Customer Alertness as an Externality of the Market

In paying open attention to the features of demand as an endogenous market element, thus downplaying the decisive role of supply technology, Austrian theory constitutes a deviant from economics’ mainstream. Still it is obvious that customer impact is not a key concern for a market process view that sees entrepreneurial efforts as mostly originating with the seller. To remedy this shortcoming time is ripe to lay bare the manner in which customer entrepreneurship in particular informs market dynamics. By thus reinstalling ideas on consumer sovereignty once proposed by Hutt and later expanded upon by Mises, this paper argues that market explanans are discerned that otherwise are not easily seen. Such a twist of the argument is particularly apt in times of global tendencies towards marketization where customers are assigned a particular role for the workability of such markets. That is to say, consumers (and customers in general) are not only beneficiaries of, but also agents behind, welfare consequences that result from market efficiency. On a larger scale and from a European perspective this is seen (or maybe not seen due to market inefficiencies) in the coughing transition process of formerly socialist economies and in the troublesome path towards deregulated utilities markets where consumers are expected to choose the most efficient supplier thus contributing to their own well-being.