Putting Abundance in Context
The purpose of this brief exercise in the history of economic thought is to demonstrate that the concept of scarcity has no right to a monopoly position in academic economics. While scarcity has dominated economic analysis for nearly two centuries, many of the great economists wrote convincingly about the possibility of an economy of abundance. The "abundance economists" include Adam Smith, Karl Marx, Thorstein Veblen, John Maynard Keynes, and many others from diverse schools of thought and diverse perspectives.
Abundance is the antithesis of scarcity. Abundance means that everyone has adequate health care, nutrition, education, transportation, recreation, housing, self-expression, and personal security. Abundance does not mean that goods are free. Abundance means adequacy, not satiation. The level of adequacy is not constant but is relative to the progress made in the community's joint stock of knowledge. In a Stone Age community there is a lower level of adequacy than in a Space Age community. The Space Age level of adequacy is higher because such a higher standard is practical with a larger joint stock of knowledge. Scarcity means that some members of the community suffer from inadequate health care, nutrition, education, transportation, recreation, housing, self-expression, or personal security.
Unfortunately, the level of adequacy in a community is not always determined by what is practical, given the community's joint stock of knowledge. The community's standard of adequacy can be severely distorted when adequacy is judged by what is honorable in terms of its status system rather than by what is practical in terms of its knowledge system. Veblen argued that the honorific dimension is introduced into the community's standard of adequacy by the invidious distinctions practiced by the leisure class ( 1975).
Viewing the world from the scarcity perspective implies that people are condemned to a world of conflict and poverty. The scarcity lens suggests that the distribution question (who gets how much) is a dominant theme in economics because slicing the pie is a more important and difficult question when the pie is small. The poor are poor because there is just not enough to go around.
Viewing the world from the abundance perspective leads us to examine a different set of problems. What do we do with the abundance of goods and services the world economy is capable of producing? How do we ensure that people, no matter where they might live, participate in the economy of abundance? What is the meaning of work in an abundant society? How does economics change if distribution is no longer a central focus? If the poor are not poor because there is too little to go around, then why are they poor?
The scarcity point of view has a virtual monopoly on orthodox/academic economics. In fact, economics is taught in the schools as if it were the science of scarcity. More specifically, economics is commonly defined in textbooks as the study of the allocation of limited resources to meet unlimited human wants. The scarcity point of view does not have a complete monopoly, however. Institutionalists offer an alternative definition of economics that does not assume scarcity at the outset. In what follows, we adopt Allan Gruchy's definition of economics as "the science of the social provisioning process" (1987, 4-7, 21). In Gruchy's economics, scarcity is not assumed by definition, so abundance becomes a meaningful concept.
Adam Smith plus Malthus, Ricardo, and Mill
We begin with the great optimist, Adam Smith. However, we cannot avoid a digression on the great pessimist David Ricardo nor can we skip over either the great moralist Thomas Malthus or John Stuart Mill.
Although even he discussed the possibility of a distant stationary state, Smith's ( 1937) Inquiry into the Nature and Causes of the Wealth of Nations was one of the first systematic attempts to explain the possibilities of economic growth. His optimistic assessment was based on the increases in output stemming from specialization and division of labor. The only limit to the division of labor and, hence, the only limit to growth, was the extent of the market. His argument was historically grounded, powerfully written, and easy to understand.
There were three main benefits of specialization: (1) increases in the skill or dexterity of a worker performing the same task repeatedly, (2) the time saved from not shifting from one task to another, and (3) the possibility that a specialized worker might invent labor-saving machines. The combination of the three benefits of specialization resulted in greatly increased output per worker.
Smith described an economy of abundance: "It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of people" ( 1937, 9). Although Smith emphasized that the process of economic growth could be slowed or halted by monopolistic restrictions on trade or by other factors that might limit the extent of the market, he envisioned almost no limit to the increases in output that could result from specialization and division of labor. Furthermore, he believed that the increases in output should be widely distributed to include the poorest people. The economy he envisioned was clearly an economy of abundance, not an economy of scarcity.
Malthus disagreed with Smith on the growth prospect. He countered Smith's optimism with the specter of overpopulation. Malthus argued that since the population could grow geometrically while the food supply only arithmetically, all ameliorative schemes of redistribution to the poor were doomed to failure. Mark Blaug pointed out, "Malthus always went out of his way to antagonize all those who believed in the amelioration of social conditions" (1978, 69).
Smith's insight regarding universal opulence was almost forgotten by economists after Malthus raised the specter of overpopulation. To make intellectual matters even worse, Ricardo (1772-1823) continued the attack on economic abundance when he provided an analytical framework for what he termed the "stationary state" ( 1963, 54) and what contemporary growth theorists now call the "steady state." Ricardo presented several analytically elegant arguments on why the economy would, at some point, inevitably reach the steady state. Only one of these arguments will be described here.
Ricardo, like Malthus, assumed that there was an inevitable tendency for population to increase. For Ricardo, it was also obvious that land, especially arable land, was a finite resource. Ricardo also assumed that the combination of an increase in population and a finite supply of fertile land must result in increased food prices. In Ricardo's words, "As population increases, these necessaries will be constantly increasing in price" ( 1963, 49). Ricardo also assumed that rising food prices must mean an increase in wages. His logic on this point was simple. Because of the supply and demand for labor, wages were always at a subsistence level, that is, wages were barely high enough to keep a worker and his family alive. If food prices increased, wages would have to increase or the worker would "soon be totally deprived of subsistence" (49).
Ricardo is well known for arguing that the institution of land rent reduces profit and accumulation. He also assumed that at any given time, the output of the economy was fixed. If this were the case, any increase in wages could occur only by reducing the share of output going to profit. If profits fell, so would the incentive to invest. With little or no investment, capital accumulation would cease and the economy would enter the stationary state and there would be no possibility of an economy of abundance.
But even the pessimistic Ricardo admitted that he thought the stationary state was "far distant" ( 1963, 54). Ricardo's assessment is consistent with that of more recent growth theorists such as Evsey Domar (1957, 14) who stated, "And yet I fail to see any indications that the world is any closer now to a stationary state than it was, say, a hundred years ago."
In the 1840s, John Stuart Mill (1806-1873) wrote what became the standard economics textbook for many years. Mill's book also influenced many other late nineteenth century economists. Mill was more optimistic about the possibility of abundance than Ricardo. Mill cited the "unlimited growth of man's power over nature" (1848, 211), "greater security of property" (212), "improved business capacities" (213), and "the continual growth of...