I'm struggling with what should be a simple concept: scarcity. For some reason, I just can't wrap my head around the fact that in this highly advanced technological society of ours, we can't fix scarcity.

Sure, we might not be able to produce an "infinite" amount of things. But then again, nobody wants an infinite amount of things. That's an absurd notion, and an even more absurd foundation to build a principle on.

Say, everybody wanted 4 cars on average. Some people might want less, some more. Can we really not ramp up production to facilitate this wish? Couldn't we ramp up production to dig out even more gold? To mine for even more diamonds? To grow even more food? To collect even more water?

We live in an age of advanced technology. Of algorithms, artificial intelligence and of highly automated large-scale production. How am I to believe that, given all these abilities, we couldn't achieve a solution to a reasonable form of scarcity? By reasonable I mean scarcity that makes sense within a human context: nobody wants an "infinite amount of cars", at least the vast, vast majority of people don't, and the few outliers that do shouldn't be relevant in an economic principle of this significance.

This seems like an idea that would have made sense a century ago, but not anymore. How and why does is still hold up, considering our unprecedented potential to produce goods?

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    $\begingroup$ You said that people don't want infinite things. This is true because of scarcity. Scarcity is the cause of cost and price. If scarcity did not exist, firms and governments would have no problem at producing with minimum cost, and as a result people would want infinite things. $\endgroup$
    – Airdish
    Feb 7 '16 at 5:12
  • $\begingroup$ @S. Mo But that makes zero sense. Why would people want an infinite amount of things? That's preposterous! I certainly wouldn't want an infinite amount of things - what am I supposed to do with an infinite amount of things? I can't even count them! I know of nobody who would want an infinite amount of things, even if they were free. $\endgroup$
    – user7232
    Feb 7 '16 at 5:32
  • $\begingroup$ In the situation that you describe, you strictly prefer more coconuts up to a certain level, and then you are indifferent between having more coconuts or not. This is exactly captured by the diminishing marginal utility assumption (with limit zero for an infinite level of consumption). $\endgroup$
    – Oliv
    Feb 7 '16 at 8:47

What you are saying is that the marginal utility of one additional good (car, or coconut) decreases and tends to zero. I believe everyone agrees with that.

The reason why scarcity matters is not that people can't be satisfied with a finite consumption, but that most individuals currently consume below their satiation level and would be happier with one additional unit. Most people would prefer a bigger house, a more luxurious car, more clothes, etc., even if they would finally be satisfied with some finite level.

Regarding your observation "Can we really not ramp up production to facilitate this wish?", the answer is no: it is still too costly to produce cars, houses, clothes etc. to accommodate everyone's wishes. If we were able to produce costlessly the amount of goods required to satisfy everyone's satiation level, the problem of scarcity would be solved (and economics would disappear as a science), but we are clearly far from this situation.


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