Consumers, Capitalism, and Klondike Bars

The principle of free exchange—also known as the trader principle—is one of the most important aspects of a market economy, and perhaps no brand exemplifies it better than the Klondike Bar. For over a century, a chocolate covered block of ice cream has been delighting customers and, since the 1980s, the brand has been asking: “What would you do for a Klondike Bar?” By putting the emphasis on consumers, this iconic jingle is genius on several levels. However, before we dive into why Klondike is one of America’s favorite novelty brands, let’s review the requisites for empowering consumers with a choice and why it matters for societal well-being.

Consumer Choice Requires a Market Economy
For those familiar with Austrian Economics, it should be no surprise that Ludwig von Mises gives one of the best definitions for a market economy:

The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody’s actions aim at the satisfaction of other people’s needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens.

In short, a market economy is based on voluntary exchange by means of leveraging one’s private property—this is what makes capitalism a beautiful thing. Under a capitalist system, individuals have the right to pursue what they can benefit from. For instance, when I go to my grocery store to buy a Klondike Bar, among other things, I profit from the exchange. Although the transaction will cost me financially, the possession of what I purchase is worth it. The grocery store also profits, although less than many may assume (at roughly 1–3%), and in order to continue making a profit it must ensure that its shelves are stocked with the bestselling and most sought-after items. As conveyed by Mises, consumer interests are paramount in a capitalist system:

In the market economy the consumers are supreme. Their buying and their abstention from buying ultimately determines what the entrepreneurs produce and in what quantity and quality… The market adjusts the efforts of all those engaged in supplying the needs of the consumers to the wishes of those for whom they produce, the consumers. It subjects production to consumption.

The opposite of a market economy is a command economy, and here is where socialism comes into play. Under a socialist system, profiting off one’s productivity or use of private property is not applicable given that production and distribution are determined for the common good. Therefore, central planners, not consumers, dictate what is stocked on store shelves. And this is why the famed Marxist economist Richard Wolff was forced to admit that a PlayStation would be hard to come by under a socialist system.

Consumer Interests Reign Supreme
Consumers are best served by the voluntary and dynamic nature of capitalism, since entrepreneurship and innovation have historically thrived in market economies. And the long-standing Klondike brand is a testament to this fact. Thanks to the desire to remain competitive and cater to customer interests, Klondike flavors have varied over time, from grape and maple in the early 1920s to s’mores and cookie dough swirl in the 2000s. Running a business is a creative process, and so producers, as well as their consumers, need the freedom and flexibility to try new things. In fact, the initial creation of the Klondike Bar, by founder Henry Islay, was a unique attempt to appeal to an adult audience. Islay developed the product to be distinct from ice cream bars on a stick, which seemed childish, and the foil wrapper was, at that time, a more premium form of packaging. And while Islay’s product ideas helped to further his business, it was savvy marketing that propelled Klondike into being a household name and supermarket staple.

The truly genius aspect about the famed “What would you dooo…” jingle is that while it implies the frozen treat is something worth having, it recognizes that consumers hold the power for determining the value. The commercials of yesteryear, featuring individuals impersonating their pets and clucking like chickens, perfectly illustrate (in a comical way) the consumer sovereignty espoused by the teachings of Mises as noted above. And while Mises gave us the economic foundations for the justification of capitalism, Ayn Rand gave us the philosophical defense for supporting market-based economies:

The principle of trade is the only rational ethical principle for all human relationships, personal and social, private and public, spiritual and material. It is the principle of justice.

A trader is a man who earns what he gets and does not give or take the undeserved. He does not treat men as masters or slaves, but as independent equals. He deals with men by means of a free, voluntary, unforced, uncoerced exchange—an exchange which benefits both parties by their own independent judgment.

With all of this in mind, it is perhaps worth noting that although the United States is often thought of as having a market-based economy, in reality, it would be better described as an interventionist economy. The market-based system is tainted with aspects of government interference and control. A truly capitalist system has yet to be fully tried, and although the same might be said for socialism, whenever socialism has been approached on a mass scale, the results have been dismal, destructive, and dire. Conversely, whenever individuals and businesses are free to harness their ideas and earnings under a more capitalistic system, economic growth follows.

Therefore, the best way to help consumers influence production according to their tastes, and the best way to further a communal society based on exchange rather than force, is to support free market principles whenever given the chance. And that’s what I’ll do for a Klondike Bar.

Editor’s note: This piece originally was published by the Foundation for Economic Education.