Everything about Scarcity totally explained
In
economics,
scarcity is the problem of
infinite human needs and
wants, in a world of
finite resources. In other words,
society doesn't have sufficient productive resources to fulfill those wants and needs. Alternatively, scarcity implies that not all of society's goals can be pursued at the same time;
trade-offs are made of one good against others. In an influential 1932 essay,
Lionel Robbins defined economics as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."
In biology,
scarcity can refer to the uncommonness or
rarity of certain
species. Such species are often protected by local, national or international law in order to prevent
extinction.
Goods and services
Goods and services are scarce because of the limited availability of resources (the
factors of production) along with the limits on our technology and skillful people
relative to the total amount desired. If somehow people desired nothing, there would be no scarcity. If resources were great enough to produce more than anyone desired, there would also be no scarcity. Scarce resources determine the location of society's
production possibilities frontier or curve (PPF). Inefficiencies in the use of resources (less than
full employment or inappropriate employment of inputs like land and capital) may limit the amount produced so that the economy operates below its PPF. It is difficult to abolish all inefficiencies, and some characterize institutional inefficiency as
artificial scarcity.
Goods (including services) that are scarce are called
economic goods (or simply 'goods' if their scarcity is presumed). Other goods are called
free goods if they're desired but in such abundance that they're not scarce, such as air and seawater. Too much of something freely available can informally be referred to as a 'bad', but then its absence can classified as a good, thus, a
mown lawn,
clean air, etc.
Where goods are scarce it's necessary for society to make choices as to how they're allocated and used. Economists study (among other things) how societies perform the optimal allocation of these resources — along with how societies often fail to attain this optimality and are instead
inefficient.
For example, we may all want to own gold
jewellery. The amount of gold available, however, is limited, so it's necessary to make choices as to how it's allocated. In a market economy, this is achieved by
trade. Other ways to make this decision involve
tradition, community
democracy and
centralized command. In the
market, individuals and organizations, such as
corporations, trade resources amongst themselves, reallocating resources to where they're most wanted by those with purchasing power. In a smoothly operating market system, the rate of exchange between different resources, or price will adjust so that demand is equal to supply. One of the roles of the economist is to discover the relationship between
demand and supply and to develop mechanisms (such as pricing, incentives, or penalties) to achieve an optimal outcome (in terms of consumer welfare).
Certain goods are likely to remain inherently scarce by definition or by design; examples include
land and
positional goods such as awards generated by
honor systems,
fame, and membership of
elites. These things are said to derive all or most of their value from their scarcity. Even in a theoretical
post scarcity society, certain goods, such as desirable land and original art pieces, would most likely remain scarce. But these may be seen as examples of artificial scarcity, reflecting societal institutions. That is, the resource cost of giving someone the title of "knight of the realm" is much less than the value that individuals attach to that title.
As
informational goods can be copied at negligible cost, they don't need to be scarce. This is why copies of software such as
GNU/Linux are typically available for very little cost. However, proprietary software and many other products are kept artificially scarce through
intellectual property protection laws, most commonly
copyrights and
patents.
Scarcity applied to other areas
It is possible to apply the scarcity principle in social arguments. For better results it's advised to structure your argument in terms of prevention rather than opportunity for gain.
Criticisms
Some question the concept of scarcity, on the grounds that it assumes human wants are "unlimited." (See the
Simple living and Voluntary Simplicity movements.) These "unlimited" wants may result more from culture, than human nature. For example, people can be influenced to want more by: peer pressure, adverts, or the desire to show off. They might also see consumption as a means of coping with unfulfillment. The problem of scarcity seems less relevant to basic needs - like food, water, shelter, clothing, and health care.
The
Technocracy movement argues that North America can achieve abundance and self-sufficiency, through the application of scientific principles and technology. They suggest replacing human labor with machines and cutting the work-week to four half-days (16 hours). They propose an economy with energy accounting, instead of finance. The value of goods would be based on the energy required to produce them. Machines would run at full-load to maximize efficiency. People would receive an equal share of total energy production in the form of goods.
In
News from Nowhere, a
Utopian novel by
William Morris, the existence of creative work for all helps abolish the problem of scarcity. Many economists believe it's impractical to provide creative work for everyone. Some people might not even desire it.
Harris's Lament
Harris's Lament originates from a
Barney Miller episode in which Detective Ron Harris (played by
Ron Glass) attempted to find a good apartment in
New York City (no easy task). Inherent scarcity has been expressed in popular media as Harris's Lament: "
all the good ones are taken!". For example, Harris's Lament has been used to complain about the inherent scarcity of such things as names of computers on networks and boyfriends.
Further Information
Get more info on 'Scarcity'.
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