The concept of scarcity occupies a central position in economics. Both macro and micro economics are instinct with this idea. Because this centrality has some major consequences for social arrangements, I propound that scarcity is a purely socio-economic fact and an exclusively human mental construct.
It is not found in nature at all. What is found in nature is, in fact, finitude. All material objects, whether primary objects of nature or, for that matter, manufactured objects, share the quality of being bounded in space and time which makes them limited in amount or number, fungible by function, and exhaustible by use. Since finitude as a natural fact and scarcity as an economic fact happen to be co-extensive, the latter too acquires the appearance of a natural fact by being confused with the former as a fundamental quality of material and sensory goods.
This concept provides the foundational rationalisation for fundamental economic categories of supply and demand. It should be noted that something is called scarce if its supply is not able to keep up with its demand. The fact that a thing may be limited in number or amount is only a secondary consideration and does not qualify it to be labeled scarce as it may still be limited but not scarce if there were no demand for it. Supply and demand, further, are concepts that have as their terminal states ownership or consumption of things.
Goods are supplied or are in demand because there are people in need of having or using them. This need, real or perceived, prompts people to assume the role of producers and consumers on one hand and sellers and buyers on the other. This need, whether individually or collectively felt, creates a close connection between scarcity and value. Scarcity begins to exist as soon as something is deemed to be of value in economic and social terms. Things acquire value accordingly as they are perceived to be scarce or not. Conversely, they are perceived as scarce or not scarce depending upon the value attached to them.
This dialectic between value and scarcity also plays not a small part in the maintenance of a social system of unequal access to resources. Resources can be simply defined as pools of naturally available things or man-made articles considered to be necessary for the collective sustenance of society. These resources are almost always scarce because they are almost always allocated in a manner that benefits social groups selectively. Since resources in any society are not equally allocated between people who normally exist involuntarily as social groups pursuing divergent group goals and objectives, the ‘scarcity’ argument is deployed to naturalise the socially determined act of asymmetrically allocated resources.
It serves as an apparently neutral appeal to nature invoked to justify selective allocation of resources aimed at partial social welfare. It is not the fact of the scarcity of resources that causes their selective allocation but rather the fact of selective allocation that causes the so-called scarcity of resources. We might as well say that what makes things scarce is not their finitude but the fact of their exclusive possession ensured through a system of free enterprise regulated by the law of supply and demand.
One of the spurious applications of the concept is also to explain avoidable shortfalls caused by the incompetent management of resources – a corollary of biased appropriation of shared assets. Scarcity is, therefore, not a scientific term denoting the inherent finitude of material things but is rather an ideological category using spatiotemporal limitedness of things to defend and cover up social concentration of resources.
Scarcity anchors the idea of waste since what is unlimited cannot by definition be wasted. The idea of individual saving and the associated one of thrift could only exist in the consciousness of individuals if there were first a preceding notion that enabled them to make sense of the idea of waste and the resulting deficiency of what is wasted. The notion of scarcity also helps underpin the concept of human beings as rational economic agents out to maximise personal gain. Maximisation of gain would effectively lose meaning if what was to be gained was freely and endlessly available to be had by everyone.
Gain is perceived to be achieved only at the expense of other similarly motivated agents by means of a competition in and for whatever is not unlimited. Since economic gain is competitive, centered on the idea of self-aggrandisement and forecloses sharing by its nature, scarcity promotes an egotistical society. If it prompts saving and wards off waste at the individual level, scarcity can very well cause waste in society as a whole too. The endlessly expanding drive for gain arises out of the fear of destitution rooted in the idea of scarcity. When pursued collectively, this very expansion leads to bouts of overproduction and over-accumulation exhibiting the presence of contradictory phenomena of falling demand and excess supply culminating in mammoth social waste and want.
The writer is a Senior Policy Analyst working for the OIC’s Standing Committee on Scientific and Technological Cooperation and can be contacted at [email protected].