Preorder Economy

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A preorder economy is a type of proposed future economy where the exact demand for goods is known ahead of time, before any material production takes place. It has been discussed within the framework of ecological economics.

Creating a preorder economy has recently been proposed as an economic efficiency solution to the environmental problems facing modern society. These environmental challenges are believed to be caused in part by unsustainable levels of production, consumption and advertising related to the imperfect exchange of information in market economies. Therefore preorder economy theory advocates using the internet as the means to coordinate all production with existing consumer desires, so that almost nothing is made which does not have someone ready to buy it. This is the idea of just in time manufacturing taken to its logical end.

Significant environmental benefits are argued to come from the elimination of wasteful overproduction. Consumers could potentially benefit from the preorder economy because their preferences could be met much more accurately and they could gain direct input into the invention and design of the products they buy. Since manufacturers would no longer need to try to persuade people to buy what had already been made, advertising would supposedly decline in a preorder system. This might mean consumers would be satisfied with a lower level of total consumption, which is good for the environment. Finally, companies could benefit from a dramatic reduction in the risk of doing business, since they would know their product lines would always sell out.

[edit] References

Stanley, C. (2006) "The Preorder Economy: Coordinating Supply and Demand on the Way to a Sustainable Future", International Journal of Environment, Workplace and Employment, Vol. 2, Nos. 2/3, pp.180–205.