The market's fear of scarcity must be replaced with the abundance of the loving God. And the first commandment of the Market: "There is never enough," must be replaced by the dictum of God's economy: namely, there is enough, if we share it (Jim Wallis, Sojourners).
You cannot wish scarcity away. It is one of the most fundamental realities of economic life, involving everything from raw materials to money to the very time we have on God's green earth. Still less can you wish away scarcity with shallow sentiment and decree that all of humanity will have enough if we follow the "dictum" of "God's economy (John Couretas, Acton Institute).
The concept of economic scarcity seems to make theologians and economists grumpy with each other. One reason is that these two groups tend to use the word scarcity in different ways.
Scarcity is a basic concept in economics. It applies to both individuals and the economy as a whole.
At the personal level, scarcity is the corollary of human finiteness. There are limits on what a person can do, even in an entire lifetime. There are only so many hours in a day, and days in a week. If I want to spend more time sleeping, I will have to give up some of my leisure activities. If I want more time for leisure, I will have less time for paid work or work around the home. If I want to spend more time doing art, I may need to spend less time growing food.
Time is limited, so people must make choices about how they spend their time. If I choose to spend more time on one activity, I will to spend less time on some other activity. Life is full of choices about how we will spend our time.
Humans are not omnipotent. One person will not have the strength and energy to build a new house and run a marathon in the same week. Our finiteness places limits on what any person can produce. Everyone must make choices about what they will make and do. The economic term for this is "scarcity".
Similar limits apply to an economy as a whole. The labour, capital, technology and other resources available in an economy are limited. Air, energy from the sun, and sometimes, water are the only resources that are available in unlimited amounts. The earth contains huge of volumes useful minerals and metals, but much of it is not easily accessible. Labour and capital are needed to extract it.
Human technology is limited. We do not have the technology do everything that we want. We might prefer to use energy from the sun to power our motor vehicles, but we do not have the technology yet and if we put further efforts into developing it, we will have to put less effort into other technologies that might be more useful.
Capital is also limited. Capital can only be obtained by forgoing consumption or leisure, so an increasing use of capital to be more productive, can only be achieved by increased saving. Every economy faces a choice between saving to make the economy more productive and consumption to increase well-being.
In the short-term, every economy has a limited population and therefore a limited labour force. Furthermore, there will be limited supplies of some of the skills that are needed to produce certain types of things. The reason is that when people decide to obtain a certain type of training, they choose not to develop other skills. People can only develop into one or two professions and they can only develop a limited range of skills.
In every economy, limited resources (labour, capital, technology and natural resources) place a limit on what can be produced. The technical name used by economists to describe this state of affairs is scarcity. It is not a perfect word for this purpose. "Finite" might be a better word, but we are stuck with the common practice.
Scarcity requires choice. Whenever, we want more of something, we have to choose to have less of something else. If I decide I want to earn more money, then I am choosing to have less leisure. Since I am finite, I cannot choose to do more work and have more leisure at the same time. The book of Proverbs reminds us of this truth.
A little sleep, a little slumber,
a little folding of the hands to rest-
and poverty will come on you like a bandit
and scarcity like an armed man (Prov 6:10-12).
This verse must be really important, because it is repeated word-for word in Proverbs 24:33-34. Scarcity is used here in a different sense, as a synonym for poverty, but the verse is a clear statement that we face a choice between leisure and poverty. Likewise, if I want to spend more time preaching the gospel, I will have to spend less time at work or relaxing.
Most of our choices we face involve a cost. The cost is whatever we have to give up, when we choose to do something else. If I choose to buy a television, then I will have to postpone buying a new laptop. That is the cost of my choice. Even giving has a cost. If I give money to the poor, I cannot use it to buy groceries.
In a money economy, choice at a personal level takes four forms.
I have to make the choice between work and leisure. This choice determines my income. The cost of my income is the energy I expend at work and the loss of leisure time.
I have to allocate my income between consumption and saving. The cost of increased consumption is a reduction in savings, which may close out some future options.
I have to decide how much of my income, I will give away to others. The cost of giving is the consumption that I will have to forgo.
I have to allocate my expenditure on consumption between a multitude of goods and services that are available for purchase.
We are constantly making and revisiting these types of choice. Economic is really a study of how people make choices. The economist attempts to understand how people weigh up the cost of the choices they must make and how they allocate their time and energy between the infinite number of choices that everyone faces.
In an idealised paradise, everything I want would be immediately available. As soon as I wish for something, someone would bring it to me. Without scarcity, there would still be no choices, but every choice would be costless, because I would never have to give up anything to get something else.
Economics would be pointless in and idealised paradise. If there are no choices that involve costs, economics has no role. Decisions about allocation of effort and resources would not be needed.
Unfortunately, or perhaps fortunately, we do not live in this idealised paradise. (The paradise of the Christians hope will not be like this.) We all have to deal with a tendency to want more than we have. Societies have to find ways to deal with the reality the demand for goods and services is greater than supply. John Couretas is correct in saying that one of the fundamental realities of economic life is scarcity of everything from raw materials to money to the very time we have on God's green earth.
Dealing with Scarcity
Societies have dealt with this problem of scarcity in different ways.
In traditional societies, the king or chief did most of the allocation of goods and services, and they did fairly well from it. The ordinary people usually lived a life of object poverty, but they were expected to provide the ruling group with everything they wanted whenever they wanted it.
During the Second World War, coupons were use to allocate a limited supply of consumption good. Essential goods like petrol and fabric could only be bought with a coupon. This limited the demand for scarce goods.
In the Soviet Union, the problem of scarcity was solved by queuing. The supply of bread and meat was hardly ever sufficient to meet people's needs. Most of the time the shops were empty. When supplies came into the shops, people would queue to make their purchase. Those who were to slow to get into the queue would miss out.
In market economies, the problem of scarcity is solved by prices. The price of every product reflects the supply and demand for that product. If the demand for a good increases relative to the supply, the price will increase, which will reduce demand. If the supply of the product increases then the price will fall, encouraging more people to buy the product. Prices adjust up and down until the demand matches supply.
The first three options leaves one group of people dissatisfied. The market option, also leave some people dissatisfied, but it does help people to adjust their wants to what is available, because prices allow them to quantify the costs of their choices. If a person wants a high definition television, they can work out exactly how many hours they will have to work to pay for it. They can see in advance the cost of satisfying this need.
Prices have the affect of reducing the demand for goods to a more realistic level. For example, if high-powered sports cars were free, everyone would want one. Because the price is actually well beyond the reach of almost everyone, most of us just take sports cars off list of things we might want. The high price means that we rarely think about the possibility of owning a sports car. Prices enable us to focus on choices that are more realistic for our situation.
Market prices do not eliminate scarcity, but they help people make choices that match their consumption and saving to their earning capacity.
Some goods are abundant. There is more available than people want. When a good is abundant, anyone can get more it at no cost, so the sign of economic abundance is a price of zero. No one bothers producing more of an abundant good, because they will not get a return.
Air is a good example of an abundant good is air. There is more air available than people want, so there is not market for air. Air is abundant, so the price is effectively zero.
Water is abundant in most places, so it is usually available for free. However, as the population has increased and uses for water have proliferated, it has become scarce in many places and people now have to pay for it. Markets for water are emerging.
If everything were available in abundance, markets would disappear. In the idealised paradise described above, markets cannot exist because the price of every good and service is zero. Nothing has any cost, so everything is free.
The continuing existence of markets for many goods and services is evidence that scarcity still exists. Although we live in a prosperous society, we have not yet reached the place, where scarcity has disappeared. In a developed economy, basic food and clothing are fairly abundant, so their prices have fallen quite low, but new goods and services want have been developed that people now want. Although old needs have been well and truly met, new needs have emerged that have not yet been satiated. The existence of prices above zero means that economic scarcity still exists.
Although the concept of scarcity makes from the perspective of economics, and although I disagree with the political approach of Jim Wallis, I have some sympathy with his thoughts on scarcity and abundance. During the last few centuries, the western world has experienced a massive increase in income and wealth. A number of thing have made this prosperity possible,
Increased specialisation and division of labour
Expanded trade and globalisation
Huge accumulation of capital
Massive technological advances
Relatively stable legal systems
These factors have combined together to produce previously unknown prosperity. Many people in Jesus times really worried about how they would gather enough food to survive for one more day (Matt 6:31). In the modern world, most people do not have to worry about where their food and clothing will come from.
What is surprising is that this substantial prosperity has not increased contentment. As people have gained more they want even more. Compared to the past, we seem to have a massive abundance, but most people are still dissatisfied and want even more. An even stranger thing is that Christians are no different. Jim Wallis is right to put his finger on this disconnect. It does not undermine the foundation of economics, but it does show that something is wrong with the way that Christians understand the world.
Supply and demand are not fixed. The supply of goods depends on our ability to combine energy, intelligence and stuff from the earth to produce things that people want. Supply can increase gradually over time, but cannot increase dramatically unless new technology emerges.
Demand depends on our attitudes and desires and is only limited by our imagination.
A strange thing has happened in the modern world. The supply of goods has increased steadily. This would normally cause prices to fall, except that demand has grown even faster. Our needs and desires have expanded radically. If a poor man from Jesus time were offered the lifestyle of a person living on welfare today, he would feel incredibly rich. The lifestyle of a rich person from Jesus time would be seen as inadequate today.
This has a strange consequence. Although we are the richest generation that has ever lived, we are also the most dissatisfied generation that has ever lived. We have gone into debt, so we can have more stuff now, but we still want more. This is a different scarcity. An unbound imagination can never be satisfied.
Scarcity now derives from demand rather than supply. In traditional society, scarcity was the consequence of severe limits on the ability to produce. A subsistence farmer or hunter often needs to work all day, just to produce enough food to live. He had no time to dream about luxuries. Scarcity arises out of technical constraints on the ability to produce.
In the modern world, pressure on scarcity comes from the demand side. Free market capitalism has largely resolved the problem on the supply side. A modern economy can easily produce food and shelter for all members of society. In the Western world, scarcity arises more out of the insatiable demand for more and more goods and services. The problem is that there are no physical or technical limits on what people can desire or want. Scarcity arising from the demand side form cannot be resolved by producing more, as desire and wants can grow faster than productivity capacity. The only solution to pressure from this side is for people to be happy with what they have got.
Christians Should Be Different
We should not be surprised that many people are not satisfied with what they have got, but Christians should be different. Paul demonstrated a different approach to life.
I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do everything through him who gives me strength (Phil 4:12-13).
Paul did not need more and more goods and services to be content. He found satisfaction in the one who gave him strength.
The Proverbs of Agur say something similar.
There are three things that are never satisfied,
four that never say, 'Enough!':
the grave, the barren womb,
land, which is never satisfied with water,
and fire, which never says, 'Enough!' (Prov 30:15,16).
Some things are never satisfied, but God's people are not on the list. We should not be in the group that is never satisfied and never has enough.
The huge increase in wealth that we have seen over the last few centuries has resolved the production problem that constrained the subsistence economy. Productive efficiency no longer needs to be the overriding economic driver. Other goals can now be achieved without risking economic security. This increase income and wealth could have several different impacts in the Christian community.
An equivalent increase in consumption of goods and services. This is what we have seen in the Western World, but it has not produced increasing contentment. In fact the more we have, the more that we seem to need.
Massive accumulation of capital. This would make the economy even more productive in the future.
An increase in leisure time. There been some increase in leisure, but most people work as much as ever. Women are probably working more.
Outpouring of generosity. The New Testament churches were very generous. They shared with each other and supported people and communities that faced poverty. However, their generosity was limited by their own relative poverty. They just did not have the capacity to support a dramatic economic transformation.
The modern world has chosen option 1 and 2 with a little bit of option 3. That makes sense for the world.
The Church could have stood apart from the world by choosing option 4, but we have not been that enthusiastic. A wonderful opportunity to transform society and advance the Kingdom has been dissipated in a property boom and a frenzy of consumption.