Mises, Meet Yerkes
The direction of all economic affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain's orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him. — Mises, Human Action
Mises never ventured into one of Bill Yerkes's pizza shops. For if he had, he never would have written those words above. You see, Yerkes — the self-proclaimed "Pizza Nazi" of Central Ohio — takes orders from no man. In his shops, he alone is supreme.
OK, to be exact, Yerkes does take food orders, but he determines what he produces in his shops; he determines the menu and the presentation. And if you don't like it, take a hike. Do not believe me? Visit a Bono Pizza shop and test him yourself … if you dare.
Now, Yerkes is not the only recalcitrant entrepreneur. Pittsburgh has its Primanti Brothers. In these restaurants, each sandwich is topped with fries and coleslaw — that's right, the fries and coleslaw go between the bread. And if you ask for either on the side, they'll direct you out the door and to the Wendy's across the street.
Given that these two examples seemingly refute Mises, I have to ask this question: How could Mises have built the science of economics on such a glaring error? The consumer as the captain. Huh!
Ok, so what is really going on here? Both of these business models have been successful in their respective cities. Oh, sure, the owners and employees huff and puff on their turf, but they can do so only because the consumer is willing to enter their stores in order to purchase their offerings. And what offerings indeed.
Bono pizza is a blend of imported cheeses, delicious meats, and fresh vegetables, cooked in one of Yerkes own patented wood-fired ovens. The crust is a handmade, hand-tossed delight. And then there is the sauce. Bono Pizza is the best pizza around.
Primanti sandwiches are also tasty meals. While I am not a big fan off fries, adding them to a mess of coleslaw and a grilled meat, all smashed between slices of Italian bread, creates a sloppy, hearty mess. Very Pittsburgh, and very good.
It is amazing the number of sins that good food can cover. However, I am being too harsh. Yerkes is an excellent host, as long as you play by the house rules — his rules. And Primantis is always a warm spot to relax and eat. Of course, they both have to be.
Mises never claimed an entrepreneur could not decide what he produces. Mises simply noted the truth that an entrepreneur can stay in business if and only if he produces that which the consumer desires. Should the product that the entrepreneur desires to produce coincide with the product that the consumer desires to purchase, all the better. However, life does not have to be so Pollyannaish.
In the market, the entrepreneur does not need to have a great attachment to his product, certainly not to the extreme of the Yerkes and Primantis of the world. The entrepreneur likely does not care what he produces. Oh, sure, he may enjoy making a certain product in a certain manner, but most companies with staying power are more sensitive to the wants of the consumer than to the products they produce.
If they were not, the consumer would seek out the entrepreneur willing to satisfy current desires. You see it all the time as stores and restaurants come into favor, and then quickly go out of favor. The entrepreneur who senses changing preferences can keep his position at the helm. Not the captain, mind you, just the helmsman keeping the ship on the ever-changing course of consumer desires.
Mises was not refuted, and his passage above remains correct. There is room for Yerkes and Primantis in the science of economics. They will keep their shops only as long as the consumer desires their food. Should preferences change, and Yerkes and Primantis remain obstinate, they will be forced to relinquish the helm — and their capital — and become captains once again.
Comments (16)
Pat
Great article. I would also add that those two examples offer something that is rarely mentioned: the friendliness of the staff. Maybe some people value the atmosphere their stores have to offer. Reasons that are rarely appreciated and yet important to individual consumers.
Published: January 6, 2009 9:05 AM
Dan
I would like to say for one this kind of sounds like an ad for the pizza shop utilizing Mises.com rather than an article on what Mises himself has stated. I really hope this wasn't a sad attempt to promote a company masked as a thoughtful discussion. It starts out that you refuted Mises just to say he was right and isn't refuted at the end. With a bunch of "ad-like" references to the businesses mentioned. I think the free market allows companies the right to advertising, but, this is a discussion forum about economics. Let's maybe see more discussion of the FED and how their monetary dictating is destroying the wealth of the referenced businesses and every working money-handler.
Published: January 6, 2009 10:03 AM
David
Tough crowd.
I really enjoyed this, simply for the knowledge that there are still people out there that read Mises.
I went to the library a while back to look for some of his work. Human Action hadn't been checked out since.....
wait for it......
1971!!!!!!
Yeah.
And this was at a busy library in Chicago.
Mises.org does enough Fed bashing for me.
Signed,
Satisfied consumer of Mises.org
Published: January 6, 2009 10:33 AM
Trent Hill
Don't forget Seinfeld's Soup-Nazi, who actually exists.
soupman-minnesota.800review.com
Published: January 6, 2009 11:25 AM
bearing01
The restaurant is still selling America's food of choice, which is Pizza and Sandwiches. I imagine the business is popular because of its no-frills reputation and great tasting food. They type of place where everyone in town has to try it at least once. If they were selling egg-plant sandwiches with spinach salads only... I bet they would be closed down by now.
Published: January 6, 2009 11:38 AM
Inquisitor
I think this is a nice article, addressing an important point. Rand would of course conceive of the role of the entrepreneur slightly different to Mises, Yerkes being a paradigm case for her. But it is important to note that producing someone no one wants will get you nowhere fast. No offense, Marx.
Published: January 6, 2009 11:42 AM
Bruce Koerber
Uncompromising? Is that always bad?
When Mises was uncompromising to statism was that a good or a bad?
When Ron Paul is uncompromising about the constitutionality of any piece of legislation is that a good or a bad?
Additionally, supreme confidence in the quality of your product may be the best foundation for marketing your product, that is, if it is indeed true that it is unparalleled.
Just imagine how many unique businesses will be out there when private property rights are not trumped by interventionism. The market process in an unhampered economy will quickly and efficiently send signals and information to producers and consumers so that those who serve best will prosper.
Published: January 6, 2009 12:01 PM
Michael A. Clem
I think another important point about free market economics is niche marketing. It's pretty much impossible for an entrepreneur to satisfy all the people all the time, but he doesn't have to. He only needs to satisfy enough people to make a profit. Thus, there's room for different businesses to satisfy different types of customers, even in the same industry.
Published: January 6, 2009 1:58 PM
john
GM tried the same trick and failed miserably. The buying public did not want their 'fries' in the bread, but GM wasn't listening.
Mises is right again
Published: January 6, 2009 6:07 PM
mhmjr
I rather think Mises would stand behind his statement. The consumer is still at the helm here. There are as an earlier commenter pointed out, enough consumers that prefer food prepared exactly in the manner these places offer their product. If there were no consumers that did so, these businesses would fail as stated.
"If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices"
This does not mean the businessman must obey an exact specific order from any specific consumer, but rather the orders conveyed by the market prices themselves.
Published: January 6, 2009 6:09 PM
Greg
Primanti's is most certainly a must-eat joint in Pittsburgh. It's always one of the first stops when I get back into town after being away at school.
Several locations are open 24 hours and they even serve breakfast. There's a reason it'll never go away.
Published: January 6, 2009 6:51 PM
too much time
A few more restauranteurs that cater to niche markets:
http://www.houstonpress.com/2006-05-04/news/houston-s-food-nazis/1
Published: January 6, 2009 8:20 PM
James R
I suspect Mr. Fedako is exaggerating just a wee bit.
I can't speak to Bono Pizza, but I live in Pittsburgh, and whenever I eat at Primanti Brothers, I always ask for the fries on the side.
Not once have I received so much as a raised eyebrow in response, let alone ejection from the premises.
A much better example of a recalcitrant Pittsburgh restauranteur would be Ermond Mazzoleni, the longtime owner of Frenchy's Restaurant. Alas, Frenchy's closed in 2003 and Mr. Mazzoleni died in 2006, but I still remember the time I was eating there and a couple walking by—clearly from out-of-town, and trying to decide where to eat dinner—asked to see a menu.
Mr. Mazzoleni told them (in so many words) to keep walking.
Not only that, but he fumed about it for the next 5 minutes or so. "I've-a been in business for more than 50 years, and theyz-a want to see my menu? Get-a lost."
Published: January 7, 2009 5:34 PM
Fabio
There's a greasy spoon where I'm from that is famous and gains customers _because_ they treat their customers like crap. I guess some people like that and are therefore "getting something extra" when they go there. Even in this case, Mises is not refuted . . . the restaurant is offering something that (apparently) some people want. So what if it's not the food.
There are also companies like 37signals (web-based software) that purposely ignore all the feature requests they get. Instead, they design software that _they themselves_ love to use, with the features _they_ want; everyone else be damned. And boy are they successful. Again, not a refutation of Mises. Their point is that instead of trying to make a product that _everyone_ likes (by including each person's pet feature) they try to make a product that a (relatively) few people _absolutely love_. The consumer is king.
Published: January 7, 2009 10:32 PM
bill yerkes
hi, my name is Bill Yerkes, & I had/have no idea how myself or my company made it to this website.
Since it was pointed out to me though, I read the article. I only wanted to say how lucky I feel for having the customers we do. I've opened places in the D.C. area, southern CA, and the Midwest. I honestly can't remember ever having received a complaint from anybody about anything. I also want to say I think this is because I make the product I do (pizza) in the best way I know how. I learned how in Naples Italy and everything we use is fresh that day, even the mozzarella, and if we don't sell something that night, we throw it away and start over. As far as I'm concerned, the customer is indeed the king. We do what we do to make people happy..& in this world, I think that's all that matters. So many companies, not just food vendors, don't care what they sell, don't care if it lasts, don't really care much if you're happy with it, they just want to generate sales. I guess my thoughts are that if we, as a people/country, don't stop and think of other's welfare, sometimes before our own, we're in a big mess. Again, I have no idea how this got here, and NO it is not an advertisement for my company,(Dan). I feel proud though that we would be considered as a model of anything. Remember, "give it away". It doesn't matter what, (time, info, money, whatever) just share what you know with someone. It works. thank you for your time, bill yerkes
Published: February 1, 2009 3:49 PM
bill yerkes
hi, my name is Bill Yerkes, & I had/have no idea how myself or my company made it to this website.
Since it was pointed out to me though, I read the article. I only wanted to say how lucky I feel for having the customers we do. I've opened places in the D.C. area, southern CA, and the Midwest. I honestly can't remember ever having received a complaint from anybody about anything. I also want to say I think this is because I make the product I do (pizza) in the best way I know how. I learned how in Naples Italy and everything we use is fresh that day, even the mozzarella, and if we don't sell something that night, we throw it away and start over. As far as I'm concerned, the customer is indeed the king. We do what we do to make people happy..& in this world, I think that's all that matters. So many companies, not just food vendors, don't care what they sell, don't care if it lasts, don't really care much if you're happy with it, they just want to generate sales. I guess my thoughts are that if we, as a people/country, don't stop and think of other's welfare, sometimes before our own, we're in a big mess. Again, I have no idea how this got here, and NO it is not an advertisement for my company,(Dan). I feel proud though that we would be considered as a model of anything. Remember, "give it away". It doesn't matter what, (time, info, money, whatever) just share what you know with someone. It works. thank you for your time, bill yerkes
Published: February 1, 2009 3:50 PM