The Economics of Abundance

 DISCLAIMER, THIS IS MY VERSION OF AN ECONOMIC THEORY, I AM DOING A THOUGHT EXPERIMENT AND DO NOT TAKE MY WORD IN THIS SCENARIO, I AM JUST A 17-YEAR-OLD MAKING UP A SCENARIO AND USING SOME ECONOMICS AND GENERAL KNOWLEDGE TO SIMULATE WHAT HAPPENS, thank you and enjoy! 

Picture yourself in 2522, assume that humans have been able to grow to be a type 1 civilisation on the Kardashev scale: we are able to completely control the Earth, able to harness as much energy as we desire as well as the control over any natural disasters, with the ability to mine asteroids in the asteroid belt for their endless resources, where there are no shortages of food or anything else. What will economics look like?

In a world where there are no shortages, the basic economic problem does not apply. As there are no shortages, there is no need to allocate resources efficiently, the issue of scarcity is no longer, and most wants are satiated. Thus, I present the problem of abundance. In a utopian society such as this there would be no money. This is because everyone would have equal and infinite wealth, a true socialist state, most are happy, there is no poverty and thus no need for any theft resulting in a much safer environment, the murder rate drops, as people are not getting caught in the crossfire during the aforementioned theft. Some may search for power or a method to feel superior, which may lead to violence or societal unrest, at extremes, dictatorship could form (assuming there is a government existing to be toppled). Overall, this society is synonymous with a utopia, with a few flaws, but that is life.

If I were to suggest that this society with infinite resources is unsustainable. Why would that be?

In a world of abundance, there would be no productivity. And why should there be? Because, in theory, you can have whatever you like, whenever you like. However, there would be a shortage in labour. The people who are responsible for infinite demand would need infinite supply for an equilibrium. You must be thinking, “Shrey, you have already said that there is infinite supply so what’s your point?” Which is a valid question, however, if everyone is rich, nobody is. By this, I mean that there is an inability for workers to exist, in any field. The sad reality of this idealistic society is that there is nobody who is willing or able to run it (excluding the prospective dictators I mentioned before for their lack of ability).  If people’s wants are always satiated, they would not have any incentives to work in a job. Therefore, not only would this be unachievable, but it would also be a trap. Because people can free ride on the infinite services and goods, people would stop working, making society unable to function. So, every few months of this utopia would be followed by a couple months of dystopian and hectic work. If the society were to broadcast that everyone receives the same result no matter what they do, the education levels would fall dramatically. This is because people (generally) become educated so that they can make more money and if they get infinite goods and services either way, they will not want to educate themselves. As a direct result of this, the society will only be able to last for one generation as the next would be unable to service the machines effectively, and because of this, the human civilisation would crumble, becoming a shadow of its former self. A wasteland of ultra-high technology to look at but not to be understood. They would fall from the type 1 civilisation to what we are today, in 2022.

Say that in 2722 (as they could look at the old technology to advance themselves faster), Humanity makes its journey back to their former glory, instead of falling into the trap, what would they do?

The appropriately named, New Age Society, would make a government, consisting of a handful of people, to create an artificial shortage. To continue to urge people to work. Making the rewards scaled to the type of work they do, and whether the government deems them to be worthy of infinite wealth or not. For example, in this society they would make engineers the wealthiest to urge invention. However, this would also not be a permanent solution, as the system would be prone to corruption, “absolute power corrupts absolutely.” Due to this, the New Age Society would last longer than the Society before it, yet it would eventually become corrupted and/or overthrown because the Government of the New Age Society was not suppling everyone with infinite resources even though they could, and the aforementioned dictators would put the New Age Society back into the old age trap. And then the cycle would be reset.

What is the key take-away?

In one word, “incentives” an economy must have incentives for their citizens to be productive. In the utopian society, it was shown that there were very little to no incentives causing the economy to have the largest economic crash to occur (in theory)  resulting in 500 years of progress being lost because of lack of incentives for people to educate themselves.

 

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If you are interested in the Kardashev scale and space, I would recommend this 11 minute video: https://www.youtube.com/watch?v=rhFK5_Nx9xY