Artificial scarcity

Artificial scarcity is an economic term describing the scarcity of items even though the technology and production capacity exists to create an abundance. The term is used by the Technocratic movement to point out one flaw of inefficiency in the price system.

An example of artificial scarcity is often used when describing copyrighted, or closed-source, computer software. Any software application can be easily duplicated billions of times over for a relatively cheap production price (an initial investment in a computer, an internet connection, and any power consumption costs). On the margin, the price of copying software is next to nothing, costing only a small amount of power and a fraction of a second. Things like serial numbers, license agreements, and intellectual property rights ensure that production is artificially lowered in order for business to gain a monetary benefit, thus giving those in the software and digital arts business their livelihood. Technocrats argue that if the price system were removed, there would be no personal incentive to artificially create scarcity in products, and thus something similar to the open source model of distributions would exist.

PPF's

The following graphic shows the economic anomaly, as current economics deals only with allocating scarce resources, not abundant ones. Most economists stress the trade-off that occurs when producing goods. If we want more leather boots, we'll have to give up producing running shoes because our resources are limited. This trade-off is illustrated by a move from P1 to P2 in the Production Possibilities graph on the left.

With computer software, no trade-off occurs (at least not one of significant value). To produce more of a certain piece of digital information, we need not to trade-off the production of other things, like shoes and boots. In essence, problems of artificial scarcity usually arise when a good that was once scarce becomes abundant due to extreme productivity and technologic progress.

The technocratic movement would apply this example of a computer to the larger context of society. It would state that our technologically advanced state is capable of producing an abundance of virtually everything. Technocrats argue that the productive capacity exists to feed everyone in the world, but because there is no way to sell an abundance, we underproduce, we throw away, or we misallocate. The main reason why technology hasn't been used to create this abundance, they say, is that our economic system is used to exchange scarce resources, instead of distributing an abundance. Technocrats hope to amend these socio-economic problems by educating the populace before the demise of the current price system.

External links

• Technocratic Glossary
• Article explaining technocratic beliefs of current economy