Economic Scarcity in an Abundant World

What is economic scarcity?

According to Econguru (link opens new window) "Scarcity is defined as the realistic condition that resources are limited, and in turn prevents all human wants to be fully satisfied. It's the start point where all economic problems derive themselves, thus making it necessary for people to make choices between things, what and how much others [want] to give up to get the most favored ones."

In other words, economic scarcity states that you can’t have it all. There’s just not enough, so you have decide how much you want to exchange to have what you desire. Even if you are the richest person in the world, you still need to exchange to get what you want. This scarcity is what drives the economy.

Economic scarcity is based on supply (how much there is available) and demand (how much people want it). The more demand and less supply, the more scarcity. Scarcity can be derived in a few ways. (See Scarcity Principle or Law of Scarcity)
Is it true that we have to live with scarcity?

Lynne Twist’s book The Soul of Money discuss three "scarcity myths": "There’s just not enough", "More is better", and "That’s just the way it is".

She demonstrates how we buy into these myths almost everywhere in every way. And because we believe that most things are scarce (hence, have value) we try to get the most we can for ourselves. We tend to hoard, always waiting for the rainy day when things will get rough and we'll need it. We protect our own.

In other words, scarcity, since it is fear-based, makes us act fearfully, and creates more scarcity.

Let’s take the example of energy to illustrate how this plays out.

We have unlimited sources of energy, but our most commonly used form of energy is itself, limited in supply.

Instead of honoring a limited supply of something, like fossil-fuels, and work together as a planet to conserve this non-renewable energy, we fight wars against each other to protect our share. Companies raise their prices during natural disasters (remember gas prices after Katrina?) and raise anxieties in consumers. Raising anxiety (fear- based emotion) increases the urge to behave in scarcity mode.

But, what about other forms of energy available to us? There’s plenty of solar and wind power to run the planet. Why haven’t we been taking advantage of that long ago?

Why haven’t we seriously pursued the abundant forms of renewable energy available?

The limited supply of oil and the increased demand (based on scarcity myths) increase the amount of money that could be made.

If energy could be produced that is plentiful and renewable, it just may not fit into how our economy, which is based on managing scarcity, works.

Why would oil companies ever want to come together in favor of new energy generation if they are managing the scarcity of fossil-fuels (a main way of making high profit) and buying into scarcity myths that actually encourage and create more economic scarcity?

Since the economy is about managing scarcity, the economic scarcity is a necessary component. In fact, plentiful commodities are not considered something you can make much money with. They are not valued as much as something that has real or perceived scarcity.

In this energy example, it is conceivable that not only could renewable energy sources be tapped into and profited by, but eventually these sources could be maintained at low or no cost to the consumer. In other words, paying for power could become obsolete. Then, there would be no economic scarcity concerning power.

Where would we be with our economy then?

In our fear of and yet dependence on economic scarcity, we often take the abundance that exists, the plenty provided (like fossil fuel) and distribute it in a way that not only does not honor it by wasting, but leaves many out of the game. We create scarcity with our myths and fear.

Here’s the good news. Our scarcity based economy is collapsing and people are starting to wake up to the idea that something else needs to happen.

In our world, we have enough food to feed everyone and yet so many starve or go to bed hungry. We have enough energy to run the planet, yet we have focused almost all our attention on drilling for oil and mining coal (limited and polluting) over all other forms.

What if we ran our economy not on this principle of scarcity, but on the principle of abundance? What if our economy was based on everyone having enough for themselves and some to share. That exchanges occur because everyone is sharing their passions and gifts to enrich each other’s lives. That everyone has something to offer in this game.

That people, things, resources are considered valuable, not because they are scarce, but because they add to the whole of humanity.

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