marginally DECREASING costs

["William B. Ryan" <william_b_ryan@xxxxxxxxx>]

<**>I thought that scarcity meant, "not infinite" or
"finite".
----------------------------------------

This is similar to the definitions concocted by Bill
Wallace.  It seems that you too are thinking in
absolutist terms.  Something is either infinite or
scarce without shades of gray.  In ordinary usage
scarce does NOT mean something other than infinite:

"scarce 1. Insufficient to meet a demand or
requirement; short in supply: Fresh vegetables were
scarce during the drought. 2. Hard to find; absent or
rare: Steel pennies are scarce now except in coin
shops. --scarce adv. Barely or hardly; scarcely..."

More to the point is what it means in economics.
There is no arbitrary dividing line between scarcity
and abundancy not even at the point of infinitude.
Well, you could draw them in the sand as the
"Rothbardian" Austrians are wont to do in their
method a priori, but that is not the scientific
approach.

In economics scarcity does not mean fundamental
scarcity to one side of an arbitrarily defined line,
but diminishing returns or marginally increasing
costs as functions of time.

The difference between the old and the new economics
is that the new economics takes the position that
costs are generally decreasing for everything with
improvement in process, discovery, invention and
development.  The abundancy postulate replaces the
scarcity postulate.

Marginal utility theory - and its Austrian variant -
thereby becomes as useful to us as Ptolemaic
cosmology.

It may seem logical that we live in a finite world of
limited resources, but within the time-scale of human
existence it is *effectively* infinite.

The world has never run out of a "non-renewable"
resource and never will because they exist in such
prodigious quantities.

The world has frequently run out of "renewable"
resources.  Europe twice ran out of wood during the
Middle Ages.

The reason for this is that the existing stocks of
renewable resources are seldom more than in small
surplus to consumption, so that some perturbation can
spell disaster: blights that destroy crops, and so
on.

The reserves of nonrenewable resources are many
multiples of ordinary consumption.
--


*Credit-Power and Democracy,* published 1920, pp.
105-107:

...We have already seen that the only possible basis
of *real* credit is a belief, amounting to knowledge,
in the correctness of the credit-estimate of a
society, with all its resources, to deliver goods and
services at a certain rate.  If we made this basis
our *financial* basis, then the credit-structure
erected on it can only be destroyed by social
suicide--by the refusal of the community to function.
Now, one of the components of the capacity of a
society to *deliver* goods and services *is the
existence of an effective demand* for those goods and
services.  It is not the very slightest use, under
existing conditions, that there are thousands of most
excellent houses vacant in this country, when the
cost of living in them totally exceeds the effective
financial demand of the individuals who would like to
live in them.  The houses are there, and the people
are there, but the delivery does not take place.
*The business of a modern and effective financial
system is to issue credit to the consumer, up to the
limit of the productive capacity of the producer, so
that either the consumers' real demand is satiated,
or the producers' capacity is exhausted, whichever
happens first.

This can obviously be done by making issues of
purchasing-power to cover the whole estimated
productive capacity, and taking it back to the extent
that this capacity is diminished from any cause
whatever, a state of affairs which rapidly results in
making everyone 'rich' in the current sense of the
term; which, it should be clearly borne in mind, does
not at all mean that an individual's real consumption
is large--very often quite the contrary--but that the
individual in question has the mechanism at hand by
which to obtain what he does want...
--


----original message----
Date:  	Tue, 16 Dec 2003 11:59:56 +0200
From:  	"Kerem Tibuk" <keremtibuk@xxxxxxxxxxxxx>
Subject:  RE: [Austrian School of Economics] marginally
 increasing costs

I am really sorry.  As I said before English is my second
language.

Therefore I thought that scarcity meant, "not infinite" or
"finite".

Now I know that scarcity means "not merely enough".




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