Economic activity is guided by the consumers.  The entrepreneur directs it, but he directs it at the orders of the consumers.  A superficial observer might think people are exploited by the capitalists, entrepreneurs, managers, or any other person in a leadership position.  They must obey the orders from the consumers.  They’ll be replaced by those that will listen to the consumers if they don’t.  This is on the free market, not the Leviathan state.

The consumers tell them what to produce, how, where, and give them many more orders.  They act at the demands of the consumers.  Those in leadership positions do give the orders, but they get their orders from the consumers.  They will go bankrupt if they act against the demands of the consumers.  They will be replaced by those who do a better job of listening.  Consumers control the market by buying and abstention from buying.

Consumers make poor people rich, rich people poor, or keep them in their situation.  They don’t hesitate to switch if someone else makes a product that fits their demands better.  In short, the consumers are callous.  The “merciless” bosses have nothing to do with this.  The boss is trying to meet demands.  He is not erratic and unpredictable.  He is acting as the consumers’ desire.  He’ll be out of a job if he doesn’t, maybe everyone there.

The entrepreneurs are not free to spend money at will.  In fact, all wages are refunds from the consumers.  The refunds will not come at any moment the bosses don’t satisfy their demands.  All wage earners’ salaries are paid for by the consumers—including movie stars and athletes.  They won’t make money if the consumers don’t patronize.  The consumer is supreme.  Every penny spent counts towards them staying in business.

It’s been said that the market is like a democracy.  This is entirely wrong.  The popular vote counts in a democracy.  The minority votes don’t matter.  Every cent counts in the market.  It’s also wrong that the individual is sovereign.  This implies that someone has authority over you.  Nobody has authority over you in the market.  You are free to follow your demands.  The entrepreneurs must listen, or they will be replaced.

Reference

Ludwig von Mises; Human Action