The marginalist revolution in the late nineteenth century marked the beginning of the end of classical political economy and the birth of what came to be known as neoclassical economics (Sandelin et al. 2002). All three pioneers of marginal utility theory—Carl Menger (1871), William Jevons (1888), Léon Walras (1954) —referred to scarcity as the starting point for economic analysis. Through the work of these pioneers, especially Menger’s, the centrality of scarcity became a core premise for the advancement of contemporary neoclassical economics (see Hayek 2004:19; Robbins 1998:277). As a result, virtually every neoclassical economic textbook refers to scarcity—even though the field of economics is becoming increasingly differentiated.
I have argued in my research that scarcity problems are, and will remain, an important sub-set of problems, but we need to include sufficiency and abundance problems as well (Daoud 2007, 2010, 2011a, 2011b, 2015, 2017). Under scarcity, economics will give us insights about how people optimize their behavior to get as much as possible out of their limited resources. Neoclassical economics is mainly interested in what we can call allocation problems under a scarcity assumption. If actor A has a set of resources R, that is scarce in relation to fulfilling a set of wants W. Neoclassical economics tells us that a rational actor will optimize his or her resources in such a way that person can derive as much utility U as possible given the circumstances. These types of problems are central to many social science issues—they face governments allocating a limited budget to a myriad of popular demands, they face the individual in deciding if he or she should go to university or take a job. As social scientist, we need to keep analyzing these situations.
What is problematic with the neoclassical view, however, can be summarized in three points. First, this assumption is often postulated to be empirically valid without further investigation. It is stipulated to be valid in most cases of which economics is applied to, and rarely confirmed (Samuelson and Nordhaus 2001). A situation might be characterized by scarcity, but we know that even famines can arise when food is sufficient (Daoud 2017; Sen 1981). What is the real validity of a piece of research if its core assumptions do not hold when checked against reality?
Second, when we see the world from a scarcity perspective, we are led to ignore sufficiency and abundance problems (Daoud 2011b; Dugger and Peach 2009; Galbraith 1958). Many events or processes are not cases of scarcity. For example, unemployment is an abundance of labor power. Some would say, but is not unemployment rather a case of scarcity of jobs? No, not if we follow the original definition of scarcity, laid out by Menger, Robbins or Malthus for that matter (Daoud 2007, 2010). Labour power is a factor of production. A job, which is essnetially a position is a specification to perform a particular task—when the task if done by a worker, it satisfies fulfilling a want or need (Dugger and Peach 2009:41). The social world is filled with other abundance or sufficiency examples: consumer society with its cornucopia of goods and services (Offer 2006); post-scarcity society and emancipator reasoning (Bookchin 1971); technological development (e.g. 3D-printers, automated machines, artificial intelligence) that leads to exponentially higher levels of productivity (Söderberg and Daoud 2012).
Third, postulating leads us to ignore how scarcity problems became scarcity problems in the first place. What if scarcity is created? What if actor B has the instruments to manipulate actor A’s resources R to stay scarce? It would be more rational for actor A to engage in a power struggle with B, freeing one’s self from this artificial scarcity. In many settings, actors strive to achieve abundance or sufficiency in order to free themselves from the turmoil of scarcity (Keynes 1972). Even Adam Smith writes that ‘…the object of police [politics or governance] in general is the proper means of introducing plenty and abundance into the country, that is, the cheapness of goods of all sorts’ (Smith 1982:333). However, endowments or resources do not just appear as free gifts of nature or society. Capital owners control, for example, the supply of cars or housing. Even if demand exceeds supply, someone has to make the final call to produce more cars. Similarly, the supply of fish is not only controlled by the fishing industry but also by some natural seasonal cycles affecting the scarcity or abundance of fish. So even in functioning markets, individuals or groups may have vested interest in supplying more or less of some good or service. This is largely what political economy is about. (Panayotakis 2011, 2012).
In summary, the approach I am advancing shows that the fundamental problem of neoclassical economics lies within the set of socio-economic problems (Daoud 2011a). Under scarcity, economics informs us that agents will instrumentally choose the strategy to maximize their utility, making (allocating) the most out of their resources. What I have argued in several papers is that this is only one useful strategy among several; agents might reduce scarcity, inflate it, or create it. As such, the research agenda of Scarcity, Abundance and Sufficiency subsumes the allocation problem within a super-set of problems. Recalibrating socio-economic inquiry to research the dynamics of scarcity, abundance, and sufficiency will cast not only new light on old problems, but lead us to discover new problems that traditionally have been reserved for neoclassical economists. I invite you to explore these problems with me.
Bookchin, Murray. 1971. Post-Scarcity Anarchism. San Francisco, California: Ramparts Press.
Daoud, Adel. 2007. “(Quasi)Scarcity and Global Hunger.” Journal of Critical Realism 6(2):199–225.
Daoud, Adel. 2010. “Robbins and Malthus on Scarcity, Abundance, and Sufficiency.” American Journal of Economics and Sociology 69(4):1206–29.
Daoud, Adel. 2011a. Scarcity, Abundance, and Sufficiency: Contributions to Social and Econoimc Theory. Gothenburg: Gothenburg Studies in Sociology, Department of Sociology & Geson Hyltetryck.
Daoud, Adel. 2011b. “The Modus Vivendi of Material Simplicity: Counteracting Scarcity via the Deflation of Wants.” Review of Social Economy 69(3):275–305.
Daoud, Adel. 2015. “Scarcity and Artificial Scarcity.” in The Wiley Blackwell Encyclopedia of Consumption and Consumer Studies. John Wiley & Sons, Ltd.
Daoud, Adel. 2017. “A Framework for Synthesizing the Malthusian and Senian Approaches: Exemplified by the 1943 Bengal Famine.” Cambridge Journal of Economics.
Dugger, William M. and James T. Peach. 2009. Economic Abundance : An Introduction. Armonk, N.Y.: M.E. Sharpe.
Galbraith, John Kenneth. 1958. The Affluent Society. London: Hamish Hamilton.
Hayek, Friedrich August von. 2004. “Introduction.” in Principles of economics, edited by J. Dingwall, B. F. Hoselitz, and B. F. Hoselitz. Grove City, PA: Ludwig von Mises Institute and Libertarian Press.
Keynes, John Maynard. 1972. “The Economic Possibilities for Our Grandchildren.” Pp. 321–32 in The collected writings of John Maynard Keynes. Vol. 9, Essays in persuasion. London, New York: Macmillan ; Cambridge U.P. for the Royal economic society.
Menger, Carl. 1871. Principles of Economics. Grove City, PA: Libertarian Press; Ludwig von Mises Institute.
Offer, Avner. 2006. The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950. Oxford: Oxford University Press.
Panayotakis, Costas. 2011. Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy. London : Winnipeg : New York: Pluto Press.
Panayotakis, Costas. 2012. “Scarcity, Capitalism and the Promise of Economic Democracy.” International Journal of Pluralism and Economics Education 3(1):104–11.
Robbins, Lionel Robbins. 1998. A History of Economic Thought the LSE Lectures. Princeton, N.J.: Princeton University Press.
Samuelson, Paul Anthony and William D. Nordhaus. 2001. Economics. 17. Boston: McGraw-Hill.
Sandelin, Bo, Richard Wundrak, and Hans-Michael Trautwein. 2002. A Short History of Economic Thought. 1. Stockholm: SNS förl.
Sen, Amartya Kumar. 1981. Poverty and Famines: An Essay on Entitlement and Deprivation. Oxford: Clarendon.
Smith, Adam. 1982. Lectures On Jurisprudence. Indianapolis: Liberty Fund.
Söderberg, Johan and Adel Daoud. 2012. “Atoms Want to Be Free Too! Expanding the Critique of Intellectual Property to Physical Goods.” tripleC: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society 10(1):66–76.
Walras, Léon. 1954. Elements of Pure Economics or the Theory of Social Wealth. Homewood, Ill.: Irwin for The American Economic Association and The Royal Economic Society.
Photo: Johan Söderberg & Adel Daoud