The Spirit of Capitalism: The Scarcity We Create for Ourselves

How many times have you heard someone say, “We live in a world of scarcity”? Too often, I’m sure. Perhaps you’re even in the habit of saying it yourself.

I heard it recently from an American political leader and my first thought was, “No, and I need to write a Better Capitalism post that helps correct this misperception about scarcity.” More specifically, a post about how scarcity enables the damaging American-style capitalism we’ve created for ourselves that is counter to the Spirit of Capitalism.

Image Credit: The Harvard Crimson

As I began to outline this post, my inner calm voice reminded me of the book by Charles Eisenstein, Sacred Economics: Money, Gift & Society in the Age of Transition (North Atlantic Books, Berkeley CA, 2021). I stopped, went to my bookshelf, pulled down my copy and, not surprisingly, found the chapter at the beginning of his book where Charles insightfully writes about scarcity. It pays to listen to the inner calm voice, eh?

Seeing the benefits of sharing his perspective and grateful that he licenses this work under Creative Commons, with attribution and without derivation, we’re thrilled to share here excerpts of Charles’s perspective on scarcity (pgs. 35 – 45).

The Illusion of Scarcity

It is said that money, or at least the love of it, is the root of all evil. But why should it be? After all, the purpose of money is, at its most basic, simply to facilitate exchange – in other words, to connect human gifts with human needs. What power, what monstrous perversion, has turned money into opposite: an agent of scarcity?

For indeed we live in a world of fundamental abundance, a world where vast quantities of food, energy, and materials go to waste. Half the world starves while the other half wastes enough to feed the first half. In the Third World and our own ghettos, people lack food, shelter, and other basic necessities and cannot afford to buy them. Meanwhile, we pour vast resources into wars, plastic junk, and innumerable other products that do not serve human happiness. Obviously, poverty is not due to a lack of productive captivity. Nor is it due to a lack of willingness to help: many people would love to feed the poor, restore nature, and do other meaningful work but cannot because there is no money in it. Money utterly fails to connect gifts and needs. Why?

For years, following conventional opinion, I thought the answer was “greed.” Why do sweatshop factories push wages down to the bare minimum? Greed. Why do people buy gas-guzzling SUV's? Greed. Why do pharmaceutic companies suppress research and sell drugs that they know are dangerous? Greed. Why do tropical fish suppliers dynamite coral reefs? Why do factories pump toxic waste into rivers? Why do corporate raiders loot pension funds? Greed, greed, greed.

Eventually I became uncomfortable with that answer.  . . . Ultimately, greed is a red herring, itself a symptom and not a cause of a deeper problem. To blame greed and to fight it by intensifying the program of self-control is to intensify the war against the self, which is just another expression of the war against nature and the war against the other that lies at the base of the present crisis of civilization.

Greed makes sense in a context of scarcity. Our reigning ideology assumes it: it is built into our Story of Self. The separate self in a universe governed by hostile or indifferent forces is always at the edge of extinction, and secure only to the extent that it can control these forces. Cast into an objective universe external to ourselves, we must compete with each other for limited resources. Based on the story of the separate self, both biology and economics have therefore written greed into their basic axioms. In biology it is the gene seeking to maximize reproductive self-interest; in economics it is the rational actor seeking to maximize financial self-interest. But what if the assumption of scarcity is false – a projection of our ideology, and not the ultimate reality? If so, then greed is not written into our biology but is a mere symptom of the perception of scarcity.

. . .

The assumption of scarcity is one of the two critical axioms of economics. (The second is that people naturally seek to maximize their rational self-interest.) Both are false; or, more precisely, they are true only within a narrow realm, a realm that we, the frog at the bottom of the well, mistake for the whole of reality. As is so often the case, what we take to be objective truth is actually a projection of our own condition onto the “objective” world. So immersed in scarcity are we that we take it to be the nature of reality. But, in fact, we live in a world of abundance. The omnipresent scarcity we experience is an artifact: of our money system, of our politics, and of our perceptions.

. . .

The assertion that we live in a world of abundance may provoke an emotional reaction, on two counts. First, it seems to embody a privileged ignorance, when so much of the world faces extreme poverty, hunger, homelessness, and deprivation. More production will solve these problems, right? Wrong. We already produce more than we need to feed, house, and clothe everyone. The problem is not one of underproduction; it is one of maldistribution. In other words, the scarcity is real – but it is artificial.

. . .

Amid superabundance, even we in rich countries live in an omnipresent anxiety, craving “financial security” as we try to keep scarcity at bay. We make choices (even those having nothing to do with money) according to what we can “afford,” and we commonly associate freedom with wealth. But when we pursue it, we find that the paradise of financial freedom is a mirage, receding as we approach it, and that the chase itself enslaves. The anxiety is always there, the scarcity always just one disaster away. We call that chase greed. Truly, It is a response to the perception of scarcity.

Let me offer one more kind of evidence, for now meant to be suggestive rather than conclusive, for the artificiality or illusory nature of the scarcity we experience. Economics, it says on page one of textbooks, is the study of human behavior under conditions of scarcity. The expansion of the economic realm is therefore the expansion of scarcity, its incursion into areas of life once characterized by abundance. Economic behavior, particularly the exchange of money for goods, extends today into realms that were never before the subject of money exchanges. Take, for example, one of the retail growth strategies in the last twenty years: bottled water. If one thing is abundant on earth to the point of near ubiquity, it is water, yet today it has become scarce, something we pay for.

. . .

For something to become an object of commerce, it must be made scarce first period. As the economy grows, by definition, more and more of human activity enters the realm of money, the realm of goods and services. Usually we associate economic growth with an increase in wealth, but we can also see it as an impoverishment, an increase in scarcity. Things we once never dreamed of paying for, we must pay for today. Pay for using what? Using money, of course – money that we struggle and sacrifice to obtain. If one thing is scarce, it is surely money. Most people I know live in constant low-level (sometimes high-level) anxiety for fear of not having enough of it. And as the anxiety of the wealthy confirms, no amount is ever “enough.”

. . .

Perhaps the deepest inclination of our slavery is the monetization of time. It is a phenomenon with roots deeper than our money system, for it depends on the prior qualification of time.  . . .  Once qualified, time too could be bought and sold, and the scarcity of all money-linked commodities afflicted time as well. “Time is money,” the saying goes, an identity confirmed by the metaphor “I can't afford the time.”

If the material world is fundamentally an abundant world, all the more abundant is the spiritual world: the creations of the human mind – songs, stories, films, ideas, and everything else that goes by the name of intellectual property. Because in the digital age we can replicate and spread them at virtually no cost, artificial scarcity must be imposed upon them in order to keep them in the monetized realm. Industry and the government enforce scarcity through copyrights, patents, encrypted standards, and “digital rights management,” allowing the holders of such property to profit from owning it.

Scarcity, then, is mostly an illusion, a cultural creation, But because we live, almost wholly, in a culturally constructed world, our experience of this scarcity is quite real – real enough that nearly a billion people today are malnourished, and some three million children die each year from hunger-related causes. So our responses to this scarcity – anxiety and greed – are perfectly understandable. When something is abundant, no one hesitates to share it. We live in an abundant world, made otherwise through our perceptions, our culture, and our deep invisible stories (emphasis added). Our perception of scarcity is a self-fulfilling prophecy. Money is central to the construction of the self-reifying illusion of scarcity.

Money, which has turned abundance into scarcity, engenders greed. But not money per se – only the kind of money we use today, money that embodies our cultural sense of self, our unconscious myths, and an adversarial relationship with nature thousands of years in the making. All of these are changing today. Let us look, then, at how money came in to so afflict our minds and ways, so that we might envision how the money system might change with them.

Join Us

We continue this series about the spiritual dimension of capitalism by encouraging you to bring the best of your spiritual values into everyday economic decisions. This is the path to successfully balancing profit and purpose in our individual lives and in our greater economy. If you're inspired to learn more and want practical ideas for living out your spiritual dimension in the marketplace, we’d love for you to join us on this journey of renewing capitalism. You can begin by reading our book Better Capitalism and by signing up for our weekly blog post.

Fix Capitalism. Fix the American Dream.

Our vision is to benefit society by transforming capitalism's current core ethic of 'maximize shareholder value' to the better core ethic of 'optimize mutual value.' We achieve our vision by impacting learning, opinion, beliefs, and policy. Institute for Better Capitalism, Inc.

Invite Us to Speak

⭐⭐⭐⭐⭐ Our Amazon number 1 new release: Unleash more with Better Capitalism: Jesus, Adam Smith, Ayn Rand, & MLK Jr. on Moving from Plantation to Partnership Economics.

"This book merits close, sustained attention as a compelling move beyond both careless thinking and easy ideology."—Walter Brueggemann, Columbia Theological Seminary

"Better Capitalism is a sincere search for a better world."—Cato Institute

The Institute for Better Capitalism, Inc., is a 501(c)(3). We invite and are grateful for financial partners in this work. We invite you to donate here or contact us for more information. Thanks!

Donate Now >>