SCARCE MEANS FINITE

America: the land of the free.
Free means you don’t pay, doesn’t it?


ABBIE HOFFMAN, REVOLUTION FOR THE HELL OF IT

Hoffman and others like him argue that the institutions of property, public or private, are obsolete and should be abolished. They claim that an increasingly automated economy can make all goods plentiful so that the institution of property is no longer necessary and that it now prevents us from producing all we could—that people might starve in a society with unlimited food.

There are several things wrong with this argument.

Many countries have access to modern technology and the resources needed to build automated factories of the sort imagined by believers in the cybernetic cornucopia. These countries have widely differing social, economic, and political systems. Yet we are the richest of the lot, and none of the others shows the sort of growth (say, 30 percent per year in per capita income) necessary to produce a revolutionary change (say, one-tenth of the workers producing 15 times the current GNP) by the year 2000.

Even if productivity does increase enormously, the argument assumes that total demand is limited; otherwise increases in productivity will be met by increases in demand, as in the past, and the conflict between different people who want the same resources will still exist.

Believers in such a saturation of demand argue that above some income (usually about twice their own) consumption ceases to be useful and becomes pure show, so that when production reaches this level there need be no more scarce goods. This argument confuses amount of consumption with the physical quantity consumed. There is a limit to the amount of food I can eat or the number of cars I can conveniently use. There is no obvious limit to the resources that can be usefully employed in producing a better car or better food. For $20,000 a car can be made better than for $10,000; for $40,000, better than for $20,000. If the median income rises to $100,000 a year, we shall have no difficulty spending it.

The argument also confuses the technical economic meaning of ‘scarce resources’ with the conventional meaning of ‘scarce’. Even if no one is hungry, food is still scarce, since some cost must be incurred in order for me to have more or better food. Either someone has to give up food or someone must pay the cost of producing more. The opposite of a scarce good is not a plentiful good but a free good, something available in sufficient supply for everyone at no cost. Air was a free good until demand, for breathing and for carrying off industrial wastes, exceeded supply.

A more relevant case might be book matches or sanitary drinking water, both of which must be produced but whose cost is so low that it hardly seems worth the trouble of charging the individual user for them. They are therefore given away free, in loose conjunction with the sale of more expensive goods. No one has to pay to use a drinking fountain.

If Hoffman is right and automation produces a median income of $1 million a year, no one will bother to charge for food. Food machines will be provided as a free amenity for the convenience of potential customers at the stores where whatever goods are worth selling (art? entertainment? spaceships?) are sold, or they will be set up on street corners to commemorate dead spouses, just as water fountains are now. If medicine became automated and cheap, profit-grubbing capitalists would build free hospitals and make money renting out the interior walls as billboard space.

The problem of plenty is not a new one for capitalism. It has dealt with that problem by providing more and better ways to use larger and larger incomes—so successfully that Abbie Hoffman hardly realizes how rich we already are by the standards of previous centuries. Capitalism will continue to deal with the problem of plenty in the same way.

It’s only fair: capitalism created the problem.

[I like to claim that my description of free hospitals renting out their walls as billboards anticipated the business model of the web, where sites provide free information and pay for it with the revenue from ads.]