Are There Limited Natural Resources?

If you open most economic textbooks, the first lesson they present to you will be about scarcity of resources.


According to the American Economic Association, economics is "The study of scarcity, the study of how people use resources and respond to incentives, or the study of decision-making."


But this raises an interesting question. Are there actually scarce natural resources? And if there aren't, what are the consequences of that?


I find the answer to be yes and no. It's a nuanced question.

The answer is yes when you consider that the Earth obviously has a finite capacity for us to use. Thus, the impossibility of something like endless economic growth.

But whether that actually translates into practical scarcity is a much different question.

So the answer is no...IF we use the resources correctly.

By "correctly" I mean by embracing three things: circular economy dynamics, equitable distribution and a steady-state economy. You need all three.

You need circular economy dynamics because currently we have linear extraction dynamics. We extract resources from the earth, use them in a way that we feel is valuable, and then export waste.

So it goes: extraction (deforestation, mining, fishing etc) -> consumption (eating, using my cell phone, writing on paper, etc) -> waste (landfills, plastic in the ocean, etc).

In a circular economy, resources are essentially recycled back into the system after use. So something like composting is an example of real life circular economy dynamic.

The second thing you need is much more equitable distribution. This is relatively straight forward. There might be an abundant amount of resources, but if the vast majority of said resources are going to 1% of the population, than you still have a significant portion of the population who will not have enough and be in scarcity. Thus, the need for even more extraction of the earth's limited resources in order to make sure everyone has enough.

In reality, with a more equitable distribution, you need much less extraction and goods in general.

This creates a situation where abundance is much more feasible, but you still need the third piece: a steady-state economy.

If the economy is under constant pressure to grow, like it is now, then inevitably you will run into a situation of scarcity of resources. That would be the case even with circular economy dynamics and equitable distribution. Thus, the economy needs to be able to the thrive WITHOUT needing to grow.

This can be done. But it doesn't look like anything we've done in the past. Not capitalism, not socialism, not even feudalism.

If all that happens, you're looking at a world of abundance.

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