Scarcity is a Perception and not a Reality


We have written articles in the past to address two realities in our world. Firstly, that it is our perceptions that create our future and secondly, our economies are based on an engineered reality that there is a scarcity of resources, and because of the so-called explosion of the human population we must accept a lower standard of living OR reduce the human population base! Nothing could be further from the reality of our future world. I can justify that statement with just one word..TECHNOLOGY.
The truth is that economics is based on scarcity. Things are valuable because they are scarce. The more abundant they become, they cheaper they become. The cost of computers, televisions, and mobile phones are just a few examples of this axiom. However, those who profit from the current economics would and are doing everything in their power to suppress the technologies that would make it apparent that an abundant future is in our cards, not the opposite reality. It is estimated that free energy alone would raise the current standard of living globally by a hundred times!

economics wordcloud

But a series of technological changes are underway that promises to end scarcity as we know it for a wide variety of goods. The Internet is the most obvious example, because the change there is furthest along. The Internet has reduced the cost of production and distribution of informational content effectively to zero. In many cases it has also dramatically reduced the cost of producing that content. And it has changed the way in which information is distributed, separating the creators of content from the distributors.
On the Internet today, a variety of intermediaries transmit information for free or at a very low cost. Those intermediaries are agnostic about (and quite often ignorant of) the content they are distributing. So the Internet has not only slashed the cost of creation, production and distribution; it has also disaggregated creation and distribution. we can create without distributing, secure in the knowledge that our works will be disseminated by others who distribute without creating. More recently, new technologies promise to do for a variety of physical goods and even services what the Internet has already done for information.
3D printers can manufacture physical goods based on any digital design. While home printers are so far quite limited in size and materials, there are tens of thousands of designs available on the Internet already, and larger commercial-scale printers can print anything from circuit boards, homes, rocket engines to human organs on site for the cost of the raw materials and some electricity.

MakerBot_Replicator_2

Synthetic biology has automated the manufacture not just of copies of existing genetic sequences but any custom-made gene sequence, allowing anyone who wants to create a gene sequence of their own to upload the sequence to a company that will “print” it using the basic building blocks of genetics. Advances in robotics offer the prospect that many of the services humans now provide can be provided free of charge by general-purpose machines that can be programmed to perform a variety of complex functions.
While none of these technologies are nearly as far along as the Internet, they share two essential characteristics with the Internet: they radically reduce the cost of production and distribution of things, and they separate the informational content of those things (the design) from their manufacture. Combine these four developments – the Internet, 3D printing, robotics, and synthetic biology – and it is entirely plausible to envision a not-too-distant world in which most things that people want can be downloaded and created on site for very little money – essentially the cost of raw materials.
Those who wish to block these realities have created the legal concept of intellectual property (IP). The role of IP in such a world is both controverted and critically important. IP rights are designed to artificially replicate scarcity where it would not otherwise exist. In its simplest form, IP law takes public goods that would otherwise be available to all and artificially restricts their distribution. It makes ideas scarce, because then we can bring them into the economy and charge for them, and economics knows how to deal with scarce things. So on one view – the classical view of IP law – a world in which all the value resides in information is a world in which we need IP everywhere, controlling rights over everything, or no one will get paid to create. That has been the response of IP law to the Internet so far.
But that response is problematic for a couple of reasons. First, it doesn’t seem to be working. By disaggregating creation, production, and distribution, the Internet democratized access to content. Copyright owners have been unable to stop a flood of piracy with 50,000 lawsuits, a host of new and increasingly draconian laws, and a well-funded public education campaign that starts in elementary school. They might have more success targeting the intermediaries rather than the individuals consuming content, but because those intermediaries distribute content without regard to what it is, IP can block piracy there only at the cost of killing off what is good about the Internet.
Patent and design patent owners may soon face the same conundrum: unless they strictly control and limit the sale and manufacture of 3D printers and gene printers, they may find themselves unable to prevent the production of unauthorized designs, and even targeting the intermediaries may prove futile; among the things you can print with a 3D printer is another 3D printer. The world of democratized, disaggregated production may simply not be one well-suited to the creation of artificial scarcity through law.
Second, even if we could use IP to rein in all this low-cost production and distribution of stuff, we may not want to. The point of IP has always been, not to raise prices and reduce consumption for its own sake, but to encourage people to create things when they otherwise wouldn’t. More and more evidence casts doubt on the link between IP and creation, however. Empirical evidence suggests that offering money may actually stifle rather than drive creativity among individuals.

free copyright
Economic evidence suggests that quite often it is competition, not the lure of monopoly, drives corporate innovation. Many of the most innovative companies decry patents as interfering with rather than encouraging progress. The Internet may have spawned unprecedented piracy, but it has also given rise to the creation of more works of all types than ever before in history, often by multiple orders of magnitude.
Perhaps the Internet has sufficiently reduced the cost of creation that more people will create even without an obvious way to get paid. Perhaps they never needed the motivation of money, just the ability to create and distribute content. Either way, if the goal of IP is to encourage the creation of new works, the example of the Internet suggests that radically reducing the cost of production decreases, not increases, the need for IP law.
Commercialization theory, which postulates that we need IP not to encourage creation but to encourage production and distribution of works, is particularly vulnerable to disruption by cost-reducing technologies like the Internet, 3D printers, and gene printers. It may once have been true that even if a book was cheap to write, printing and distributing it took a substantial investment that had to be recouped. However, the development of technologies that disaggregate creation from production and distribution, and reduce the cost of the latter to near zero, mean that commercialization-based theories cannot justify IP in the face of new technologies.
The theory that we need IP rights to prompt disclosure of things that would otherwise be kept secret also seems rather quaint. Perhaps it made sense in a world where transmission of information was difficult, but in a world in which information flows freely, keeping secrets has become the exception rather than the rule. Far from necessitating more IP protection, then, the development of cost-reducing technologies may actually weaken the case for IP.
If people are intrinsically motivated to create, as they seem to be, the easier it is to create and distribute content, the more content is likely to be available even in the absence of IP. And if the point of IP is to encourage either the creation or the distribution of that content, cost-reducing technologies may actually mean we have less, not more, need for IP.
It can be argued that IP rights are a form of government regulation of market entry and market prices. We regulated all sorts of industries in the 20thcentury, from airlines to trucking to telephones to electric power, often because we couldn’t conceive how the industry could survive without the government preventing entry by competitors. Towards the end of that century, however, we experimented with deregulation, and it turned out that the market could provide many of those services better in the absence of government regulation.
The same thing may turn out to be true of IP regulation in the 21st century. We didn’t get rid of all regulation by any means, and we won’t get rid of all IP. But we came to understand that the free market, not government control over entry, is the right default position in the absence of a persuasive justification for limiting that market. The elimination of scarcity will put substantial pressure on the law to do the same with IP.
A world without scarcity requires a major rethinking of economics, much as the decline of the agrarian economy did in the 19th century. How will our economy function in a world in which most of the things we produce are cheap or free? We have lived with scarcity for so long that it is hard even to begin to think about the transition to a post-scarcity economy. IP has allowed us to cling to scarcity as an organizing principle in a world that no longer demands it. But it will no more prevent the transition than agricultural price supports kept us all farmers. We need a post-scarcity economics, one that accepts rather than resists the new opportunities technology will offer us. Developing that economics is the great task of the 21st century. It starts with understanding these realities and then as consumers demanding it. After all, the customer is always right, no?

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Author: redhawk500

International business consultant, author, blogger, and student of life. After 35 years in business, trying to wake the world to a new reality. One of prosperity, abundance, and most importantly equal opportunity. it's time to redistribute wealth and power.

3 thoughts on “Scarcity is a Perception and not a Reality”

  1. Forgive me for the oversight. However, our goal is to stimulate thought and we often use other’s thoughts and words to assist in this process. We do this without profit, nor gain of any sort. We only wish to assist in the ability for us all to share our “collective” consciousness. It is interesting and ironic that it was this article you choose to comment about it.

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