A Blog of the Global Justice Movement

Wednesday, February 2, 2011

The Problem with Money, Part III: "Post Scarcity" Economics

Yesterday we summarized the claim in conventional economics that humanity is nothing more than a consuming machine that swallows everything in its path, leaving nothing behind, a veritable "black hole" of consumption, from which no light of hope can escape. Is this, however, a correct or believable analysis, even given the assumptions of conventional economics?

From the perspective of binary economics there are so many problems with the standard scarcity argument that it's difficult to know where to begin. First, of course, economic scarcity says absolutely nothing about the possibilities inherent in what R. Buckminster Fuller called "ephemeralization," that is, the tendency of human beings to "do more with less."

Economic scarcity is also, in accounting terms, a "balance sheet account." That is, it makes a statement about the amount of available resources at a specific point in time. It says nothing whatsoever about how much there was a moment ago, or will be available in the next moment. Economic scarcity is a "static" analytical statement . . . yet economics is a dynamic science — an "income statement" for an economy, relating the production and allocation of economically scarce resources over time.

This does not make economic scarcity any less valid — economic scarcity is true, and nothing can change that — but it can and must change how we think about "scarcity." We must, in fact, advance beyond the presumed constraints imposed by dependency of a dynamic science on a static analysis. This is why binary economics is construed as a "post-scarcity" school of economic thought. It's not that binary economics claims to overcome economic scarcity. That is impossible, for economic scarcity is a simple statement of Aristotelian logic: a thing cannot both "be" and "not be" at the same time, or (in economic terms) you can't use the same chunk of resources for two different things at the same time.

The other big problem with how conventional economists understand scarcity is the "humanity-as-a-giant-consuming-black-hole" assumption; that human wants can never, never, never, never, never be satisfied. Really? What about the theory of marginal utility, a pillar of modern economics?

To quote from the Wikipedia, "In economics, the marginal utility of a good or service is the utility gained (or lost) from an increase (or decrease) in the consumption of that good or service. Economists sometimes speak of a law of diminishing marginal utility, meaning that there are diminishing returns in consumption, so that the first unit of consumption of a good or service yields more utility than the second and subsequent units."

Oh. You wanted it in English. Okay.

The theory of marginal utility as it relates to consumption is that, as you increase your consumption of a good or service, your satisfaction or the utility you derive from consuming each additional amount of that good or service tends to decline until you reach satiation/satisfaction and you stop consuming.

D'oh.

According to marginal utility, then (which most conventional economists accept), the idea that human beings are unstoppable consuming machines (which most conventional economists also accept) is completely invalid. While some binary economists might reject the theory of marginal utility, given the usual understanding of scarcity found in conventional economics, marginal utility certainly justifies the description of binary economics as a "post-scarcity" paradigm.

So. Binary economics rejects the idea that humanity is inherently an unstoppable consuming machine. That still doesn't tell us how to overcome the presumed constraints imposed by economic scarcity . . . or does it? We'll look at that question in the next posting in this series.

#30#

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