Monday, April 28, 2014

How Did Plenitude Overcome Scarcity?

Short answer: it hasn't actually accomplished this feat. At least, not in the broad sense of the term. Indeed, some "get" that scarcity is still real. After all, considerable poverty remains entrenched - even in places where it is least expected. Even so, some along the right of the political spectrum, imagine plenitude as endless digital options for consumers. Others envision plenitude as finance "magic" or fiscal "power", i.e. all it takes is for government to do the "right thing" and spread the wealth around. Even though fiscal activity is only one of many random elements, the plenitude it implies, can overwhelm the reality of economics as people based.

In the classroom of course, economics continues to be taught with scarcity as a basic tenet, to the dismay of those who are more than ready to implement the plenitude programs of their choice. While I'm not ready to jump on board with those plans, readers may suspect that I have a beef nonetheless, with the way mainstream economics approaches scarcity.

Why so? The scarcity of finite time has not been adequately considered, in the seeming plenitude of random resources. Even though the intersection of time and resource use provides an indicator of economic stability, this intriguing focal point has yet to be explored for the answers it might hold. Neither Keynesian or Austrian has real use for the consideration of economic time. A mistaken attribution of time as a side factor could explain this, especially given the ways in which labor became defined in the 20th century. It's easier to understand specific wages for instance, than how farmers, the self employed and entrepreneurs interact with their environments to generate additional spending flows.

The lack of consideration for finite time use in a context of random resources, also creates problems at the heart of tax and redistribution systems as noted in a recent post. In other words, the resource of our finite time, gets mixed in with everything from the minimal to the infinite - like so many scrambled eggs in a skillet. No wonder too many factors just aren't adding up.

By no means is this the first time that the idea of plenitude appears to be gaining ground. But acquiring wealth in the present does not hold the same meanings it once held, in material terms. Unfortunately, "extra" savings can be confused as economic security or even inappropriate behavior. Growing payouts to shareholders fit this category, and on first consideration, may make little sense. Let's think for a minute - in spite of J.W. Mason's ability to persuade in his New Inquiry article - about the fact that many companies are currently sitting on piles of cash. Sure it's easy to get dare shareholders decrease productive activity on the part of a company! But would companies really be enthusiastic about this approach, if there were more reasonable ways to interact in the marketplace?

After all, most individuals would rather be doing something a lot more stimulating than money sitting, if and when there are ways to do so without undue risk. And if uncertainty holds back many undertakings, why isn't there more discussion how to change these circumstances? This is not the cozy and secure position that many might imagine. Ongoing economic flows are far more important than any "results" - which will remain in transition under any circumstance.

Just the same, Chris Dillow notes a growing belief that distribution of surplus is now the order of the day, and the quote he highlighted is worth repeating:
The central problem of economics is the distribution of the surplus, rather than the allocation of scarce resources.
Suffice to say, I don't agree. Before we know how far we can run, we need to know the starting line.

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