Shayne Wissler
Imagine a world where we figured out the right direction to push, and then we pushed in that right direction…

The economically perverse notion of ‘economic scarcity’

September 26 2013


  1. Insufficiency of amount or supply; shortage: a scarcity of food that was caused by drought.
  2. Rarity of appearance or occurrence: antiques that are valued for their scarcity.

At the foundation of Austrian economics (or arguably any typical economic theory) is the concept of “scarcity”. At best, this is an extremely poor choice of word for the underlying concept. While one may be able to argue that once we permit the economist’s arbitrary replacement of the normal meaning of this term with his own idiosyncratic meaning then the denotation is at least somewhat sensible, the connotation is absolutely horrible.

Every normal human being is going to think of the typical dictionary definition, as in the above, when they hear the term “scarcity”. But consider an economist’s perspective on this otherwise ordinary and uncontroversial word, e.g. from Wikipedia:

Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human 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 behavior as a relationship between ends and scarce means which have alternative uses.”

There are many problems with this notion:

  • It’s a plain fact that not all humans actually have unlimited wants and needs. Some of course do – this is a function of their chosen values and psychology – but certainly not all.
  • It speaks as if “society” is inherently the one providing for an individual’s needs, rather than the individual providing for his own needs through his own productivity and free trade with others.
  • It speaks of “scarce means” (other descriptions speak of “scarce resources”), conspicuously using the word “scarce” when it is in fact completely redundant. Why is it redundant? Because the Law of Identity (i.e. “each thing is the same with itself and different from another”) underpins every statement we can make about anything whatsoever. We already know means and ends are limited, by virtue of the fact that we are talking about real or potentially real things. We don’t need to consult economists about this at all; if we have doubts about it we should consult a philosopher or a psychiatrist.

This last is the most telling point of all. When someone redefines a word such that it contradicts its normal and very sensible meaning and then after all that, only uses it in a completely redundant manner, you can be fairly sure that the person is either extremely confused or is a charlatan. Maybe the economists who coined this concept think that human beings are dumb and want more than exists, so they are just trying to emphasize “hey, you can’t have everything, all things are limited”, albeit in a very clumsy and destructive manner. Maybe they see this human tendency to want more and more as causing economic mayhem, so they are just trying to put insert subliminal marketing spin in favor of the Law of Identity into their “science”, and for some reason they don’t want to mention the Law of Identity explicitly. Or maybe they just haven’t heard of the Law of Identity.

In any case, what these shenanigans amount to is this: the economic concept of scarcity steals its veneer of plausibility from philosophy’s Law of Identity, and ends up sneaking in the unjustifiable dogma that we should expect scarcity instead of overflowing abundance.

Leaving aside authentic collectors items, the universe contains virtually limitless possibilities for overflowing wealth creation. We have only just scratched the surface of the wealth creating possibilities of the Earth or of harnessing the Sun’s energy, let alone exploiting asteroids, the Moon, or the rest of the planets. Scarcity only results from natural disaster or unnatural (usually governmental) interference with mankind’s capacity for self-improvement. Abundance is the normal condition of mankind when he is left free to create it, not “scarcity.” So we should not believe in “economic scarcity”, but in the potential of rational philosophy, science, and engineering to eradicate it.

Never attribute to malice that which is adequately explained by stupidity.

— Hanlon’s razor

In spite of Hanlon’s razor I am going to point out a potentially darker side here. Now, it very well may be the case that the philosophically bumbling economist explains this weird perversion of the term “scarcity” from its ordinary meaning. I don’t have insight into personal motives. But I can discern the ultimate effects of such perversions.

People with low expectations are easily satisfied, therefore, if you can kill expectations you can nullify people. A scarcity myth is thus a tool of enslavement, blunting justified outrage over artificially-induced scarcity. This quells the most energetic, spirited, and justified kinds of institutional reforms, reforms that would move us toward the very goals the many economists claim to support. Intentional or not, the notion of economic scarcity thus perverts the enterprise of liberty into an ivory tower game.

Some have taken this concept so far that they use it as if it were the very foundation of natural rights. They claim that the genesis of rights is discerned in the goal of “eliminating conflicts over scarce resources”, rather than in the goal of maximizing the scope of individual human action. Consider the psychology behind choosing to emphasize conflict instead of maximally unrestrained human action as a foundation of natural rights. And consider the technical interpretation of the former idea: one way to eliminate conflict is simply to stop living. This emphasis on “conflict” or “scarcity” or “rivalry” is neither a mentally healthy nor technically precise perspective on human liberty.

Furthermore, if scarcity is the source of human liberty, then doesn’t that make abundance the enemy of human liberty? No one would express such a thought explicitly, but what are the subconscious consequences here? And speaking of the subconscious, the apparent attraction of Christians to Austrian economics is easily explained: scarcity reminds Christians of Adam and Eve being kicked out of the Garden of Eden and being punished by scarcity. Austrian economics thereby lends support to Christian metaphysics, namely, that our life on Earth should be filled with suffering and deprivation instead of prosperity and abundance.

Economics, if it really wants to be a true science and not a dismal pseudo-science, needs to completely jettison its idiosyncratic notion of scarcity and embrace its proper purpose, which is not to determine how to best allocate “scarce resources,” but rather, how to create the most abundance and prosperity.