The Freeman 1972 - The Ludwig von Mises Institute

516 THE FREEMAN Septemberconvince consumers to buy thatwhich they would not otherwise havebought. So, advertising is made possibleby imperfections in the market.More seriously, it is contended, advertisingleads toward monopoly bybuilding up a wall of good will, a protectivewall .of loyalty among consumerswhich renders a particularproduct immune to outside competition.Competing products, which donot share in the fruits of the advertisingcampaign, find themselves onthe outside. This barrier to entry maygradually lead· a particular producerto control a share of the market whichis rendered invulnerable to the windsof outside competition.• Finally - and this in a way sumsup all of these criticisms - advertisingis condemned as wasteful. Theconsumer pays a price for a productwhich covers a very large sum ofmoney spent on. advertising. Advertisingdoes not change the commoditythat has been purchased; it couldhave been produced and sold at amuch lower price without the advertising.In other words, resources arebeing used and paid for by the consumerwithout his receiving anythingthat he could not have received intheir absence.These are serious criticisms.We have learned to expect them tobe emphasized by contemporaryliberal economists. To Marxistthinkers, again, advertising is essentialfor capitalism; it is seenas a socially useless device necessaryin order to get excess productionsold. They see no positiveelements in advertising at all. Buteven conservative thinkers andeconomists have pointed out someapparent limitations, weaknesses,criticisms of advertising.The Free Economy andHow It FunctionsIt is not my purpose here todefend each and every advertisingmessage. I would rather discussa free economy, a laissezfaireeconomy, pure capitalism. Iwould like to show that in such aworld, advertising would emergewith a positive role to play; thatit would add to the efficiency withwhich consumer wants are satisfied;and that, while the real worldis far from perfect, a large volumeof the criticism would fadeaway were it understood what rolEadvertising, in fact, has to. pIa)in a pure market economy.Let me imagine a world, a freEmarket, in which there are no deceitfulmen at all. All the messages beamed to consumers an