When I wrote: .. the assertion that the butcher pursues self-interest and does not intend the benefit the customer gets from consuming meat is only half the story. The other half is that the customer intends to get the benefit and pays for the meat., Sumitra Shah wrote: Indeed it is only half the story. How and where the meat was cooked, and by whom remains untold. Since economics deals with production, it is an artificial neglect of not only the productive activity, but also of the other complex motives of human beings. I have two points to reply here. 1. What is missing? I wrote: The other half is that the customer intends to get the benefit and pays for the meat. I did not mention cooking as being the missing part. I wish to argue that the failure to explicitly include the means of payment in the models of the market resulted in the split between micro and macroeconomics, and between trade theory and monetary theory, and even between exchange models and trade models. If we include the payment explicitly, then [1]micro becomes macro, and [2]trade theory becomes monetary theory. The unresolved debates in macroeconomics are mostly about payment, though not seen to be so. Secondly, the reconciliation between the customers intention to derive benefit and the sellers lack of concern with the customers benefit is crucial for [3]social choice theory, and especially for welfare economics via Menger, Pareto and Arrow. I hope to explain this in future posts. The failure to include payments and agreements between the buyer and seller to reconcile their concerns with the benefit has had crippling effects on theory. I would not say that it was a neglect. It was a problem of worldview, namely, how we used to see the universe of the economy. Smith and others surely did not neglect demand when they thought about the market. The problem was to find out a method of talking explicitly about payments. Says Law and quantity theory of money did try to pick up the matter of payment, but without a sharp formal articulation. So I am not convinced that it was neglected. I am saying that it is a modeling issue of explicitly bringing the payments into the picture. It was a failure to see something that needed to be seen. 2. Does economics study production? I am very puzzled by the statement Since economics deals with production, it is an artificial neglect of not only the productive activity... I do not understand how economics can deal with production and then neglect productive activity artificially. I also feel dazed by the view that economics deals with production. I thought that production as such (when not intended for sale through the market) is a subject of a branch of biology called ecology. In it, the principle of conservation of energy is articulated as constrained optimization so that the mouse reaches a general equilibrium of both production and consumption such that the ratio of marginal utilities is equal to the ratio of marginal costs. For gregarious animals such as ants or bees, and especially of primates and man, there is a political structure within the group to apply a political rule to production: from each according to ability to each according to need. This determines division of labor and distribution of output. This is not economics yet. Only if production is meant to be a way to earn profit through exchange does it become a part of economics. In short, economics studies exchange, as Whately articulated so well, and as Mises left no doubt about it. I realize that it is possible to be confused about Marxian political philosophy versus Marxian economics. The talk about modes of production and how they affect beliefs and cultures is not economics: it is political philosophy and sociology. Marxian economics talks about exchange and theory of value. The economics in Marx consists of the incomplete circuit CMC (commodity-money-commodity) and MCM (money-commodity-money) in the exchange scenario, and the labor theory of value. It is a mistake to suppose that labor theory of value is merely a production-related matter. Ricardian trade theory is meant to tell us that the exchange process affects the decision to allocate labor to the production of particular goods, so that the labor content is a response to exchange. In short, in Marxian economics, the subject is exchange, and not production as such. My fear is that the whole Keynesian enterprise of looking at consumption is thrown away as artificial neglect. I am sure that long before the customer can cook the meat, Keynes is crying about how he is going to pay for it. The payment, in the form of money, has something rather crucial to affect how the meat gets to the customer or fails to go. No, I am not convinced that economics deals with production and neglects productive activity artificially. Blessed will be the day when someone can assure me that the customer does not care whether he gets any benefit from the meat he buys, and that nobody cares about payment. That day, I will happily go to the Trent River and spend my life in production: catch fish and more fish, and then sometimes neglect cooking it, because sushi is not taboo. I do not know about raw meat, however. Mohammad Gani References 1. http://econwpa.wustl.edu/eps/mac/papers/0404/0404012.pdf 2. http://econwpa.wustl.edu/eps/it/papers/0405/0405005.pdf 3. http://econwpa.wustl.edu/eps/mic/papers/0405/0405008.pdf