Exploring Post-Scarcity

What do we mean by a post-scarcity society?

A post-scarcity society is one in which we can produce enough. Yet ‘enough’ can be a fiercely contested concept. Is it ‘enough to survive’, or is it ‘enough to live a life of luxury and leisure’? Can humans ever be truly satisfied and, if offered more, would they ever decline? As such, post-scarcity is more of a subjective concept, when we collectively decide that what we have is enough.

This can be difficult for economists, who generally avoid making normative statements about what should make people content and when that should occur. Nonetheless, there are some guiding principles. Economists recognise diminishing marginal returns to consumption, which suggests that we reach a point where having more of something will not increase our welfare. I like cake, but eventually I would reach a point where I do not really need or want more. On the other hand, there are also theories that suggest that supply creates its own demand. As supply increases, we free up capacity to create more of something else, so we will just find a new thing to consume.

Are there signs that we are approaching post-scarcity?

This depends on how far down the rabbit hole you are willing to go. If we think post-scarcity means we can produce enough food for survival, we are already there: the UN Environmental Programme states that we have enough food to feed 10 billion people. But quality is different from quantity. It is possible to give everyone enough staple food, but not for everyone to eat lobster daily.

A good analytical tool to use would be Maslow’s hierarchy of needs, which categorises human needs by urgency for survival. We first have our physiological needs such as food, water, and rest. Next, we have safety needs, such as security. Beyond that our needs start becoming more intangible, such as belongingness and love, feelings of accomplishment and self-actualisation at the very top.

When thinking about a post-scarcity world, the central question is how much of each is enough? We know that there is enough staple food for everyone (it is quite clear from simple physiology to know roughly how many calories people need to stay alive) but how many friends are too many? How much should one self-actualise before one has had enough self-actualisation? It is likely that as we become post-scarce in the bottom parts of the pyramid we move onwards and upwards to the more unlimited needs at the top.

What issues are we likely to face as we approach the post-scarcity limit?

I think there are two issues here. The first is whether the market mechanism is sufficient to satiate our needs as they grow more complex, intangible and focussed on self-actualisation. The second is how distribution will change given the opportunity for less work and greater leisure.

Let us deal with the market providing for our complex needs first – what is the problem here?

As we approach post-scarcity for the bottom items on the pyramid, we need to ask whether the market mechanism is still relevant as we strive for those at the top. Essentially, isn’t there something about buying friends and self-worth that actually undermines what they are? There is something that rings a little hollow about fast fashion helping us to express ourselves, or Instagram influencers telling us that the secret to a good life is to subscribe to their channel. In short, as soon as self-actualisation is commodified by market forces it can very easily lose its authenticity and purpose. But we should not overstate the case here; buying tickets for a concert does not make that music any less beautiful, so it is not a clear-cut issue but something we need to bear in mind.

What are the distributional issues involved?

Imagine a world in which, in the extreme, only one person has a job, and they produce everything. They would wield a huge amount of power over how that output is distributed. The one worker could have their output split equally among everyone else, or they could choose to split their output with their friends, or an external force (a government) could take their output in the form of tax and redistribute it as they see fit. There are many answers, but this then becomes less an economic question and more a moral question as to what is fair. Morally, people may ask why anyone should benefit when only one person has done all the work? And, if they do benefit equally, how do you incentivise that one person to keep working?

This is an extreme scenario and assumes that there is a hard limit to our wants that we will reach. It is more likely that as workers become more productive you would expect them to reduce their hours, and as leisure time increases so does demand for services to fill that leisure time with. For example, as our physiological needs are fulfilled, we see a transition into the health and social care sector. These are labour intensive sectors so we would imagine employment would stay high but shift structurally.

The main issue at stake is that as hours start to fall you need a higher hourly wage to compensate. There are a lot of frictions in society that may make this a messy transition and it is unlikely that workers, especially those in the lowest paid jobs, would truly be able to express their preference between leisure and employment. It would tend to be easier for the most productive workers (who are also the highest paid) to work fewer hours, meaning that society would become more unequal.

One option for dealing with this potential rise in inequality would be if society’s output were to be distributed by the government or another non-market force They would need to decide how much to distribute and to whom it should be distributed; there must be enough redistribution to even out incomes but not so much that it distorts the right incentives or pulls people out of work that they should otherwise be involved in. These are difficult decisions to make, sometimes technical, sometimes moral. But if we really believe that we have reached the point of ‘post scarcity’ they are decisions that have to be made.