There is no easy way to get rid of scarcity, and here is why.

in capitalism •  2 years ago

It is so often I meet people arguing that capitalism is broken, capitalism is a "exploitation" and that we are past the scarcity era, so, we can throw capitalism away and reorganize economy in the new arrangement, where each persons basic needs are fulfilled and there is no more extremely rich people on first hand and tremendously poor on the other.

That sounds nice, very optimistic and so empathetic, but this is total bullshit, since there is no easy way to solve the problem of scarcity in economy. Many people are thinking in that way: there are so many of goods here, on the planet, much more than people actually need, so why don't we just put all of them in to one big, global redistribution process and give each person what he needs?

That is point of view of someone, who never studied economics and has only good intentions and no actual knowledge about what the price system and economic calculation means. Unfortunately for such kind of idealists, post-scarcity economy is an utopia  according to the actual scientific knowledge. I could argue here about Conservation of energy principle, entropy, one-way arrow of time or alternative costs, but I'am going to point it down as simple as I can.

When you see that there is so much food wasted on the one side of our planet, and awful famine killing children on the other side of globe, you can feel that something is wrong. And it really is, but the capitalism is not a part of the problem. Usually places, where people starve to death are not capitalist countries of abundance (which is USA for example), but the third-world countries, ruled by the brutal dictators, military regimes and torn by tribal conflicts (like Ethiopia for example). There is war, there are bandits, there are corrupted politicians, ideologists killing for religious reasons and no trade, no production, no agriculture, no free market, no capitalism at all. So, as you can see, it is not the restaurant owner in Paris throwing unsold food to trash guilt of famine in African countries. There is politics and war, what you should condemn.

Going back to the scarcity problem: economy is not the issue of redistributing goods, since there is no such thing as "common pool of production and goods" which could be divided and redistributed among population.
Many people would like to consider that economy is like strategic military plan, when general relocates divisions to the place, they are most needed from his point of view. But it is not like that.

Each person on the planet do or does not produce something or provide services to others. And everyone who do produce something is rewarded for his work - it is another question if the payment of particular worker is "fair" or not, but I'am not going to start this topic here, maybe another time. So as you see, we have no homogeneous pool of resources and goods, but billions of separate, private pools, with their owners. So you can not just relocate resources in to new way and solve problems of some people.

Problem of poor, starving people in Africa is that the politicians in their countries prefer to use international charity for funding their luxuries and waging their wars, and the western politicians prefer to establish protectionist trade policy against African farmers (check the EU importing policies). The capitalism has nothing to do with all of that.

So, when you see that there is a famine in African country, and the shop owner in you neighborhood puts food in to the trash bin,  there is no connection at all. Do not blame your neighbor nor the "capitalists". Believe me, or not, but if some capitalists would be able to start enterprising activities in that poor, starving country, people there would become slowly richer and happier. As it is in China, where 1 bilion people leaved extreme poverty last decades thank to the capitalism.

Remember: economy is not about relocating divisions, and politics is not about helping people and solving their problems. Most problems we've ever had, was caused by the politicians, as wars, economic recessions, environmental disasters and many other. 

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The problem is: more often than not dictators in third world countries are supported (if not established) by USA and the other rich countries.

As regards scarcity in first world countries: I think we should speak of scarcity of scarcity. We have too much of everything, that's why our companies are suffering.


Of course that is true, what you say about rich countries standing behind the dictators (good friendship between USA and Saudi family would be great example, but there is more).

What do you mean by the "to much of everything"? Do you mean the "overproduction" thing?


Ok, that is what I thought. :-) Well, to answer that, I would like say, that the "overproduction" concept is an element of neoclassic school of economy, and it is only one perspective on the production errors in economy.
The Austrians proposes rather the underproduction+overproduction concept, when one good is overproduced, while the other is on the shortage. hat is the "malinvestment" theory, which I prefer, considering it much closer to the reality.

The global "problem" of "ovberproduction" - if it is real - is impossible to avoid without risking the contrary: shortages and common poverty, like in Wenezuela. Entrepreneur decides to produce a little bit larger output , because he want to maximize his profits, it is better to sell more than less goods, even if there would be a tiny surplus wasted at the end.

If we had a brilliant god-like function of production which could take in to account the "future demand" for products, there would be no surpluses nor shortages and 100% goods would finde their consumers and no consumer would stay with nothing. But there is no such mathematical function at all - which the calculation debate between Mises, Hayek and Oscar Lange showed. So the only way to avoid shortages of everything is to overestimate future demand in hope of it's raise. The true problem is when some capitalist takes an absolutely false estimations (like when the interest rates are arbitrary lowered down by the central bank) and opens production of good which is not needed at all in society. That is the other problem, which austrian school of economics works on.