The Economics of Abundance

Once a person has their basic needs satisified more consumption is optional. While we might argue on the level of consumption required to satisfy basic needs most would agree that there is a limit on consumption in order to be satisfied and to live a fulfilled life. If the desire to live a fulfilled and satisfying life is ‘normal’ then the consumption and possession of goods and services is a second order effect and is not the objective of living.

Economic forces have lead to the production of low cost, high quality consumables that been spectacularly successful in creating or potentially creating an abundance of goods and services that go beyond the needs of many of us to lead a fulfilled life. This has lead many into consumerism where we consume more than we need to the extent that our lives are less fulfilled than they would be with less consumption. An example is the over abundance of food in some societies to the extent that excessive consumption leads to obesity and a reduction in the quality of life and in the potential of many people.

The economic forces that have lead to the spectacular success in the production of goods and services are the same forces that take us beyond our the needs. What we need are feedback mechanisms within our economic systems that act as a brake on consumption without reducing economic growth. Economic growth now comes from increasing consumption and a reduction in consumption leads to a lower economic growth. What we want is to redirect enconomic growth away from increased consumption to reduced consumption but still with economic growth.

At present the main feedback control comes from price. That is, price is the main mechanism we have to stop excessive consumption. With modern production systems price is no longer a barrier to consumption and so it fails to control excessive consumption.

However, price is also the mechanism that leads to increased consumption because as we become richer so we can afford higher prices and so price as a control starts to lose its effectiveness. If we are rich enough to afford as much of something as we consume then we will continue to consume beyond what is good for us unless there are other countering influences.

Examples other than food are gambling, alcohol consumption, space (as in houses), transport (as in consumption of fuel), health (as in unnecessary and detrimental tests and procedures).

We cannot depend on “good sense” to limit these excesses but we have to build our economic systems to help us make good sense.

This series of articles will introduce economic artefacts that go beyond price to help us control our excesses and live in an age of abundance.

The reader may be puzzled how some of the articles fit into this theme of the “economics of abundance” as many are about identity, entering information into a horse event, diversity of media etc. There is an underlying theme to all these articles and it is to do with giving individuals control over their electronic information. By giving individuals control we give them the power to make decisions and to participate in systems that are cost effective and bring market forces into areas where market forces don’t normally exist. Markets are great mechanisms for the allocation of resources. The trick is to create markets where markets do not exist to do things we thought were outside the scope of markets – like cope with abundance, stop wars, reduce green house gases and achieve any other “objective” you might imagine. The reason that electronic identity is so important in all these areas is that you need many buyers and many sellers to create a true market and you need to have ways of easily creating many buyers, many sellers and to provide them with the currency with which to trade.