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Mother Pelican
A Journal of Solidarity and Sustainability

Vol. 14, No. 9, September 2018
Luis T. Gutiérrez, Editor
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Scarcity and Fear of Scarcity

Carmine Gorga
The Somist Institute

Originally published by
EcoIntersect, 7 August 2018
REPRINTED WITH PERMISSION


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Zillions of transactions that occur daily offer prima facie evidence that there is no such thing as scarcity in the world, nor does the firm expectation of entering into zillions of transactions tomorrow show evidence of fear of scarcity.

And yet, in any economics textbook and in nearly every sentence in these books there is a subliminal - if not explicit - warning against scarcity. An official definition of economics remains "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."

Worse. Any negative phenomenon in the economic world is attributed - again, explicitly or implicitly - to this imponderable factor, scarcity. High prices? Scarcity. Depressions? Scarcity. Poverty? Scarcity.

Consequently, there is a twist at the core of the functions of this discipline. The function of economics is not to solve the problem of scarcity; if there is one. The concern of economists ought not to be with the size the resources available at any moment, but with the fairness of the distribution of available resources. Economists act as if they were technical engineers; they ought to function as moral scientists - as their illustrious precursors, up to Adam Smith, use to function. No, Adam Smith did not transform economics into a science. Economics is not a science today; economics is a mental indiscipline that has been in a state of crisis ever since Adam Smith. As Philip Pilkington, a brilliant British economist, has accurately pointed out:

“Mainstream economics moves forward not through logical development and integration, but through forgetting."

As to the presence of scarcity in the world, we need to make a dispassionate analysis of three forms of scarcity: scarcity of natural resources; scarcity of sources of energy; and scarcity of money.


The concern of economists ought ... to be ... with the fairness of the distribution of available resources.

Left to her own devices, nature suffers from no scarcity: Nature offers only superabundance. A codfish lays one million eggs at a time; a tree scatters thousands upon thousands of seeds in the wind. A tiny mustard seed yields a majestic tree. As a result of predator/prey relationships, there is sufficiency in nature.

What of energy? Looked at historically, it seems that as soon as one source of energy is depleted, inventive engineers and entrepreneurs find a new source. Wind and sun are the rage now. A grain of sand, if we believe in the equivalence of matter to energy, contains enough energy to keep us warm for a long time. But, it is said, but at what cost? Thus, we ran headlong into the most cited form of scarcity ever, scarcity of money. Here indeed the discourse gets complicated because one objectively finds scarcity of money for most people and a superabundance of money for the few. The issue, then, is not scarcity of money but an inefficient distribution of money - and, indeed, an issue of prices. Someone famously said something like, “Keep costs low enough and I can buy the entire yearly production of a nation with one penny."

All this confusion happens in the economic discourse because phenomena are analyzed one at a time and not put all together in relation to each other. Walking on a mountain in Ecuador recently and seeing that every inch of the land was covered with superabundant vegetation, it became easy to dream of the day in which governments and corporations are to make the human stomach capable of digesting directly grass, rather than letting a cow transform grass into a steak. If governments and corporations were to systematically and responsibly invest in very long-term R&D projects, rather than being glued to the results of the next financial quarter and at best the next election cycle, dreams like these might become a reality in due time.


The issue, then, is not scarcity of money but an inefficient distribution of money.

There is no scarcity of natural resources. The only (relative) scarcity is that of precious metals. And ever since time immemorial, people who want to control people have generally decided to use scarce precious metals as a base for the creation and distribution of money.

Money is so powerful an instrument that, to create a new and better world, some want to do away with it altogether. They confuse the thing itself with some of the nefarious uses that are made of it, chief among them is the use of money to control people. This use is not inherent to money, but a consequence of the scarcity of money, namely, inherent to the conditions under which money is created and distributed. Contrary to much idealistic/unrealistic ideology prevailing today, money is a splendid thing. Indeed, properly used, in our age of individualism and human separation, money can become our best tool of community rebuilding.

Let us concentrate our minds, then, on the procedures for the production and distribution of money. Money used to be produced mostly with gold or silver or copper, because they are nonperishable materials. Scarcity and durability was a corrosive combination. It was up to the Chinese to break this gordian knot by creating paper money toward the end of the first millennium of Our Era, followed by the Colonists in the Commonwealth of Massachusetts in 1690. Benjamin Franklin took a hold of the issue, and never let it go. He fostered and won the War of Independence on this issue; “taxation without representation" was not much more than an appealing slogan to be uttered upon demand. Benjamin Franklin carried the issue all the way to its inscription in Article 1, Section 8 of the United States Constitution. The entire effort fell into suspended animation with Alexander Hamilton establishing the Bank of the United States on the European model, in which bankers create money for the benefit of friends and relatives first - and if crumbs fall off their table to feed the hoi polloi, that is truly beyond their power to control. It gives capitalists great satisfaction.


The entire effort fell into suspended animation with Alexander Hamilton establishing the Bank of the United States

Keynes, of course, berated the “barbaric" tradition of creating money backed by precious metals and, eventually, even called for the creation of units of account named Bancors, which were designed to call attention to dangerous imbalances in international trade and thus facilitate the introduction of necessary corrective measures.

Concordian economics picks up on these historical threads and calls for the national bank - the Federal Reserve System (the Fed) in the United States - to create money (using superabundant paper and electronic - indestructible - digits in a ledger book) by issuing loans - at cost - to public and private entities only for the creation of new real wealth. Thus, there will never be any scarcity, but always sufficiency of money. When the Fed creates money, not in relation to gold, not in relation to the hunger of voracious moguls, but in relation to the real needs and potentialities of the country, scarcity will be replaced with sufficiency. With money, not created to satisfy the frenzy of consumer loans, but exclusively for capital expenditures, all the potential beneficial uses of money will be unleashed within the nation. More pointedly still, economists will finally be given an opportunity to learn how to let robots do the work of the slaves; and, if the ownership of the robots is equitably shared among all those who produce them, we are all finally going to gather the fruits of the digital age of abundance.


money ...created ... exclusively for capital expenditures, all the potential beneficial uses of money will be unleashed

We must have peace and prosperity. We must solve the economic problem - not for its superficial financial aspects, and not even for the redemption of our past sins, but for the redemption of our current sins, for the deep moral and theological sins that we commit while trying to “make" a living. Look at the carnage, look at the moral mayhem that the scarcity of money and the hoarding of money and wealth in a few hands, creates. We must solve the economic problem - not to “make" money, but for us to earn the kingdom of heaven on earth by practicing morality and the right theology. What a waste to spend one's life worrying and caring about money.

No scarcity, then, can be found of either natural resources, or energy, or money. And yet, and yet, fear of scarcity is forever going to remain the mother of all evil.

Fear of Scarcity as the Mother of All Evil

Fear of scarcity is the mother of all evil. There is no scarcity of natural resources or energy or money, but fear of scarcity is real - as evidenced by the general condition of our age. The rich are in a constant search for subsidies and tax deductions; the middle classes are in a constant search for a job; the poor are in a constant search for entitlements. How can this condition be characterized? We need to pass from psychology to economics. Translating from the language of psychology into that of economics, fear of scarcity is classified as economic insecurity

What is the cause of this insecurity? The cause is not scarcity, but fear of scarcity; not a deficiency in Nature, but a deficiency in our intellectual structures that lead to deficient economic policies. This is the chain of causation that leads to economic insecurity. Fiscal policies whose inherent structure is to rob Peter to pay Paul, do not lead to economic security; arbitrary administrative decisions in too many facets of our economic life do not lead to economic security; most of all, a monetary policy that is designed to lend money to people who have money - and mostly “invest" this money in the purchase of financial assets, rather than in the creation of real wealth - this monetary “policy" does not lead to economic security.


Fiscal policies whose inherent structure is to rob Peter to pay Paul, do not lead to economic security

The greatest fear of all is generated by the incessant call for the redistribution of wealth. You never know when goons in legal suits - or IRS jackets - are empowered to take your wealth away. With the eventual implementation of Concordian economics, there will be no need for the redistributionist program. If people are free to produce and to own what they need, they will reduce waste, and will always find enough resources to satisfy their needs; population growth, which seems to threaten the natural balance of things, is "naturally" petering down.

Waste is an inherent problem with monetary policies built on debt, especially consumer debt. Much production occurs, not to create wealth, but to repay debt. The current cycle is to create debt to feed growth to induce more debt to feed more growth. This insane cycle is fed by the scarcity of money and its concentration into the hands of the few. This insane cycle will be broken if, as specified, loans are issued to create real wealth - not paper wealth - and the ownership of the new wealth is justly apportioned among all those who create wealth.


Waste is an inherent problem with monetary policies built on debt

The issue is not scarcity, but fear of scarcity. Scarcity is a phenomenon invented by economists who have never set foot in a supermarket of developing countries, let alone developed countries. Economists, experts who are trusted to design fiscal and monetary policies, err twice on this issue: First, they base too many of their decisions on an entity that does not exist, scarcity; then, they do nothing to counteract a phenomenon that does exist, out of the creation of their favorite policies, economic insecurity.

Let us conclude this issue of overarching importance with this realization. When rows upon rows of buildings lie boarded up; when one third of the food supply goes daily into the garbage dump, it is not a question of scarcity of supplies. And, certainly, when the Fed stuffs billions of dollars into over bloated coffers, it is not a question of lack of money. The concern ought to be with the wise use of whatever resources are indeed available to us at any moment. There is no scarcity. There is only a misallocation of resources. Especially misallocation of financial resources. Scarcity is a hoax perpetuated by economists; economic science, by itself, is neutral on the issue. It would work just as well with assumptions of sufficiency, if not abundance.


ABOUT THE AUTHOR

Carmine Gorga -- see Wikipedia and Google Scholar. In 1965, after a Summer of intellectual struggle with the General Theory, Dr. Gorga changed one equation in Keynes’ model of the economic system, and found himself in a completely new intellectual world. This turned out to be a continuation of the world of economic justice initiated by Moses, codified by Aristotle, synthesized by Jesus, and validated by St. Thomas Aquinas - and interrupted by Adam Smith. A book outlining this transition, titled "The Economic Process," was published in 2002 by the University Press of America and annotated in the December 2002 issue of the Journal of Economic Literature (p. 1306). The third edition of this book has been annotated - again - by the Journal of Economic Literature in December 2017 (p. 1642). Professor Franco Modigliani assisted in the development of this work for 27 years. A brief essay, titled "Concordian Economics: An Overall View," can be found at http://econintersect.com/a/blogs/blog1.php/concordian-economics-an-overall-view. For a full understanding of Concordian economics, Gorga has gradually realized that we need to go beyond Individualism and Collectivism, toward Somism (men and women in the social context) - see www.somistinstitute.org - and then we need to pass from Rationalism to Relationalism: see www.relationalism.org.


"A mind all logic is like a knife all blade.
It makes the hand bleed that uses it."


Rabindranath Tagore (1861-1841)

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