that can be recognized and controlled. Currency and its financial instrument decide the production and exchange of capital, and consumption produces the consumption chain (consumption value chain) – macro consumption value chain and micro consumption value chain – during the commodity production and exchange process of capital.

Natural (free) market economy rules and natural (free) rule of financial market are twin sisters who depend on each other but are not the same as each