FBXL Social

I don’t think that the concept that economics (and by extension economic systems) is fundamentally about scarcity is a remotely controversial statement. I bet you any money that most econ 101 courses would say the same thing. Ultimately people have unlimited desires and there are limited resources, and so we have to figure out how to allocate those limited resources. That is true under capitalism, it’s true under socialism, it’s true under tribalism, it’s true when there’s no humans around whatsoever and single-celled organisms need to figure out how to use materials around them most efficiently.

Nothing about economics says that value can’t be created. What it says is that we have to deal with scarcity. To create value, you need to take limited materials, limited manpower, limited equipment, and use it to produce something new. It’s just clever use of resources to take something that is abundant and turn it into the thing that you can trade with other regions that are not as abundant in that thing, and that is also been the basis of global trade for most of human civilization. People didn’t cross treacherous seas so they could buy wheat and transport it to places with plenty of wheat. They would end up trying to get rare things such as silk and spices.

Says law is explicitly about scarcity. It’s saying that there isn’t enough of everything to go around, and so if there’s more of a certain thing then more of that thing will get used. If anything, if economics is about limited resources and unlimited human desires, Says law shows that human desires will always expand to fill available resources.

An example of this would be aluminum. When it was first isolated, aluminum was considered a precious metal more valuable than gold. One of the descendants of Napoleon had the aluminum silverware that he only brought out for his most esteemed guests. The tip of the Washington monument is covered in aluminum, and at the time it was considered an ostentatious display of wealth and used up a good chunk of the free aluminum available on the planet of the time. Later on, a process came about for extracting aluminum from more or less regular rocks, and aluminum became much more abundant in metallic form, and as such the price went down and the demand for it when way up. An old retiree would never have purchased an aluminum boat in the days of that Napoleon, but today it’s common and maybe even considered less desirable than a fiberglass boat. I would say that the aluminum example is a perfect example of says law, and shows how the less scarcity there is the more thing gets used, requiring scarcity to be a major factor in how much a thing is used.

Smith maybe thinks that air has no value, well… he’d be wrong. There was once a time that the air contained many atmospheres worth of carbon dioxide. That was the most important thing in the world for the vast oceans of plant life that existed about 2 billion years ago. At that point, however, oxygen was a toxic by-product of photosynthesis, and a combination of the toxicity of oxygen and reverse greenhouse gas effect resulted in the largest Extinction event ever, with approximately 95% of all life being destroyed. At that point only forms of life that had some tolerance to oxygen could survive, but eventually forms of life came about that were able to make use of this oxygen to produce larger amounts of energy than would have been possible otherwise. So there was a scarcity of energy, and a abundance of oxygen, and so life itself ended up making use of the oxygen to deal with the lack of energy problem. In this way, even in the absence of humans, life itself dealt with scarcity and abundance. In the Graysonian ethic, I talk about how economics don’t require money to apply. This is an example of that, where life itself ends up making unintentional economic decisions to make use of abundant resources and economize scarce resources.

Even today, hundreds of millions of dollars are spent every year on getting air to where it needs to be, showing that it isn’t something without value and it isn’t something that people aren’t willing to pay for. It all depends on the circumstance. You may be able to pull enough air out of your local surroundings to survive, but if you are underwater, or underground in a mine, or in space, or in the midst of the house fire, or you’re trying to run a gasoline or diesel engine really hard, or you’re trying to run a coal boiler to run a power plant, you will be willing to pay a premium for air.

One final thing, is that value isn’t really determined by scarcity or abundance per se, it is relatively subjective. If we go back to the oxygen catastrophe, all life on the planet at that point considered oxygen to be a toxic by-product, and it wanted that byproduct gone, it didn’t want it around. What it wanted was the carbon dioxide that was plentiful. Today, animal life desperately wants that oxygen, to the extent that we will die without it after a few minutes, and an excess of carbon dioxide will be toxic to us and to kill us. In spite of its utility, most people don’t want or need any amount of chlorine gas, but there’s a large market for it.