In economics, scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient
productive resources to fulfill those wants and needs. Alternatively, scarcity implies that not all of society's goals can be
fully attained at the same time, so that 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 province, 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 are desired but in such abundance that they are 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 mowed lawn,
clean air, etc.
Where goods are scarce it is necessary for society to make choices as to how they are 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 is necessary to make choices as to how it is allocated. In a market economy, this is achieved by trade. Other
ways to make this decision involve tradition, community democracy, and government top-down or centralized command. In the market,
individuals and organizations, such as corporations, trade resources amongst themselves, reallocating resources to where they are
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. 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 do not 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 is 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 is
impractical to provide creative work for everyone. Some people might not even desire it.[citation needed]
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[1] and
boyfriends[2].
References
Bibliography
- Milgate, Murray (1987), "goods and commodities," The New
Palgrave: A Dictionary of Economics, v. 2, pp. 546-48.
- Montani, Guido (1987), "scarcity," The New Palgrave: A Dictionary of Economics, v. 4, pp. 253-54.
See also
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