The Economics of Abundance

A Political Economy of Freedom, Equity, and Sustainability

Wolfgang Hoeschele

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781138383371
• eBook ISBN: 9781317034650
• Topic: Business
• Subtopic: Business General
• Index: Business

No matter how many resources we consume we never seem to have enough. The Economics of Abundance is a balanced book in which Wolfgang Hoeschele challenges why this is so. He claims that our current capitalist economy can exist only on the basis of manufactured scarcity created by 'scarcity-generating institutions', and these institutions manipulate both demand and supply of commodities. Therefore demand consistently exceeds supply, and profits and economic growth can continue - at the cost of individual freedom, social equity, and ecological sustainability. The fact that continual increases in demand are so vital to our economy leads to an impasse: many people see no alternative to the generation of ever more demand, but at the same time recognize that it is clearly unsustainable ecologically and socially. So, can demand only be reduced by curtailing freedom and is this acceptable? This book argues that, by analyzing how scarcity-generating institutions work and then reforming or dismantling them, we can enhance individual freedom and support entrepreneurial initiative, and at the same time make progress toward social justice and environmental sustainability by reducing demands on vital resources. This vision would enable activists in many fields (social justice, civil liberties, and environmental protection), as well as many entrepreneurs and other members of civil society to work together much more effectively, make it more difficult to portray all these groups as contradictory special interests, and thereby help generate momentum for positive change. Meanwhile, for academics in many fields of study, the concept of the creation of scarcity or abundance may be a highly useful analytical tool.

1
The Paradox of Our Times

With its cleanly exposed mineral patches, golden, black, and silver, which formed unequal patterns, it was as though the mountain had been painted with fingers. With the clouds that hung to its sides, it seemed to dance as with wings, and gushing, cascading streams piled it with pearl strings. Lovely were its rivers, groves, waterfalls, and hollow caverns where many peacocks danced to the tunes of the Apsara’s ankle rings.

(Mahabharata, trans. van Buitenen, II: 499)

The most basic paradox of our times, the times that we call modern and the mode of social organization we call capitalist, is that, no matter how many resources we consume, we never seem to have enough. It is this paradox that drives us humans to despoil even the most remote landscapes, such as the Arctic National Wildlife Refuge in Alaska or the rainforests of the Amazon and of Borneo, in the never-ending race for natural resources. It is this paradox that prevents us from assuring, at very little cost, that everyone can meet their basic needs, even while fortunes are spent on the most superfluous of pursuits. This paradox that makes our society uniquely unsustainable ecologically and unjust socially has been created by the application of the leading science of our age, namely neoclassical economics, in the service of the most powerful contemporary institutions, such as major corporations, financial institutions, and the state.

It is a basic tenet of mainstream economics that human wants are unlimited—that is why resources are always considered scarce, justifying the definition of economics as a science about the allocation of scarce resources. In the words of one representative text, “economics is the study of how people allocate their limited resources in an attempt to satisfy their unlimited wants” (Miller 2001: 5). I advance here a different thesis: human beings have limited wants and needs, but capitalist institutions seek to continuously generate new forms of scarcity by creating ever new needs. Once scarcity has been generated, it can be exploited to accumulate power and yield profit. Hence, an economics that supports these institutions is not the science of the efficient allocation of scarce resources; it is instead the science of the profitable allocation of scarcity. Scarcity, then, is a means towards the end of profit maximization. In order to counter this vision of the economy, it is necessary to develop a new approach, consistent with advances in other social and natural sciences, which challenges the most basic current economic suppositions, and aims at putting an end to scarcity by creating abundance.

Human Needs and Wants

What wants or needs do people have? Can wants be infinite? Surely, wants cannot be infinite, because it is only possible to want some specific thing at a specific time. Even if we add up all our wants over a string of moments extending through a lifetime, we will end up with a finite quantity, no matter how large. The size of this finite quantity varies, of course: some people can make do with very little and be happy, while others are never satisfied and always want more. What this tells us is that wants are variable, not that they are infinite. They are also subject to social influences, such as prevailing customs, advertisements or others’ consumption patterns which stimulate, and indeed create, new wants.

In addition to studying wants, we must also concern ourselves with needs, which differ from wants in that we are not free to ignore them. We need those things we simply cannot do without; we want those things which we hope will improve our well-being. Everybody needs food to eat, but a prisoner also needs the prison guard to bring that food. Likewise, anybody who does not grow her own food requires an income in order to buy food. The need for the prison guard and the need for money are both socially created. The creation of new needs necessarily reduces freedom because it forecloses alternative options, and is thus much more pernicious in its effects than the creation of new wants, which may open new opportunities for personal growth and can therefore enhance freedom. However, we must always recognize that wants can easily be transformed into needs, as we become dependent on what were once luxuries (for example, cars), and we must therefore closely scrutinize when the creation of wants may actually create new needs. A freedom-loving economics would provide guidelines about how to avoid the creation of new needs, how to distinguish between wants and needs, and how to ensure that all needs and many wants can be met.

Growth-oriented economic strategies seek to increase both needs and wants all the time. The consumers of a country are praised if they consume more, because this is supposed to promote economic growth, and they are scolded if they do not consume enough, because this is supposed to cause recession and unemployment. If people’s wants were indeed unlimited, neither the praise nor the admonishment would make any sense, it would be like praising water for being wet and scolding it for being “dry.” Water simply is wet; it deserves no praise for that. Water can not possibly be dry, and so cannot be scolded for that shortcoming. If the tenet about unlimited wants were true, all consumers would always be consuming at the maximum rate consistent with their present incomes and their expectations and fears about the future. Moralistic appeals to consume found in the business literature thus prove that the writers themselves do not truly believe the claim that human wants are unlimited: this statement is normative rather than factual. While there is nothing wrong with making normative statements, one should never confuse such a claim with a statement of fact.

Let me approach this point from a mathematical angle (people with a math phobia can rest assured: this is all the math to be found in this book). Let us assume that “satisfaction” (S) is equal to available capacities to fulfill one’s wants (C) divided by total wants (W):

S = C/W

If W is infinite, any finite number C divided by W will yield zero satisfaction. Thus, if human wants were truly infinite, no economic effort would be in the least satisfying to anybody at all, and everybody from the homeless beggar to the billionaire would feel totally depressed. If we believe in infinite wants, the entire discipline of economics is futile.

What, then, might the term “unlimited wants” really mean? It can be observed that wants are finite, but can always increase over present levels. In that case, if C doubles but W triples, satisfaction declines even though a greater number of “wants” is fulfilled: people become unhappier, despite increased consumption, because their wants have grown even faster. The fulfillment of some wants may also destroy the capacity to fulfill other wants (which may ultimately be more important), and hence satisfaction may decline because of decreasing C even while the number of commodities bought on the marketplace increases. (For example, if everyone wants a house at the city’s edge, a building boom may occur, blanketing the entire landscape with houses; ultimately, nobody lives at the edge of the city and everybody has to pay more in order to drive to “nature.”) Satisfaction can only be increased if wants are clearly finite and grow relatively slowly (or not at all), so that the capacity to fulfill those wants can grow more rapidly than the wants. Any science that seeks to satisfy human wants must therefore find ways to prevent wants from increasing too rapidly as well as ways of increasing the capacity to fulfill human wants. It is not sufficient to claim that, just because it is difficult to define the concept of wants, we should proceed to “consider that every person’s wants are unlimited” (Miller 2001: 29). No science can advance without facing up to difficult tasks.¹

So the question to ask is not whether human wants are infinite: they clearly are not. We must ask quite different questions: what do people really want or need, and how do their wants and needs change according to social circumstances? How many needs and wants can realistically be fulfilled under varying social, economic, political, cultural, and ecological conditions? Is it a good thing if human wants continue to increase? Which wants can increase, and which ones cannot, without reducing human satisfaction? How can we assure that our needs are kept from escalating?

Questions of this nature have been addressed by scholars in numerous different disciplines, but rather than attempting to survey this literature, let me simply refer to some examples from daily life. There are many instances where it is clearly not beneficial to maximize wants. We can eat only so much; beyond that, our health suffers, and we become obese or get into a habit of bulimia. If we buy clothes without end, we can hardly enjoy the clothes we already have— when are we to wear them? If we drive (and hence consume gasoline) each time we leave the house, we begin to lack muscular exercise and will hence suffer from ill-health. We can buy only as many books as we can actually read, if we are to derive any benefit from those books. For all things, and even all things combined, there is clearly some upper limit beyond which added consumption cannot provide significant added enjoyment, even if we look at it from a purely individual perspective, and confine ourselves to a consideration of only those goods and services provided through the market. Hence, in economic terms, increasing income provides declining marginal individual utility. Stated more concretely, an additional dollar can contribute greatly to the happiness of a homeless person, but not at all to that of a millionaire, and even the millions of dollars in the hands of the latter are rather ineffective at making him happier than somebody of the middle class.²

However, people depend on more than just goods acquired in the market, and increased consumption can interfere with other values. We may wish to sit in quiet surroundings and look at a mountain in the evening. The landscapes of maximized consumption within which we spend most of our lives, complete with sprawling cities, roads upon roads, light pollution, noise, and smog, make such simple enjoyment a rare privilege. The enjoyment of beautiful landscapes is often considered a “post-material” desire that becomes important only after the “basic” and “material” needs such as food and shelter have been met, and is supposedly appreciated only by the affluent in situations where such an experience has become scarce. However, as shown by the quotation at the beginning of this chapter, we can find literature extolling the beauty of nature as old as the ancient Indian epic, the Mahabharata, written at a time when scenic landscapes were in plentiful supply. Furthermore, a beautiful landscape is more, not less, material than money, the focus of “materialism,” because it is an actual place containing real objects, plants, animals, and people rather than being an abstract means of exchange. The very real desires of millions of people to live in beautiful rural or urban environments are ignored by the social, political and economic forces promoting urban sprawl. These desires can only be regarded as “post-material” once they have been made unaffordable for the great majority of people.³

The landscapes of maximized consumption belong to the ugliest creations of humankind. Our sense of aesthetics is attacked by strip malls, endless parking lots, cities where few plants can survive, landscapes of concrete. Again, conventional thinking will interrupt and say, “That’s only aesthetics—this is not really important.” But then, may I ask, can you point out to me a sane person who deliberately renders ugly the interior of her house? If we appreciate beautiful interiors, should we not take equal care to create or preserve beautiful exteriors? And why are we, who are supposedly richer than all preceding generations, unable to afford the most beautiful architecture?⁴ As pointed out by Runte (2006: 88), “no citizen [and indeed no person] should have to search for beauty.”

Our obsession with market commodities can easily undermine some of our most basic needs, such as our need for clean air. This is certainly more material (in the true sense of that term) than money. Air pollution causes numerous illnesses, which seriously impair quality of life, and can cause major monetary expenses. Ironically, the costs of treatment of pollution-related diseases are added to, rather than subtracted from, GNP statistics (which very clearly do not measure well-being). The goal of maximization of consumption actually seems to require greater pollution, both because it reduces the direct costs of production, and because it forces us to consume more healthcare services. Indeed, in the eyes of some promoters of economic growth, such as Lawrence Summers, much of the world is underpolluted.⁵

Human needs very significantly include the need for companionship and love. These needs are completely ignored by economic doctrines that presume atomistic individuals only concerned about their individual consumption. True love, as well as altruism, transcends the division between self and other. This transcendence is incompatible with a single-minded pursuit of income and consumption, but is much more rewarding for all concerned: that somebody could actually gain by giving away something (for example, by confirming a vital connection to the other) is not part of the economic calculus, but is critical to understanding why people behave in altruistic ways. A fully-fledged economics should concern itself with the conditions that promote altruism, love, and solidarity, how these conditions can be promoted, and what this means for all other aspects of economic life. Instead, the dominant economic approach assumes that people are not altruistic, that they always act from what is called economic self-interest, and thus fails to recognize that promoting altruism could be an option.⁶ This approach helps to undermine the fulfillment of some of our most fundamental needs—that is, to live in mutual support and connection with others. It is no wonder, then, that there is so much conflict, strife, and despair even in the wealthiest countries.

Neither the need for natural resources such as clean air and water, nor the need for love and companionship, can be dismissed as “post-material.” To take an example, poor peasants in a drought year depend more, not less, on the support of friends, relatives, and even complete strangers than do comfortably well-off people of the middle class. They also depend much more on the health of local soils, forests, and water resources. There is thus no justification for claims that we need concern ourselves with environmental and “non-material” needs only after production of market commodities has reached a certain level. These issues are important everywhere (for more discussion of such issues, see Guha and Martinez-Alier 1997 and Chambers 1997, esp. 177 ff).

Another human need that cannot be related to the material “standard of living” in any simple way is the need for freedom. In fact, some people seek freedom through a reduction of wants. As Buddha realized long ago, we are slaves of our desires: we want something, and if we don’t get it, we are unhappy. We wish to avoid something else, and if it happens nevertheless, we are unhappy. When we get what we want, we already fear losing it and devise ways to hold on to it longer. We get another thing, and are disappointed that it’s not as satisfying as we anticipated. The multiplication of desires thus leads to unhappiness, as well as dependency on the means for fulfilling those desires. For example, a person may have to work hard in an unpleasant job, and depend on environmentally destructive oil production, refineries, repressive and theocratic political regimes, huge oligopolistic oil companies, and military interventionism, just in order to be able to use a car to travel to work in the morning. Such a person has been entrapped in a net of innumerable needs.

Many people have discovered that they can extricate themselves from this web at least partially by a reduction of wants: we need only ask ourselves whether we really need this or that thing. By getting rid of the unneeded things we may experience liberation rather than deprivation. This can be done gradually over time rather than all at once, and does not need to be taken to the point of asceticism. Through this process, we can achieve a much greater sense of control of our lives, of freedom and independence. This pathway to self-fulfillment is entirely ignored by conventional economics. Even prevailing communist and social democratic doctrines fail to take this approach into account, since they do not question the desirability of more consumption, merely arguing that more people should be enabled to consume.⁷ Maximized consumption entails dependence on collective structures beyond citizens’ effective control, and it matters relatively little whether these collective structures are corporate or governmental.

Yet, it may be argued that some of our desires are difficult or impossible to satisfy, and are in this sense unlimited, even in the case of people who have embarked on a path of reducing their needs. These desires include the yearning for peace on Earth, for social justice, for leaving an intact biosphere for future generations, and for allowing other animal and plant species to inhabit this planet even if they are of no tangible benefit to humans. By its single-minded emphasis on the market, which can do little to satisfy these desires, and by its denigration or studied ignorance of the mechanisms which might actually promote the fulfillment of these desires, neoclassical economics presents a formidable barrier to the realization of precisely those desires that are least limited. In fact, the market can only fulfill limited wants, for which purpose it is a potent tool. However, to believe that markets can serve to fulfill unlimited wants is irrational. Meanwhile, activists for peace, justice, and environmental sustainability are branded as idealistic, economically irrational, utopian dreamers. Yet, even while these people are unlikely to be totally successful in their quests, the achievement of some of their aims is a positive contribution to humanity. Thus, it is part of the paradox of our times that we are told that our wants are unlimited, but our most unlimited desires are systematically denied, while limited means toward the achievement of limited wants are sold to us as the solution of our problems. We are trained to disregard those of our desires that are unlimited, to vastly inflate our limited individual wants, and to ensnare ourselves within socially constructed needs.

In these ways, contemporary economic discourse discourages us from considering any methods to increase happiness that do not maximize consumption. This does not promote happiness, but rather strife and misery, no matter how many commodities we may possess. This cannot be the prescription for a just and sustainable or, in other words, sane society. But how are we made to believe that we can reach happiness only through more consumption? How are we le...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Preface
• 1 The Paradox of Our Times
• PART I THE PRODUCTION OF SCARCITY
• PART II PATHS TOWARD ABUNDANCE
• Bibliography
• Index