# Scarcity

Scarcity ( English scarcity ) is in the economics , the mismatch between the unlimited needs of the people and for their gratification limited available goods and services . The opposite is abundance .

## General

Not the entire economy is scarce. Free goods such as air are not in short supply because they are available in such large quantities in the relevant area at the observed time that every person can consume as many units of the good as they want, or until their saturation level is reached. Economic goods, on the other hand, are defined by their scarcity (and therefore also called “scarce goods”), because they are not available in the desired quality and quantity at any time and in any desired location; Bananas were scarce in the GDR, but not in the FRG. Drinking water is scarce in the desert, but not in Germany. When it comes to the question of scarcity, it is not the limitation of goods that is important, but that they are too small in relation to the extent of needs; So scarcity is a relative term. It requires economic activity that aims to alleviate the scarcity and to direct the scarce resources in such a way that the best possible satisfaction of needs occurs.

In addition to quantity or quality ( product quality , service quality ), scarcity can also relate to the place or time of its availability. Any kind of shortage (like lack of money ) only affects certain economic agents in a certain place at a certain time.

## history

Title page of Hobbes' Leviathan (1651)

Scarcity is as old as human needs. In mercantilism , money was scarce. In 1556, Martin de Azpilcueta pondered the relationship between scarcity and purchasing power of money, since goods were cheaper when money was scarce; when there is a scarcity, money is worth more. These considerations are the forerunner for the naive quantity theory of money formulated by Jean Bodin in 1568 . In its price theory , mercantilism used a relative concept of scarcity: goods are more or less scarce, and their price is accordingly higher or lower. However, a systematically developed scarcity theory only goes back to Thomas Hobbes and John Locke . For Hobbes, in his major work Leviathan , published in 1651, scarcity was seen as the relationship between limited access and unlimited desire. Since all goods are scarce, it needs the state as a regulator. All economic subjects would have to constantly strive to position themselves better, in a "constant progression from one wish to the other, whereby the achievement of the former must always pave the way for the following". In 1690, John Locke's theory of scarcity was based on the assumption that social relationships were not the cause of scarcity, but that scarcity was inherent in its nature. Therefore, people have to ensure production that can cope with shortages and expansion . For him, the scarcity of land is a consequence of the money economy. Samuel von Pufendorf emphasized in 1675 in his main work "Eight Books" which role the scarcity of a good plays for the size that is applicable on the market: "The strangeness of a thing therefore does the most to increase its price".

While money was “scarce” among the mercantilists, land was considered scarce among the physiocrats . In classical economics , too , soil was always a scarce commodity. Adam Smith described this scarcity of land with the words that the existence of land rents was an indication of the “bountifulness of nature”. In his book The Prosperity of Nations (March 1776) he distinguished between natural scarcity ( English natural scarcity ) and artificial scarcity ( English artificial scarcity ). He defined scarcity in terms of demand , not supply .

Thomas Robert Malthus investigated the relationship between population growth and land yield in 1798 and, in his population law, came to the prognosis that the land yield could only grow in arithmetic progression (1, 2, 3, 4, 5 etc.), while the population could grow in geometric progression ( 1, 2, 4, 8, 16 etc.) grow, with the consequence of hunger and poverty through scarcity of food . It was not improvements in production but birth control (for example through abstinence ) that the Pastor Malthus saw as a way of permanently fighting poverty. In 1817 David Ricardo saw the landowner as the beneficiary of the scarcity, because in a growing economy the land was the only non-reproducible factor of production . "There are some goods whose value is determined solely by their scarcity". According to Ricardo, the basic rent can always arise when land turns out to be scarce and of varying quality. His differential rent theory shows that he derives the scarcity primarily from natural and only secondarily from social factors.

Only John Stuart Mill supported the Malthusian 1848 population teaching with the ground yield law . Neomalthusianism , influenced by Mill, promoted birth control contraceptives , which Malthus had rejected. Your predictions are verified today .

Nassau William Senior developed his theory of the constitutive properties of wealth creating goods ( English Constituents of Wealth ) in 1836 , for whose goods properties he added desirability ( English utility ), technical suitability for the satisfaction of needs, scarcity ( English limitation of supply ) and transferability ( English transferableness ) counted; He considered scarcity to be the most important. In doing so, he contradicted the view of Smith, Malthus and Mill, for whom wealth consisted only of material objects. A system of the causes of scarcity created by Antoine-Elisée Cherbuliez in 1852 for his contribution on scarcity to an economics dictionary differentiated between normal (crop failures), abnormal (wars, epidemics) and artificial causes of crises. From this he derived the real (through natural causes) and artificial (through state intervention ) brought about scarcity. For Léon Walras there was a scarcity ( French rareté ) of things when they were both useful and available in limited quantities. In 1874 he defined scarcity as the relationship between the infinity of needs and the scarcity of means available to satisfy them. In 1831 his father Antoine-Auguste Walras defined scarcity as the quotient of demand and supply.

Gustav Cassel's price theory from 1918 was based exclusively on the principle of scarcity; according to Cassel, the entire economy is governed by the principle of scarcity. "Since the means of satisfying needs are usually only available in limited quantities and since the needs of civilized people in their entirety are insatiable, the means of satisfying needs are usually scarce in relation to needs". As soon as a price is established for a certain commodity, only the demand that is willing to pay the price is satisfied and limited in such a way that it matches the supply. In 1931 John Maynard Keynes predicted the time of saturation and the "end of the dark tunnel of scarcity". According to Keynes' General Theory of Employment, Interest and Money from February 1936, profit arises from the scarcity of real capital ( means of production ), and money interest only exists because of the scarcity of money. For Lionel Robbins in 1932, scarcity is the basis of economic activity, because economics was interested in human behavior as a “relationship between goals and scarce resources with alternative uses”.

## species

There is a shortage when the demand is greater than the supply:

${\ displaystyle {\ text {Demand}}> {\ text {Supply}}}$

In the worst case, with a given demand, the supply is "zero", so the scarcity is greatest.

The scarcity can therefore be triggered by both the supply and the demand side:

## Economical meaning

Issues of scarcity concern economics, play a role in poverty and hunger and in the problem of distribution.

### Economics

Economics can be described as the “doctrine of scarcity”. The greater the scarcity, the more the need and thus also the usefulness and value of goods will grow. A good is scarce when it is not sufficient to satisfy all consumer wishes directed towards it. Accordingly, economic scarcity has nothing to do with absolute limitation or rarity. The price indicates the relative scarcity of goods or services. The price of a scarce good is greater than zero, that of a free good is zero. The greater the scarcity of a scarce good, the higher its price. According to the scarcity principle, pricing has the task of restricting demand to such an extent that it can be satisfied with the quantities of goods available.

### Poverty and hunger

Poverty and hunger are two global manifestations of scarcity today. They do not necessarily have to mean great poverty or a lack of essential goods, even if this can often be observed in developing and emerging countries . Poverty is undoubtedly the most common and important form of scarcity. Wealth appears as an excess of economic goods, poverty as their lack. The scientific discussion of the subject of “scarcity of financial resources” has so far mainly taken place in sociology , namely in the context of so-called “poverty research”. Hunger is the shortage of food. The global scarcity of water "has its basic causes in the balance of power, in poverty and inequality, not in the actual availability of water". A latent shortage arises from the limited availability of non-renewable raw materials . Their consumption increases their scarcity. All examples show that scarcity is location and / or time dependent, so that scarcity also represents a distribution problem.

### Distribution problem

The distribution is called allocation in economics . A distribution problem only exists as a problem if there is a scarcity. Without scarcity there would be no distribution problem because everyone's needs can be met at any time. According to Niklas Luhmann , problems of distribution are connected with the scarcity of goods: “In contrast to the general problem of finiteness, scarcity should only be spoken of if the problem is co-determined by decisions that can be observed and discussed within society - be it Access decisions or distribution decisions. Only the emergence of scarcity divides the totality of the, in principle, finite quantity into scarce and non-scarce goods. ”From the rule of law distribution principle it follows that the state has to accept the primary distribution of goods resulting from market behavior as an outflow of fundamental rights. The state would become a totalitarian supply state if it assumed a distribution function for all unevenly distributed scarce goods. In the liberal welfare state, scarcity as such does not grant the state any right to intervene , because beyond the subsistence level , nobody has a constitutional right to a specific share in the quantity of goods. The state is only authorized to correct the market results of the primary distribution of goods in the case of secondary distribution of goods ( redistribution ) .

In practice, (operational) economic decisions always lead to scarcity and thus to distribution problems. Scarcity of operational production factors means that the company's capacities must be dimensioned in such a way that full employment can be expected in the medium term . Temporary shortages can then appear during peak employment, which is called bottleneck and leads to overemployment of staff ( overtime ). Overemployment is an indicator of capacity scarcity. All operational functions can be affected by this (e.g. material, personnel, finance or logistics shortages). In a single-product company , with a linear production function, only the bottleneck factor can be scarce, to which the contribution margin is then added. Some bottlenecks can hardly be avoided, such as the shortage of skilled workers . Eugen Schmalenbach saw the materials as a scarce factor, which he called "blocked procurement". Both these bottlenecks and excess capacities must be avoided through forward-looking bottleneck planning ( production planning ). In 1926 Konrad Mellerowicz stated that there could be no scarcity without demand, because a good could only be scarce compared to a certain demand. In addition, the scarcity is already the element of supply, because only if the supply is insufficient can a scarcity arise.

In the case of goods purchased relatively independently of price (high price elasticity of demand), the providers have an interest in artificially reducing them. In the context of marketing , artificial scarcity is used as a marketing tool. In order to ensure the exclusivity of a product or a brand , the quantity produced is deliberately set too low and the possible income from the quantities not produced is foregone. Typical examples are limited (and in some cases numbered) special editions of products, especially luxury goods or goods that everyone needs to live (such as table salt ).

## Scarcity in Sociology

Scarcity is less often addressed directly in sociology . However, the fight against “scarcity” (according to Bálint Balla ) is the subject of all social action . This explains both different forms of social conflict and forms of help. In order to remedy them, the social actor works, chooses forms of reciprocity (see exchange in sociology ), depletes or enriches others or seeks forms of compensation in other social fields (see sublimation ).

## literature

Wiktionary: scarcity  - explanations of meanings, word origins, synonyms, translations

## Individual evidence

1. Arthur Woll, Allgemeine Volkswirtschaftslehre , 12th edition, 1996, p. 50 f.
2. Verlag Dr. Th. Gabler, Gabler Wirtschaftslexikon , Volume 3, 1984, Sp. 1925
3. Günter Vornholz, VWL für die Immobilienwirtschaft , 2014, p. 107
4. Verlag Dr. Th. Gabler, Gabler Wirtschaftslexikon , Volume 3, 1984, Sp. 2398
5. Martin de Azpilcueta, Comentario resolutorio de usuras , 1556, p. 98 f.
6. Thomas Hobbes, Leviathan or the Matter , 1651/1996, p. 14
7. Thomas Hobbes, Leviathan or the Matter , 1651/1980, p. 90
8. ^ John Locke, Second Treatise of Government , 1690/1977, p. 228
9. ^ Samuel von Pufendorf, De jure naturae et gentium libri octo , Book V, 1675, p. 11
10. ^ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations , Volume IV, 1776, p. 380 f.
11. ^ Thomas Robert Malthus, An Essay on the Principle of Population , 1798, p. 8
12. David Ricardo, On the Principles of political Economy and Taxation , 1817, pp. 12 ff.
13. ^ John Stuart Mill, Principles of Political Economy , Volume III, 1848, p. 7
14. ^ Nassau William Senior, Political Economy , 3rd Edition, 1854, pp. 6-13
15. Antoine-Élisée Cherbuliez, Disette , in: Dictionnaire de l'économie politique, Volume I, 1852, pp. 555-563
16. Léon Walras, Eléments de l'économie pure ou théorie de la richesse sociale , 1874/1926, p. 31
17. Gustav Cassel, Grundgedanken der Theoretischen Ökonomie , 1918/1932, p. 151
18. Gustav Cassel, Grundgedanken der Theoretischen Ökonomie , 1918/1932, p. 151
19. ^ John Maynard Keynes, Economic Possibilities for our Grandchildren , in: Essays in the Persuasion, 1931, pp. 358-373
20. John Maynard Keynes, General Theory of Employment, Interest and Money , 1936, p. 178 f.
21. Maria Grewe / Markus Tauschek (eds.), Knappheit, Mangel, Überfluss , 2015, p. 18 f.
22. ^ Lionel Robbins, An Essay on the Nature and Significance of Economic Science , 1932, p. 15
23. Heribert Gierl / Michael Plantsch, Are scarce products more attractive ?: The status of previous research , in: Journal of Research and Management. Vol. 29, 2007, p. 120
24. Katharina Hutter / Stefan Hoffmann, Professional Guerilla Marketing: Basics - Instruments - Controlling , 2013, p. 123
25. Horst Hanusch / Thomas Kuhn, Introduction to Economics , 1998, p. 1
26. ^ Rudolf Richter, Price Theory , 1970, p. 12
27. ^ Verlag Friedrich Mauke, year books for national economy and statistics , volume 140, 1934, p. 537
28. United Nations Development Program (UNDP), 2006, p. 2
29. Thorsten Kingreen, The Social State Principle in the European Constitutional Network , 2003, p. 192
30. Niklas Luhmann, Die Wirtschaft der Gesellschaft , 1989, pp. 177 ff.
31. Thorsten Kingreen, The Social State Principle in the European Constitutional Network , 2003, p. 192
32. Niklas Luhmann, Die Wirtschaft der Gesellschaft , 1989, p. 100