Scarcity

Those with some familiarity with economic theory are likely to understand ‘scarcity’ in its terms. In that context, something is scarce if its price is greater than zero. By this definition, land is still scarce—it costs a lot of money to buy a piece of land. And financial capital is still scarce because even with our current low interest rates, there is a price for borrowing money or raising equity.

However, there is a fundamental problem with this price-based definition of scarcity: anything can be made scarce by assigning ownership of it. Imagine for a moment that the world’s atmosphere belonged to Global Air Ltd, a company which could charge a fee to anyone who breathes air. Air would suddenly have become scarce, according to the price-based theory of scarcity. That might seem like an extreme example, and yet some people have argued that assigning ownership to the atmosphere would solve the problem of air pollution, on the grounds that it would result in the air’s owners having an economic incentive to maintain an unpolluted atmosphere.

Here I will use a different meaning of scarcity, one not based on price. I will call something scarce when there is less of it than we require to meet our needs. If people are starving because not enough food has been produced (or made available), food is scarce. Insofar as more knowledge would allow this problem to be solved, this can be thought of as technological (as opposed to economic) scarcity. The point here is that technological progress makes things less scarce. As I discuss in Part Two below, the eighteenth-century scholar Thomas Malthus (1798) was correct when he predicted that global population growth could be exponential, but his prediction that such growth would outpace growth in the food supply, resulting in ongoing shortages and mass starvation, turned out to be wrong, because technological progress resulted in exponential increases in food production. In fact, recent advances in agricultural techniques have meant that the amount of land needed for food production is now declining, even as food production is continuing to grow rapidly.

But is it possible to draw a clear distinction between needs and wants? If people are not starving but want more or different food, can food still be scarce? Modern economics equates the two, but intuitively we know that this is not the case. We need to drink water, but want to drink champagne. We need to provide our body with calories, but want to eat caviar. These examples are obviously extremes, but the point is that many different foods can be used to meet the need for calories. Desiring a particular food is a want, while getting enough calories (and other nutrients) is a need. In Part Two, I set out a list of the needs and look at our current and future ability to fulfill them.

Importantly, if something is no longer scarce, it isn’t necessarily abundant—there is an intermediate stage, which I will call ‘sufficiency’. For instance, there is sufficient land on the planet to meet everyone’s needs, but building housing and growing food still requires significant physical resources, and hence these things are not abundant. I can foresee a time when technological progress makes land and food abundant—imagine how much space we would have if we could figure out how to live on other planets. Digital information is already on a clear path to abundance: we can make copies of it and distribute them at zero marginal cost, thus meeting the information needs of everyone connected to the Internet.

With this needs-based definition of scarcity in place, we can now examine how technology has shifted the constraining scarcity for humanity over time.

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