Difference between revisions of "Artificial scarcity"
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== Responses to artificial scarcity == | == Responses to artificial scarcity == | ||
| − | * The term is used by the [[ | + | * The term is used by the [[Technocracy movement]][http://www.technocracy.ca/simp/glossary.htm] to point out one flaw of productive inefficiency in the [[Technocratic views of the Price system|price system]] and takes the above example of digital information in microcosm. The movement claims that a technologically advanced state is capable of producing an abundance of virtually everything. Technocrats point out empirical evidence; even though the productive capacity exists to feed everyone in the world, we underproduce, we throw away, or we misallocate because there is no way to sell an abundance. They state that a conflict between scientific reality and economic tradition stifles the possibility for abundance. A price system only creates opportunities for scarce products. |
** [http://www.technocracy.ca/modules.php?op=modload&name=Sections&file=index&req=viewarticle&artid=15&page=1 Article explaining technocratic beliefs of current economy] | ** [http://www.technocracy.ca/modules.php?op=modload&name=Sections&file=index&req=viewarticle&artid=15&page=1 Article explaining technocratic beliefs of current economy] | ||
| + | * Standard free market responses to this assert that artificial scarcities are necessary to promote the development of goods in the first place. In the example of digital information, it may be free to copy information ad infinitum, but it requires a significant investment to develop the information in the first place (and if it didn't, there would be other cheap versions of that digital information being offered by other sellers). Another fair example is the drug industry. Production of drugs is fairly cheap on a large scale, but new drugs are very expensive. This is because the initial investment to develop a drug is generally billions of dollars. Typically drug companies have profit margins much higher than this investment, but the high payoff also attracts many companies to compete, increasing the pace of drug development. A feature of many free market economies is also time limit in patent rights; after a set number of years enjoying an artificial scarcity, the patent wears off and cheap generic versions of a product enter the market. This creates a situation of accelerated economic growth and high economic payout for all levels of consumers, but also promotes a large rich-poor divide. | ||
== See also == | == See also == | ||