[extropy-chat] economics, scarcity, and plenty

David Masten dmasten at piratelabs.org
Tue Nov 1 22:21:04 UTC 2005

I'm new to the list, and I seem to have come in on a discussion of
things that just don't make sense. "Economics of scarcity" and
"economics of plenty" are meaningless to me.

If we are talking about economics then I expect that the words used
would be the terms of art for economics. The usual definition of
economics is the study of the allocation of scarce resources. Thus the
phrase "economics of scarcity" is redundant, and the phrase "economics
of plenty" is an oxymoron.

Further, scarcity is a term of art within economics and has precise
meaning that does not quite match the usual connotation. Per Samuelson
and Nordhaus' textbook _Economics_:

  Scarcity is the distinguishing characteristic of an economic good.
  That an economic good is scarce does not mean it is rare, but only
  that it is not freely available for the taking. To obtain such a good,
  one must either produce it or offer other economic goods in exchange. 

  Economic Good – A good that is scarce relative to the total amount of
  it that is desired. It must therefore be rationed, usually by charging
  a positive price.

  Free Good – Those goods that are not economic goods. Like air or
  seawater, they exist in such large quantities that they need not be
  rationed out among those who wish to use them. Thus their market price
  is zero. 

If by "economics of plenty" we are suggesting "studying the allocation
of free goods" then there is nothing to study! There is no competition
for the resource and thus no allocation to study.

Changing goods from economic to free or vis-versa does not alter the
principles of economics. In fact, air is not really a free good any
longer. We have realized that the atmosphere is of limited quantity and
that use of air for the disposal of industrial by-products is and must
be an economic good, that is, it is an allocated resource for which
there isn't enough to go to everyone in the quantities they desire.


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