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Scarcity as an economic concept "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good."Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill. If the conditions of scarcity didn't exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no
economic goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, i.e. goods that are relatively scarce..." Scarcity is the limited availability of a
commodity In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, which may be in demand in the market or by the commons. Scarcity also includes an individual's lack of resources to buy commodities. The opposite of scarcity is abundance. Scarcity plays a key role in
economic theory Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. ...
, and it is essential for a "proper definition of economics itself."Montani G. (1987) Scarcity. In: Palgrave Macmillan (eds) ''The New Palgrave Dictionary of Economics''. Palgrave Macmillan, London. : "The best example is perhaps Walras’ definition of social wealth, i.e., economic goods. ‘By social wealth’, says Walras, ‘I mean all things, material or immaterial (it does not matter which in this context), that are scarce, that is to say, on the one hand, useful to us and, on the other hand, only available to us in limited quantity’." - Montani G. (1987) British economist
Lionel Robbins Lionel Charles Robbins, Baron Robbins, (22 November 1898 – 15 May 1984) was a British economist, and prominent member of the economics department at the London School of Economics (LSE). He is known for his leadership at LSE, his proposed defin ...

Lionel Robbins
is famous for his definition of economics which uses scarcity: :"Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."Robbins, ''An Essay on the nature and significance of Economic Science'', p. 15 Economic theory views absolute and relative scarcity as distinct concepts and is "quick in emphasizing that it is relative scarcity that defines economics."Raiklin, Ernest, and Bülent Uyar. "On the relativity of the concepts of needs, wants, scarcity and opportunity cost." International Journal of Social Economics (1996). Current economic theory is derived in large part from the concept of relative scarcity which "states that goods are scarce because there are not enough resources to produce all the goods that people want to consume".


Concept

Economic scarcity as defined by
Samuelson Samuelson is an English-language patronymic surname meaning "son of Samuel (name), Samuel". There are alternative spellings such as the Scandinavian language, Scandinavian-origin Samuelsson and Samuelsen. It is uncommon as a given name. Samuelson ma ...

Samuelson
in ''Economics'', a "canonical textbook" of mainstream economic thought "... refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good ... (outlined in the production possibility curve (PPC))." If the conditions of scarcity didn't exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no
economic goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
, i.e. goods that are relatively scarce..." This economic scarcity is not solely due to resource limits, but a consequence of human activity or social provisioning.Daoud, Adel. (2010) "Robbins and Malthus on scarcity, abundance, and sufficiency: The missing sociocultural element." American Journal of Economics and Sociology 69.4 (2010): 1206-1229. There are two types of scarcity, relative and absolute scarcity.


Malthus and Absolute Scarcity

Thomas Robert Malthus Thomas Robert Malthus (; 13/14 February 1766 – 23 December 1834) was an English cleric, scholar and influential economist in the fields of political economy and demography. In his 1798 book ''An Essay on the Principle of Population The ...

Thomas Robert Malthus
laid the "...theoretical foundation of the conventional wisdom that has dominated the debate, both scientifically and ideologically, on global hunger and famines for almost two centuries." In his 1798 book ''
An Essay on the Principle of Population The book ''An Essay on the Principle of Population'' was first published anonymously in 1798, but the author was soon identified as Thomas Robert Malthus Thomas Robert Malthus (; 13/14 February 1766 – 23 December 1834) was an English cleri ...

An Essay on the Principle of Population
'', Malthus observed that an increase in a nation's food production improved the well-being of the populace, but the improvement was temporary because it led to population growth, which in turn restored the original per capita production level. In other words, humans had a propensity to utilize abundance for population growth rather than for maintaining a high standard of living, a view that has become known as the "
Malthusian trap Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply Food security is a measure of the availability of food and individuals' Economic inequality, ability to access it. According the Comm ...
" or the "Malthusian spectre". Populations had a tendency to grow until the lower class suffered hardship, want and greater susceptibility to
famine A famine is a widespread scarcity of food Food is any substance consumed to provide nutritional support for an organism In biology, an organism (from Ancient Greek, Greek: ὀργανισμός, ''organismos'') is any individual con ...

famine
and
disease A disease is a particular abnormal condition that negatively affects the structure A structure is an arrangement and organization of interrelated elements in a material object or system A system is a group of Interaction, interacting ...
, a view that is sometimes referred to as a
Malthusian catastrophe Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply or other resources is linear growth, linear, which eventually reduces living standards to the point of triggering a depopulation, popula ...
. Malthus wrote in opposition to the popular view in 18th-century Europe that saw society as improving and in principle as perfectible.
Malthusianism Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply Food security is a measure of the availability of food and individuals' Economic inequality, ability to access it. According the Comm ...
is the idea that population growth is potentially exponential while the growth of the food supply or other
resources A resource is a source or supply from which a benefit is produced and that has some utility. Resources can broadly be classified upon their availability — they are classified into renewable and non-renewable resources. They can also be classif ...

resources
is
linear Linearity is the property of a mathematical relationship (''function Function or functionality may refer to: Computing * Function key A function key is a key on a computer A computer is a machine that can be programmed to carry out se ...
, which eventually reduces living standards to the point of triggering a population die off. It derives from the political and economic thought of the Malthus, as laid out in his 1798 writings, ''
An Essay on the Principle of Population The book ''An Essay on the Principle of Population'' was first published anonymously in 1798, but the author was soon identified as Thomas Robert Malthus Thomas Robert Malthus (; 13/14 February 1766 – 23 December 1834) was an English cleri ...

An Essay on the Principle of Population
''. Malthus believed there were two types of ever-present "checks" that are continuously at work, limiting population growth based on food supply at any given time: * ''preventive checks'', such as moral restraints or legislative action — for example the choice by a private citizen to engage in
abstinence Abstinence is a self-enforced restraint from indulging in bodily activities that are widely experienced as giving pleasure Pleasure refers to experience that feels good, that involves the enjoyment of something. It contrasts with pain or suffe ...
and delay marriage until their finances become balanced, or restriction of or parenting rights for persons deemed "deficient" or "unfit" by the government.Weir D.R. (1987) Malthus’s Theory of Population. In: Palgrave Macmillan (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. DOI-10.1057/978-1-349-95121-5_1062-1 * ''positive checks'', such as disease, starvation, and war, which lead to high rates of premature death — resulting in what is termed a
Malthusian catastrophe Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply or other resources is linear growth, linear, which eventually reduces living standards to the point of triggering a depopulation, popula ...
. The adjacent diagram depicts the abstract point at which such an event would occur, in terms of the existing population and food supply: when the population reaches or exceeds the capacity of the shared supply, positive checks are forced to occur, restoring balance. (In reality, the situation would be significantly more nuanced due to complex regional and individual disparities around access to food, water, and other resources.) Positive checks by their nature are more "extreme and involuntary by nature". Daoud argues that : ''(T)he strong drive for reproduction in relation to the weak expansion of food production possibilities will very rapidly result in a situation of scarcity and thus hunger. This fundamental relation between food requirements and the food production capacity is the ultimate check on population growth.'' -Daoud, 2010 There are two types of scarcity implicit in Malthusianism, namely scarcity of foods or "requirements" and objects that provide direct satisfaction of these food needs or "available quantities". These are absolute in nature and define economic concepts of scarcity, abundance, and sufficiency as follows: * absolute sufficiency is the condition where human requirements in the way of food needs and available quantities of useful goods are equal. * absolute scarcity is the condition where human requirements in the way of food needs are greater than the available quantities of useful goods. :: Daoud citing Daly (1977) states that :::''"(A)bsolute scarcity . . . refers to the scarcity of resources in general, the scarcity of ultimate means. Absolute scarcity increases as growth in population and per-capital consumption push us ever closer to the carrying capacity of the biosphere. The concept presupposes that all economical substitutions among resources will be made (this is relative scarcity). While such substitutions will certainly mitigate the burden of absolute scarcity, they will not eliminate it nor prevent its eventual increase"'' -Daly 1977: 39 * absolute abundance is the condition where the available quantities of useful goods are greater than human requirements in the way of food needs.


Robbins and Relative Scarcity

Lionel Robbins Lionel Charles Robbins, Baron Robbins, (22 November 1898 – 15 May 1984) was a British economist, and prominent member of the economics department at the London School of Economics (LSE). He is known for his leadership at LSE, his proposed defin ...

Lionel Robbins
was prominent member of the
economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was fo ...

economics
department at the
London School of Economics , mottoeng = To understand the causes of things , established = 1895 , type = Public In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of s ...
. He is famous for the quote, "Humans want what they can't have." Robbins is noted as a
free market In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goo ...
economist, and for his definition of economics. The definition appears in the ''Essay'' by Robbins as: :"Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." Robbins found that four conditions were necessary to support this definition:Robbins, Lionel C. (1932). An Essay on the Nature and Significance of Economic Science, 2nd edn. London: Macmillan *The decision-maker wants both more income and more income-earning assets. *The decision-maker does not have the means to choose both. In this case, the means are not identified. *The decision-maker can "augment" (Robbins) both their income and income-earning assets. In this case, implicitly, this is a limited ability, or the project stakeholder would not be subject to scarcity. *The decision maker's desire for various constituent elements of income and income-earning assets are different. Robbins crucially makes the point later in his essay that this fourth condition can be restated as being "capable of being distinguished in order of importance, then behavior necessarily assumes the form of choice." Robbins argued that there had to be a hierarchy of needs to support these conditions. Therefore, the decision-maker must exercise choice, i.e., "economize." Robbins argues that the "disposition of the ... (stakeholder's)... time and resources has a relationship to (their) system of wants." The definition is not ''classificatory'' in "pickout certain ''kinds'' of behavior" but rather ''analytical'' in "focusattention on a particular ''aspect'' of behavior, the form imposed by the influence of scarcity." :"''(W)hen time and the means for achieving ends are limited and capable of alternative application, and the ends are capable of being distinguished in order of importance, the behaviour necessarily assumes the form of choice. Every act which involves time and scarce means for the achievement of one end involves the relinquishment of their use for the achievement of another. It has an economic aspect."'' (Daoud 2010, citing Robbins 1945: 14) These are relative in nature and define economic concepts of scarcity, abundance, and sufficiency as follows: * relative sufficiency is the condition where multiple, different human requirements and available quantities with alternative uses are equal. * relative scarcity is the condition where multiple, different human requirements are greater than the available quantities with alternative uses. * relative abundance is the condition where the available quantities of useful goods with alternative uses are greater than the multiple, different human requirements. Economic theory views absolute and relative scarcity as distinct concepts and "...quick in emphasizing that it is relative scarcity that defines economics." Relative scarcity is the starting point for economics.


Samuelson and Relative Scarcity

Samuelson tied the notion of relative scarcity to that of
economic goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
when he observed that if the conditions of scarcity didn't exist and an "infinite amount of every good could be produced or human wants fully satisfied ... there would be no economic goods, i.e. goods that are relatively scarce..." The basic economic fact is that this "limitation of the total resources capable of producing different (goods) makes necessary a choice between relatively scarce commodities."


Modern concepts of scarcity

Scarcity refers to a gap between limited resources and theoretically limitless wants. The notion of scarcity is that there is never enough (of something) to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice— giving something up, or making a
trade-off A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another ...
—in order to obtain more of the scarce resource that is wanted. The condition of scarcity in the real world necessitates
competition Competition is a rivalry A rivalry is the state of two people or groups engaging in a lasting competitive relationship. Rivalry is the "against each other" spirit between two competing sides. The relationship itself may also be called "a riv ...
for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what". The price system, or market prices, are one way to allocate scarce resources. "If a society coordinates economic plans on the basis of willingness to pay money, members of that society will trive to competeto make money" If other criteria are used, we would expect to see competition in terms of those other criteria. For example, although air is more important to us than gold, it is less scarce simply because the production cost of air is zero. Gold, on the other hand, has a high production cost. It has to be found and processed, both of which require a lot of resources. Additionally, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one goal against others. In an influential 1932 essay,
Lionel Robbins Lionel Charles Robbins, Baron Robbins, (22 November 1898 – 15 May 1984) was a British economist, and prominent member of the economics department at the London School of Economics (LSE). He is known for his leadership at LSE, his proposed defin ...

Lionel Robbins
defined A definition is a statement of the meaning of a term (a word, phrase, or other set of symbols). Definitions can be classified into two large categories, intensional definitions (which try to give the sense of a term) and extensional definitions ...
economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses". In cases of
monopoly A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none) is as described by Irving Fisher, a market with the "absence of competition", creating a situation where a specific ...

monopoly
or
monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The Microeconomics, microeconomic theory of monopsony assumes a ...
an
artificial scarcity Artificial scarcity is scarcity of items despite the available technology for production or the sufficient capacity for sharing. The most common causes are monopoly pricing structures, such as those enabled by laws that restrict competition or ...
can be created. Scarcity can also occur through stockpiling, either as an attempt to
corner the market In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money available ...
or for other reasons. Temporary scarcity can be caused by (and cause)
panic buying Panic buying (alternatively hyphenated as panic-buying; also known as panic purchasing) occurs when consumer A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or Service (economics), services pri ...
.


Scarce goods

A scarce good is a good that has more quantity demanded than quantity supplied at a price of $0. The term scarcity refers to the possible existence of conflict over the possession of a finite good. One can say that, for any scarce good, someones’ ownership and control excludes someone else's control. Scarcity falls into three distinctive categories: demand-induced, supply-induced, and structural. Demand-induced scarcity happens when the demand of the resource increases and the supply stays the same. Supply-induced scarcity happens when a supply is very low in comparison to the demand. This happens mostly due to
environmental degradation Environmental degradation is the deterioration of the environment Environment most often refers to: __NOTOC__ * Natural environment, all living and non-living things occurring naturally * Biophysical environment, the physical and biological facto ...
like
deforestation deforestation in 1750-2004 (net loss) showing anthropogenic modification of remaining forest. File:MODIS (2020-08-01).jpg, 300px, Dry seasons, exacerbated by climate change, and the use of slash-and-burn methods for clearing tropical forest ...

deforestation
and
drought A drought is an event of prolonged shortages in the water supply, whether atmospheric (below-average precipitation In meteorology Meteorology is a branch of the atmospheric sciences Atmospheric science is the study of the Earth's atm ...

drought
. Lastly, structural scarcity occurs when part of a population doesn't have equal access to resources due to political conflicts or location. This happens in Africa where desert countries don't have access to water. To get the water, they have to travel and make agreements with countries that have water resources. In some countries political groups hold necessary resources hostage for concessions or money. Supply-induced and structural scarcity demands for resources cause the most conflict for a country.


Nonscarce goods

On the opposite side of the coin, there are nonscarce goods. These goods don't need to be valueless, and some can even be indispensable for one's existence. As
Frank Fetter Frank Albert Fetter (; March 8, 1863 – March 21, 1949) was an American economist of the Austrian School The Austrian School is a heterodox In religion, heterodoxy (from Ancient Greek Ancient Greek includes the forms of the Greek ...
explains in his ''Economic Principles'': "Some things, even such as are indispensable to existence, may yet, because of their abundance, fail to be objects of desire and of choice. Such things are called free goods. They have no value in the sense in which the economist uses that term. Free goods are things which exist in superfluity; that is, in quantities sufficient not only to gratify but also to satisfy all the desires which may depend on them." As compared with the scarce goods, nonscarce goods are the ones where there can be no contest over its ownership. The fact that someone is using something doesn't prevent anyone else from using it. For a good to be considered nonscarce, it can either have an infinite existence, no sense of possession, or it can be infinitely replicated.


See also

*
Non-renewable resource A non-renewable resource (also called a finite resource) is a natural resource that cannot be readily replaced by natural means at a quick enough pace to keep up with consumption. An example is carbon-based fossil fuel. The original organic matte ...
s *
Artificial scarcity Artificial scarcity is scarcity of items despite the available technology for production or the sufficient capacity for sharing. The most common causes are monopoly pricing structures, such as those enabled by laws that restrict competition or ...
*
Economic shortage 250px, thumbnail, A 2014 image of product shortages in Venezuela. In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (econom ...
*
Energy crisis An energy crisis is any significant bottleneck Bottleneck literally refers to the narrowed portion (neck) of a bottle A bottle is a narrow-necked container made of an impermeable material (clay, glass Glass is a non- crystalline, ofte ...
*
Post-scarcity economy Post-scarcity is a theoretical economic situation in which most goods can be produced in great abundance with minimal human labor needed, so that they become available to all very cheaply or even freely. Post-scarcity does not mean that scarc ...
*
Resource depletion Resource depletion is the consumption of a resource faster than it can be replenished. Natural resources are commonly divided between renewable resource File:Global Vegetation.jpg, Global vegetation A renewable resource, also known as a flo ...
* Scarcity heuristic *
Trade-off A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another ...


Notes


References

* * * * Wennerlind, C. C. (1999). The historical specificity of scarcity: historical and political investigations (Doctoral dissertation, the University of Texas at Austin). * * Daoud, Adel. (2010) "Robbins and Malthus on scarcity, abundance, and sufficiency: The missing sociocultural element." American Journal of Economics and Sociology 69.4 (2010): 1206-1229. * Daoud, A. (2018). Unifying studies of scarcity, abundance, and sufficiency. Ecological Economics, 147, 208-217. * Korhonen, J. M. (2018). Overcoming Scarcities Through Innovation: What Do Technologists Do When Faced With Constraints?. Ecological economics, 145, 115-125. Accessed a

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