On Scarcity

I recently read an email on a list I subscribe to discussing scarcity. The email suggested that scarcity was an idea invented by Thomas Malthus, and was a "lie", as we live in world where there is no scarcity, as there is a natural abundance of things in the universe. How could there be scarcity in the face of such vast resources?

I do sympathize with the intention of the emailer, but I disagree with the idea of no scarcity. And, this being the internet, I decided to blog about it. The writer went on to say that since there is no scarcity, there really isn't any need for economy. This is where you can see the argument going off the rails. The confusion is one of scope (I'll refer to Kevin Hogan's work on scope ambiguity). The universe is quite vast, but we don't have access to the entire universe. We only have access to the local area that we're in. Likewise, there are great amounts of resources in the world we live in. But we only have access to those that we have available to us. There might not be global scarcity in a product (say, food, to use a current example) but there are many cases of local scarcity. It doesn't matter that human society has produced more food than it can eat at a given time, if that food isn't distributed to every person on earth.

So, on to what there is something that is a great, nearly-unlimited resource: potential. Potential is at the heart of what the emailer was discussing. There is tremendous potential in what we can accomplish. But scarcity is needed to achieve potential. If there is no scarcity, there is not need to strive in any area. Even if we are fed, housed, and clothed, we may have a scarcity of experience. It's a sort-of New Agey take on dealing with the troubles of live to look on the bright side and see potential as being somehow already actualized. And that ignores a critical factor that is always scarce: time. We don't have unlimited time in our lives.

Scarcity is only that some resource is limited in some way, and therefore needs to be rationed. In the marketplace, the scarcest resource, time, is used to convert labor into products. The best value that you can offer anyone is something that gives them more reward for their time, whether it's more product for their money, or education on how to be more productive (make someone wealthy, and you have freed up their life). Scarcity is the key guide to making the right decision on what to buy and sell, and how to appeal to others to use your product or service. If you aren't answering some scarcity, some need, no one will be interested. And by fulfilling what others want and need, you build up what you need for yourself.