Scarcity
In
"The best example is perhaps Walras' definition of social wealth, i.e., economic goods.[3] 'By social wealth', says Walras, 'I mean all things, material or immaterial (it does not matter which in this context), that are scarce, that is to say, on the one hand, useful to us and, on the other hand, only available to us in limited quantity'."[4]
— Guido Montani (1987)
British economist
Concept
Economic scarcity as defined by
This economic scarcity is not solely due to resource limits, but a consequence of human activity or social provisioning.[8][9] There are two types of scarcity, relative and absolute scarcity.[8]
Malthus and absolute scarcity
- preventive checks, such as moral restraints or legislative action — for example the choice by a private citizen to engage in abstinence and delay marriage until their finances become balanced, or restriction of legal marriage or parenting rights for persons deemed "deficient" or "unfit" by the government.[13]
- positive checks, such as disease, starvation, and war, which lead to high rates of premature death — resulting in what is termed a Malthusian catastrophe. The adjacent diagram depicts the abstract point at which such an event would occur, in terms of the existing population and food supply: when the population reaches or exceeds the capacity of the shared supply, positive checks are forced to occur, restoring balance. (In reality, the situation would be significantly more nuanced due to complex regional and individual disparities around access to food, water, and other resources.) [13] Positive checks by their nature are more "extreme and involuntary by nature".[8]
Daoud argues that [8]
- (T)he strong drive for reproduction in relation to the weak expansion of food production possibilities will very rapidly result in a situation of scarcity and thus hunger. This fundamental relation between food requirements and the food production capacity is the ultimate check on population growth. -Daoud, 2010
There are two types of scarcity implicit in Malthusianism, namely scarcity of foods or "requirements" and objects that provide direct satisfaction of these food needs or "available quantities".[8] These are absolute in nature and define economic concepts of scarcity, abundance, and sufficiency as follows:[8]
- absolute sufficiency is the condition where human requirements in the way of food needs and available quantities of useful goods are equal.
- absolute scarcity is the condition where human requirements in the way of food needs are greater than the available quantities of useful goods.
- Daoud citing Daly (1977) states that
- "(A)bsolute scarcity . . . refers to the scarcity of resources in general, the scarcity of ultimate means. Absolute scarcity increases as growth in population and per-capital consumption push us ever closer to the carrying capacity of the biosphere. The concept presupposes that all economical substitutions among resources will be made (this is relative scarcity). While such substitutions will certainly mitigate the burden of absolute scarcity, they will not eliminate it nor prevent its eventual increase" -Daly 1977: 39
- Daoud citing Daly (1977) states that
- absolute abundance is the condition where the available quantities of useful goods are greater than human requirements in the way of food needs.
Robbins and relative scarcity
- "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."[5]
Robbins found that four conditions were necessary to support this definition:[14]
- The decision-maker wants both more income and more income-earning assets.
- The decision-maker does not have the means to choose both. In this case, the means are not identified.
- The decision-maker can "augment" (Robbins) both their income and income-earning assets. In this case, implicitly, this is a limited ability, or the project stakeholder would not be subject to scarcity.
- The decision maker's desire for various constituent elements of income and income-earning assets are different.[14] Robbins crucially makes the point later in his essay that this fourth condition can be restated as being "capable of being distinguished in order of importance, then behavior necessarily assumes the form of choice."[14] Robbins argued that there had to be a hierarchy of needs to support these conditions.
Therefore, the decision-maker must exercise choice, i.e., "economize." Robbins argues that the "disposition of the ... (stakeholder's)... time and resources has a relationship to (their) system of wants."[14] The definition is not classificatory in "pick[ing] out certain kinds of behavior" but rather analytical in "focus[ing] attention on a particular aspect of behavior, the form imposed by the influence of scarcity."[15]
- "(W)hen time and the means for achieving ends are limited and capable of alternative application, and the ends are capable of being distinguished in order of importance, the behaviour necessarily assumes the form of choice. Every act which involves time and scarce means for the achievement of one end involves the relinquishment of their use for the achievement of another. It has an economic aspect."[16]
These are relative in nature and define economic concepts of scarcity, abundance, and sufficiency as follows:[8]
- relative sufficiency is the condition where multiple, different human requirements and available quantities with alternative uses are equal.
- relative scarcity is the condition where multiple, different human requirements are greater than the available quantities with alternative uses.
- relative abundance is the condition where the available quantities of useful goods with alternative uses are greater than the multiple, different human requirements.
Economic theory views absolute and relative scarcity as distinct concepts and "...quick in emphasizing that it is relative scarcity that defines economics."[6] Relative scarcity is the starting point for economics.[8][17]
Samuelson and relative scarcity
Samuelson tied the notion of relative scarcity to that of
Modern concepts of scarcity
Scarcity refers to a gap between
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what".[19]: p. 105 The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will [strive to compete] to make money"[19]: p. 105 If other criteria are used, we would expect to see competition in terms of those other criteria.[19]
For example, although air is more important to us than gold, it is less scarce simply because the production cost of air is zero. Gold, on the other hand, has a high production cost. It has to be found and processed, both of which require a lot of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one goal against others. In an influential 1932 essay,
Scarce goods
A scarce good is a good that has more
Nonscarce goods
On the opposite side of the coin, there are nonscarce goods. These goods don't need to be valueless, and some can even be indispensable for one's existence. As Frank Fetter explains in his Economic Principles: "Some things, even such as are indispensable to existence, may yet, because of their abundance, fail to be objects of desire and of choice. Such things are called free goods. They have no value in the sense in which the economist uses that term. Free goods are things which exist in superfluity; that is, in quantities sufficient not only to gratify but also to satisfy all the desires which may depend on them." As compared with the scarce goods, nonscarce goods are the ones where there can be no contest over its ownership. The fact that someone is using something doesn't prevent anyone else from using it. For a good to be considered nonscarce, it can either have an infinite existence, no sense of possession, or it can be infinitely replicated.[20]
See also
- Non-renewable resources
- Artificial scarcity
- Economic shortage
- Energy crisis
- Paradox of value
- Post-scarcity economy
- Resource depletion
- Scarcity heuristic
- Trade-off
References
- ^ a b c d e f Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill.
- ISBN 978-81-318-0368-4. Archivedfrom the original on 2023-07-01. Retrieved 2020-09-13.
- ^ a b Montani G. (1987) Scarcity. In: Palgrave Macmillan (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London.
- ^ Montani, Gudio (1987) in "Scarcity" citing Walras, L. 1926. Elements of Pure Economics, or the Theory of Social Wealth. Trans. W. Jaffé. London: George Allen & Unwin, 1954. Reprinted, Fairfield: A.M. Kelley, 1977.
- ^ a b Robbins, p. 15
- ^ .
- ^ JSTOR 20788963.
- ^ Jo, Tae-Hee. (2016) "The Social Provisioning Process and Heterodox Economics." Archived 2022-12-05 at the Wayback Machine
- JSTOR 142863.
- ^ Gilbert, Geoffrey. Introduction to Malthus T.R. 1798. An Essay on the Principle of Population. Oxford World's Classics reprint. viii in Oxford World's Classics reprint.
- PMID 19068951.
- ^
- ^ a b c d Robbins, p. 12
- ^ a b Robbins, p. 16
- ^ Robbins, p. 13
- (PDF) from the original on 2022-12-05. Retrieved 2022-12-05.
- ^ "Scarcity". Investopedia. Archived from the original on 2017-12-01. Retrieved 2017-11-20.
- ^ ISBN 978-0-13-299129-2.
- ^ a b A. Tucker, Jeffrey; Kinsella, Stephan (11 August 2010). "Goods, scarce and nonscarce". Mises. Archived from the original on 23 January 2015. Retrieved 25 Aug 2010.
- ^ a b c d e f Kennedy, Bingham (January 2001). "Environmental Scarcity and the Outbreak of Conflict". Population Reference Bureau, U.S. Archived from the original on 2023-07-01. Retrieved 2021-05-04.
Cited sources
- Robbins, Lionel C. (1932). An Essay on the Nature and Significance of Economic Science (PDF). London: Macmillan.
Further reading
- Liberty Fund, Inc.Retrieved 2019-07-30.
- Malthus, Thomas R. (1960) [1798]. Gertrude Himmelfarb (ed.). On Population (An Essay on the Principle of Population, as It affects the Future Improvement of Society. With Remarks on the speculations of Mr. Godwin, M. Condorcet, and other writers). New York: Modern Library. p. 601. Retrieved 2010-03-24.
- Montani, Guido (1987). "Scarcity". In Eatwell, J.; Millgate, M.; Newman, P. (eds.). The New Palgrave. A Dictionary of Economics. Vol. 4. Palgrave, Houndsmill. pp. 253–54.
- Wennerlind, C. C. (1999). The historical specificity of scarcity: historical and political investigations (Doctoral dissertation, the University of Texas at Austin).
- Milgate, Murray (March 2008). "goods and commodities". In Steven N. Durlauf; Lawrence E. Blume (eds.). The New Palgrave Dictionary of Economics (2nd ed.). Palgrave Macmillan. pp. 546–48. ISBN 978-0-333-78676-5. Retrieved 2010-03-24.
- Korhonen, J. M. (2018). Overcoming Scarcities Through Innovation: What Do Technologists Do When Faced With Constraints?. Ecological economics, 145, 115-125. Accessed at [1].