Scarcity – Why It Is So Important to Remember
Marxists made several fatal errors of assumption in imagining their perfect society; they believed human nature would change, they dismissed the importance of incentives and thought individuality was less important than altruism; but a major economic mistake was an assumption of abundance rather than scarcity.
In a
higher phase of communist society, after the enslaving subordination of the
individual to the division of labor, and therewith also the antithesis between
mental and physical labor, has vanished; after labor has become not only a
means of life but life's prime want; after the productive forces have also
increased with the all-around development of the individual, and all the
springs of co-operative wealth flow more abundantly -- only then can the narrow
horizon of bourgeois right be crossed in its entirety and society inscribe on
its banners: From each according to his ability, to each according to his
needs![1]
Marx imagined a development of man, both in learning and in nature; he predicted a new desire to work because labor would be for oneself not for an employer, yet not for selfish motive, but for enlightened desires.
But can this new enlightened man really confine his needs to a very specific set of requirements? Does one need a three bedroom house if he has two children, or can he make do with a two bedroom home? Does one need meat seven nights a week? In the modern age, do we all need a computer? How can one distinguish between a true need and a want? The more that the abundance of modern society hides the true nature of scarcity, the more that our needs grow – and we forget that abundance is created out of scarcity but scarcity does continue to exist – so how can we determine what our needs are, and how can we define them and still continue to allow for free choice? Does one need several suits of high quality, and if so, what style?
The assumption of abundance leads a Marxist theorist to assume that all needs are satiated and these questions can be dismissed: each person may have the three bedroom home, regardless of if it’s a true need, and each person can have suits or dresses of whatever style they wish. Yet, how to make sure that these suits, dresses and homes are created in the society is ignored. Because all of the “needs” are assumed to be met, the idea that one might take more than he needs is also ignored – as if people do not want a larger house than three bedrooms if he could have it, nor more dresses than one could possibly wear. The imagined “new man” and “new woman” who are happy with exactly what they truly need, is evoked to dismiss such ideas.
At first,
doubtless, and perhaps for twenty or thirty years, it will be necessary to have
various regulations. Maybe certain products will only be supplied to those
persons who have a special entry in their work-book or on their work-card.
Subsequently, when communist society has been consolidated and fully developed,
no such regulations will be needed. There will be an ample quantity of all
products, our present wounds will long since have been healed, and everyone
will be able to get just as much as he needs. 'But will not people find it to
their interest to take more than they need?' Certainly not. Today, for example,
no one thinks it worth while when he wants one seat in a tram, to take three
tickets and keep two places empty. It will be just the same in the case of all
products. A person will take from the communal storehouse precisely as much as
he needs, no more. No one will have any interest in taking more than he wants
in order to sell the surplus to others, since all these others can satisfy
their needs whenever they please. Money will then have no value. Our meaning is
that at the outset, in the first days of communist society, products will
probably be distributed in accordance with the amount of work done by the
applicant; at a later stage, however, they will simply be supplied according to
the needs of the comrades.[2]
It is the assumption that all others can satisfy “their needs” that convinces the Marxist that an individual won’t sell off an extra portion of communal goods. It is an assumption that – of any good – individuals won’t want more than they need. The combined assumption of a better human nature, something that would come with the satiety of need, and the ability to satisfy all needs in the first place, create this imagined restraint. But there is always scarcity.
Scarcity exists because of the nature of the universe – time creates scarcity. If one uses his time to produce any given thing, he is not producing something else. There is always a choice. Because of this, we must always choose between scarce resources. We must always make a choice in what to produce. We must always choose what our “needs” are. Even a millionaire must decide whether he wants to buy mansions or spend the money building a foundation to provide for the poor; build a private space shuttle or create a company that drills for oil. With as much money as could possibly exist, one would still have to prioritize the huge projects that it will be used for.
So, in a society, even with all human resources allocated (zero unemployment) there will still be scarcity. Even with capital well distributed and incentives in line and all people employed in jobs of their choosing or of societies choosing; there will still be scarcity. Choices will have to be made for investment and individuals will still have desires that will remain un-satiated. But why is this scarcity important? If all humans are made millionaires because in a socialist society more wealth is created for each man, because no man can hoard profits and all men are well educated, then who cares if each man is only a millionaire and not a billionaire; who cares if he must choose between a private jet and a third mansion?
It isn’t the personal struggle of this choice that is of major importance, it is the consequences of the fact of scarcity that matters. Because of scarcity a society must make choices as to investment, just as individuals must make choices as to consumption.
In a market economy, these choices are made according to the balance created by supply and demand; the price moves and price signals encourage or discourage further investment, which then determines the level of the next round of investment, which in turn, by increasing or decreasing supply, affects the price.
In a non-market economy, these choices must still be made. Marxists assume that the abundance of their new society will make this easy. The people will simply create the products that they want, share them according to need and enjoy the fruits of their labor. But when one recognizes scarcity, it becomes clear that choices will need to be made regarding investment, and price signals won’t exist because they depend on profits which are not allowed.
The choice of in what to invest is not simply a choice between building more housing and sewing more dresses, and it isn’t a binary matter of whether or not to build mansions. It is a very sensitive gradation of how many houses are needed at each size and how many of each color dress of each size to sew, and each of these many change from each day to the next as children grow and women change their mind regarding fashion. If the society is to be truly happy and free, surely the choices of the individual women must be expected to affect what is produced.
Even if fashion is expected to fade away as more important considerations take its place, the choice of exactly how many baby strollers, bed sheets and computer software of myriad kinds must be determined. Taking the example of software, one might imagine that those who enjoy creating it might simply be left to do so and paid by the collective authority as they require. Yet, what exactly do the software developers require? Their needs must be defined; do they need three sets of bed sheets? Who decides? And if the makers of baby stroller wish to have software that allows them to calculate dimensions of various designs of stroller, must the writers of software create that for them, even if they would prefer to work on something else? If not, then how is this need filled? And, if so, should the software developers be made to make the baby stroller software before or after the software that the bed sheet manufacturers require?
In any society that can create abundance, people must specialize. It is specialization and trade, as Adam Smith taught us so long ago, that create wealth. If each person simply farms and sews his own clothing – then choices are easily made but the society is primitive. In a society with specialization and trade, if the price mechanism is abandoned something must replace it that will allow the preferences of the people to be known and the resources allocated for the creation of those preferred items.
It is this economic calculation that economists spent the 1930s debating. It is not as simple as the socialists had thought – without prices, demand was only very vaguely known. When one item was in short supply in stores, consumers would choose another – so it wasn’t easily seen that more should be made. Consumers could vote with a ballot, thought socialists, but how often can you count millions of ballots; and how many items could consumers write up on one ballot? Even with computers, this dreary process of consumers spelling out every desire and the central producer crunching all of these numbers, followed by the central authority dividing resources according to these mass needs cannot compare with the fluid process of millions of individuals following the profit incentive to fill niche markets or mass desires as they each see fit to do.
Hence scarcity in any form, something which must always exist so long as time divides the day, means that communal property won’t easily allocate evenly and fairly among the people.