Last time, I concluded on the suggestion that economics is a lot more ubiquitous than we tend to think. Let’s dig deeper into the fundamental question of why we even need economics at all.
Let’s in fact take this forward from where we last left off on one particular point. Back in Episode 009 discussing opportunity cost, we were faced with a few dilemmas, such as which of the two full-time job offers to take, or even something as mundane as whether to go out for the evening or stay in. That’s when the idea of scarcity came to the fore.
The Specter of Scarcity
The fact of the matter is quite simple: almost everything - every resource we consume, is scarce, in other words, in finite supply.
This in itself is not a revelation to us. We are all aware that the natural resources on our planet are finite (even if perhaps as a species we should’ve recognized this sooner?) Land is scarce, our skills are finite, our attention is limited. We are aware perhaps more than anything else that time is scarce: how many of us have wished we had more than 24 hours in a day?
But scarcity cuts through other dimensions of reality as well. You could say that the traffic lights are a response to scarcity - streams of vehicles cutting across a perpendicular thoroughfare cannot all drive on at the same time. So we are forced to allocate.
Striking Deals
Scarcity forces choice. And choice reveals values. Let’s think about this for a moment. If we could have any amount of anything at any moment at no cost whatsoever, in some sense you’d never need to bother to choose anything, you’d just have everything.
But because we don’t live in such a universe, we have to pick. And as we saw in Episode 003, price is a signal that gives us information of the relative affordability of the different choices we are confronted with, representing the underlying reality of their availability in the system as a whole. And that connects to value - what we value more, how much we think a thing is worth, and thus whether the price on offer is viable for me or not.
This throws up moral, even philosophical, questions: the choices I make in my spending reveal my values, could I have made better choices and thus led a life of better value? How do we define this whole ‘value’ thing in the myriad nuances of that word I’m using?
But it also has practical ramifications. At the very least you don’t want to go broke, or have buyer’s remorse, or in general get a bad deal.
Enough’s Enough?
And then there is the question, if resources are scarce and technology or innovation is about reducing the scarcity of resources by means of improved production (my whole TecC series since early 2025 is dedicated to exploring this), assuming we do increase the availability of a certain resource: how much is enough?
This is a thorny question, because, human needs and wants are infinite - as soon as a previous, projected yardstick of ‘enough’ is met, our wants expand, we want more.
So in fact this is not just a puzzle in the physical realm, but also a bit of a quandary in the psychological.
Consider for example, the phenomenon of artificial scarcity, taking as an example diamonds. Sidestepping the question of what diamonds are actually worth or why they tend to become best friends with some of us, are they even scarce in the first place?
Given diamond is just carbon, if we devise a laboratory method of crafting the perfect diamond completely indistinguishable from the ‘real thing’ how would the dynamics shift? (Also, maybe they already have done lab stuff, don’t quote me on this, this is just a thought experiment.)
Still, and leaving the glitter aside, while not perfect, economics is humanity’s best known attempt to handle the specter of scarcity.
Given the pace of technological progress, there is a chance that many more elements will sooner or later escape the straitjacket of scarcity but in our current reality we cannot escape it -- and I’ve looked into this exciting prospect in my futurist research, but until then, we’ll have to use economics for those elements -- and until then, ironically annoyingly enough for the siren seductress Scarcity, I’ll have a fair bit to write about all this!
Article written by Ash Stuart
Images, video, voice narration and some footnotes generated by AI
Nothing in this presentation constitutes as advice - financial, investment or other
Further Reading & Reference
* A Study of Innovation from a Technocentric Perspective
