Definitions for underconsumption
This page provides all possible meanings and translations of the word underconsumption
Insufficient consumption (for financial stability)
consumption of less than is produced; consumption of less than the usual amount
In underconsumption theory in economics, recessions and stagnation arise due to inadequate consumer demand relative to the amount produced. The theory formed the basis for the development of Keynesian economics and the theory of aggregate demand after the 1930s. Underconsumption theory narrowly refers to heterodox economists in Britain in the 19th century, particularly 1815 onwards, who advanced the theory of underconsumption and rejected classical economics in the form of Ricardian economics. These economists did not form a unified school, and their theories were rejected by mainstream economics of the time. Underconsumption is an old concept in economics, going back to the 1598 French mercantilist text Les Trésors et richesses pour mettre l'Estat en Splendeur by Barthélemy de Laffemas, if not earlier. The concept of underconsumption had been used repeatedly as part of the criticism of Say's Law until underconsumption theory was largely replaced by Keynesian economics which points to a more complete explanation of the failure of aggregate demand to attain potential output, i.e., the level of production corresponding to full employment.
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