Discussion 2: Unlimited Wants, Limited Resources

(classical music) – It’s definitely interesting how the definition supports the prominence of
economics in this society. So if, as you’ve done, you switched around and it becomes meaningless to have economics as something that we organize around on such a big base, such a big level. Yeah, that’s the main idea. How a definition supports the prominence of economics and policy making. It never occurred to me before. – Well, I mean, I think
this is part of the whole exercise of making us reflect on what economics is. What it aims to do, what its assumptions are. – I was going to say, commenting on what you
said about anthropology and Marshall Sohlins Affluent society, I think the idea of hunter gatherers I think is they saw apparently their resources as unlimited in part because there were fewer of them, but also partly because of the way nature naturally renews itself. So you come back to the
trees the next season and the fruit is back. And it is in some sense, unlimited. It reproduces itself. Which is why it’s odd in
a way that as a society we understand resources as being so limited, because so many of them are regenerative on the planet that we have. And similarly I was going to say that it does seem like power
is a really important element of that, and it reminded me of Amartya Sen, I think, pointed out famines are not a function of scarcity, they’re a function of inequality and that I think though famines pretty much ended in India at the same time democracy was established, for the reason that people now had some power over how resources were allocated. – Were distributed. – Yes, distributed rather. – Yes, yes, yes. And then there are of course wars. Not only do wars destroy
resources, but they create artificial scarcities because the one side keeps under its control available surpluses of food supplies and doesn’t distribute them to others. I think Africa is a scene of many, many artificially created scarcities. But what I really object to is the definition of the economic problem in those terms. As the continuous problem. Because if you define wants as unlimited then where does the race end? You’re always behind the curve. You’ve got these wants
that keep multiplying and you have to sort of, you know, you have to bring up technology and automation and everything else in an endless multiplication of resources to satisfy them. Of goods and services to satisfy them. So you’re in this race. Why should it ever end? At what point does it end? People then will say,
well it will have to end when you run up against the natural limits of resources, the planetary limits. But then we’ll say, oh we’ll maybe to get around that, too by technology. Or we can get people so up in other planets consuming wildly. That worries me. And it doesn’t seem to be economics has any basis, or near classical economics has any basis for challenging that. And when they talk about the impact of robots, for example, people like Brynjolfsson and McAfee, they talk about racing human beings by education can be equipped to race with automated systems. Not race against them, but race with them. Race to where? – If, as you say, the value and importance of economics is eliminated in a situation where there
is unlimited resources, do you think inversely,
in a situation where, as you touched upon, planetary resources, physical resources,
ecological resources are running out in some way, do you think economics
becomes more important or becomes more irrelevant? – No, it becomes important again, of course it does. Because there you do get again the problem of the balance
and how you achieve it. But you can achieve it from both sides. In fact, economics has nothing to say against trying to achieve it through Malthusian. A Malthusian process. They wouldn’t say, okay, well the way you achieve the balance is that a whole proportion of the human race will necessarily starve to death and then you will get
your balance recreated. And economists would say, well, somehow, you have to limit the population. That would be one side. And how you do it is a
moral issue, actually, rather than an economic, strictly speaking economic question. On the other side, you can limit the demand on resources that have become scarce by redoing the organization
of your economic system in some ways. Less energy intensive and different types of energy use and other things. So most of the effort has concentrated on the resource side in limiting the demand
for scarce resources on the consumption side. Very little attention is
being paid to population because it’s again, assumed that population will level off, population rates will level off before the pressure on
resources becomes irreversible. Is that a good assumption? All one knows is that population forecasts have not been the most accurate forecasts that have been made in the history of demography. – What I thought was interesting about the definition from Robbins is the fact that it presents economics as a very neutral enterprise, where it’s just studying the fact of unlimited wants, unlimited resources and the relationship between them. And it’s not saying anything about what should be done, it’s just studying these things as fact. But actually taking those assumptions as fact, does end up having
normative implications because by assuming
that it just is the case that we have unlimited wants then, in saying that basically that’s okay, and sort of by definition, if we want to satisfy those wants, then
we have to just think about trying to accumulate
more resources in order to meet those unlimited wants. Which is ultimately an endless treadmill ’cause you always want more. You’re never satisfied. And by taking that angle, having that assumption, it discounts the possibility of actually controlling your wants and limiting them which would, of course,
be the other way to try and seek satisfaction rather than just satisfying an unlimited pool of desire that can never be ultimately satisfied
actually trying to reduce our wants, but inside the
definition of economics is the assumption that that’s not how you should be doing it. – Yeah, that’s right. Wants, preferences, wants
and all those things are taken as given. If you want to do something about them, that’s a moral issue. It’s not an economic issue. Economics takes the wants that is there and then says how do you
adjust resources to them. It doesn’t tell you
what you should sort of, whether you should consume
more of this or that, or less all around. It takes some situation as given and then draws a logical train of events
leading to a consequence. That’s the way it proceeds. Now, should it do that? Should it not sort of
question the assumption right at the beginning and say, we’re not going to proceed
on that assumption. We want to proceed maybe
on some social assumption rather than on individual assumption. And then see what the
consequences of that would be. But that would be,
already you’d be having a sociological economics,
and you’d be interested in questions of power and so on as soon as you did it that way. But economics has never done it that way. It’s always tried to make power invisible and therefore make itself objective. Simply a technical question
given these things. Not questioning why they
exist, but given this, what’s the most efficient
way of organizing your affairs. And that’s subjective. And that’s the way it establishes its cousin-ship with the natural sciences. But I have a couple of questions. One is, if wants are insatiable, is that good? Is that a good thing? – It’s a pretty short answer, but surely that means that, yeah, attaining some sort of level of happiness is impossible, or attaining a consistent happiness is impossible. – Yeah, it does. But it that not the basis
of our civilization? We’re permanently unhappy, we’re restless. It’s this restless itch. I mean Tibor Scitovsky,
wasn’t that his name? Wrote a book in the 1970’s, because the idea of
restlessness was there. We’re always- it comes out of Adam Smith. We’re always dissatisfied
with what we have, therefore we always want something better. And advertising is simply, tells us what the better
possibilities are. It’s not so much the
organization of discontent, as the exploitation of discontent. You know, one view is
that it is a good idea that wants should be insatiable, because without some
degree of insatiability, you can’t have any progress. But should they be completely insatiable. Isn’t it also nice to look forward to a Utopia, or Nirvana, if you like, a Buddhist kind of Nirvana in which everyone has enough. And they don’t want anymore. – Once, being completely insatiable just doesn’t make any sense to me because it’s either insatiable or satiable, and also being insatiable doesn’t always have to be associated with
having the slice of pizza and then ten slices of pizza, and then going for a thousand more. It’s merely maybe about
having a slice of pizza and then the next day
you want something else. Because, like we just talked about in the first lecture, it’s the changing and evolving that feeds into this one more time and I think the first
idea that comes to us when we talk about being insatiable is the fact that it only
always has to do with quantity, but no, maybe, it could be about equality, as simple as that. It could be about Utopia, like we’ve just mentioned. And it could be more qualitative factors, and that’s always a good thing. – Yeah. – Because otherwise, we would come to a static, stop. What else would we have to move to then- – Well you could argue, see, that our insatiability reflects or manifests itself in variety. That it’s not that we just
want more and more quantity of one thing, we want more and more variety. We get fed up with one version of it, and therefore we want
another version of it. It’s the curiosity that drives us, always, to explore more and
more variety of things. And that could go on and on and on. And we could apply to any area of life we think about, really. And is that a bad thing? – No. – I think it’s necessary
for us to be happy. – To be fair, that kind of insatiability of variety seems more linked to the idea of progress than the idea of
insatiability of quantity. – Yeah, yeah, yeah. – I was just going to
say that I think that, ultimately, we do rely on insatiability
for the sort of things we take for granted. For example, it’s only
because of insatiability that we went from the iPhone one to the iPhone
two, and three, and so on, it keeps going and no
one expects it to stop with the iPhone X. Everyone’s wanting the new model. And if it comes out, and other people have it
and you don’t have it, then because your wants are insatiable and you’re not just
happy with your iPhone, then you get the new one. And I think that, I actually do agree with the remark made earlier, that ultimately it doesn’t
make sense to say it’s good, for wants to be insatiable, because it simply means
we can never be happy, whatever we have will never be enough. But at the same time, is the drive of this continual innovation
to make new products that we do sort of rely upon in society. – But I disagree with your idea that the iPhone is driven by demand rather than supply. Because the idea that if the iPhone had been invented and then left in the model that it was originally, that everybody would have
walked around saying, “Oh this is ridiculous, “I hate this thing now, “it’s been 18 months, “I don’t like it anymore, “I want something better.” It just doesn’t make sense, because this is people
buying new iPhone models because of the technological- – I think he was talking
more from the supply side, as in how Apple pushed the iPhones- – Yeah, I got that but that’s what I mean, is that Apple are supplying that demand from the other side. It’s not so much that, you know- – That demand has been
constructed by Apple. – Yeah, exactly. – If ultimately we were content, if I was content completely, then as long as my iPhone
4S works perfectly, in the end it didn’t because the models have been so far ahead that the 4S wasn’t working. – But that’s what I mean that’s exactly what I mean
– but it did- the new one would come out, the new one would be produced
but I wouldn’t buy it. – No but my point is that – so there’s an implicit insatiability that means the supply
can create a new demand. If it wasn’t there then
they’d create a new iPhone but people wouldn’t buy it. – Yes but that’s because of
technological obsolescence. It’s not just that your
phone wasn’t good enough for you anymore, it’s that it didn’t work properly, because Apple built it in that way. – Yeah, but when the new iPhone comes out the oldest iPhone does
work fine for people and yet still-
– for a while. – Yeah for a while. But still, during that period, that short period, loads of people are buying the new iPhone. And so there is a demand that’s latent in the market, so that when the new iPhone does come up- – This does raise an interesting question, which is, where this restlessness comes from. Is Robinson Crusoe equipped
with iPhone model one on his desert island? Well of course he can’t actually
communicate with anyone. But let’s say some equivalent to, restless always for an improved model, or does the restlessness
come from seeing someone else with an improved model, and therefore your imagination is suddenly being stimulated, you could call it your imagination or you could call it your envy, whichever word you use. So it’s a social thing, isn’t it? It’s got to be a social thing, this restlessness. There’s no natural restlessness, I would have thought, or is there? In which you, on your own, without any stimulus from anyone else, you want to improve your tools, or you want to improve your, you know, yes your tools. Does it always have to
be because it’s social? Now, if it’s social, I mean, there you have a distinction, surely, between wants and needs. Your needs do not depend on the existence of anyone else. Your needs are purely biological. You get to feel hungry. And if you don’t satisfy that, you die. But your wants depend on others. Is that the distinction? If that’s accepted, then you can’t define the economic problem by nature, as limitless wants. – If there was no economy, if it was just a single person (mumbles) so is the very process
moving from an individual? Just in basic needs, to a society, an interactive society. That defines the problem
of the economy, right? – Yes. – So in a way it’s intimately tied up with the question itself. – I agree. – As soon as you ask the question, you’re basically imposing
that wants are endogenous. – But you see, the thing is that economists, I mean, I agree that
is absolutely the case. But most of the mainstream
models deny that, you see, they actually have these wants as quite independently generated from anyone else’s wants. They do imply some Robinson Crusoe starting point for these wants. They’re meant to be, giving preference is meant to be independent of other people’s preferences. That is the way the thing is set up. The model is set up. Otherwise, you couldn’t get an additive, an additive principle going. Unless you assume the independence of wants. That goes simply against the logic of what you’re saying, and I think economists are
very much to blame here. I mean, your point seems to be completely right. – Yeah. But this is probably an example of a case where economists
come across mathematical. The problem with
mathematically modeling this becomes a challenge, right, your consumption relative to your neighbor ought to be a key driver of your consumption today, probably. – Right. – But often these things come to an end only because it can’t be
written down elegantly. – I think it’s useful to
consider the possibility that even if we take into
account that a lot of these wants are socially construction, and constructed by means of being with other actors, that may indeed just
be a result contingent on it being within the capitalist system. And that within an alternative system, that might not arise. Those desires might not exist. – Yeah. And they obviously didn’t in
other systems, historically. There was some moral system or some other set of institutions, which very strictly limited what you could want. Wants were controlled by custom. So there’s nothing natural, that’s all I’m saying. But of course, what economics, surely,
mainstream economics cuts you off from, is the possibility of thinking about alternative systems. And in that sense, it’s not value free. It’s set up in a particular kind of way. I have a question, I don’t know whether
it will be of interest to consider. And that is, why, the extraordinary thing is Robbins came to his definition of scarce resources in 1932. And as I mentioned earlier, you have 25% of the output
of the United States, produced in 1929, was destroyed. Why weren’t resources scarce? Robbins assume here’s the problem. Scarce resources, unlimited wants. What you have is plenty of resources, limited demands. How would an economist explain that? And who did explain it? I mean, obviously this
is something you know. But it would be interesting
just to explore the logic. Because that was the
problem he, Keynes, saw. He said look, here we have
this definition of economics, but in fact, there are
lots of surplus resources around the place and people aren’t buying them. This must be impossible if you accept the logic of scarcity. And yet, it’s happening. And out of that I think, you did get Keynesian economics. Because before that, the straight line from earlier economists to Robbins, was through Say’s law, wasn’t it. Everything that is produced creates it’s own demand. And that is a scarcity perspective. There’s just not enough. Supply creates it’s own demand. Keynes says, no, that’s not true. There is always a problem of demand. And therefore you can have a glut of goods on the market. Even though maybe, if
everyone was fully employed there might be then, some justification for
talking about scarcity. But he said there wasn’t. And what he found was
that a whole lot of money which would have been available to satisfy the demand for
food and other consumables, had for one reason or another become temporarily immobilized. And out of that realization came the whole of Keynesian economics. So Robbins and Keynes were actually on opposite sides in the debates of the 1930’s. The fact that Robbins comes out with this definition in 1932 is perfectly consistent
with the views he takes with the economic model he has at that time. Which is, essentially, a Hayekian model, and in the Hayekian model, the only occasion when
these sorts of situations might arise temporarily, is when there’s been some
massive miscalculation of production because people are deluded about the value of money. So Robbins assumes that the problem is one of a miscalculation in the allocation of resources, whereas Keynes says, no, what we’re suffering from is the shortage of demand. And actually periods in
which money takes a holiday from consumption, and investment are excluded by mainstream definitions
of the economic problem, which follow Robbins. So it’s had a bad effect. Because if you think that the problem is only one of scarcity, and demand doesn’t enter into it, you’re driven to one set of policies. Whereas if you think demand is very important and central, then you’re driven to
another set of policies. So how you define the economic problem is very important. It’s not something that is value free, it affects policy, fundamentally. – In that case, did Keynes think that our wants could be limited, or was it only that there could become this disconnect that we might not have the means sort of because of the money supply to achieve our wants. – I think Keynes fudged. – All right. – If you read that little essay called, “Economic Possibilities
for our Grandchildren” which also came out at the
depth of the Great Depression, and it’s quite interesting to compare the two sets of writings, Robbins and Keynes. Both provoked in some way
by the Great Depression. If you read that little essay, he says, well, we’re
reaching the point where people should have enough, in our kind of society anyway, and very soon people will not have to work nearly as much as they had in the past. He then says, of course this goes against all the habits of our society, and there’ll be something like a nervous breakdown of the whole society. But again, in a slightly sleight of hand manner that economists use, he thinks of this as a
transitional problem. But then, you never know quite how long these transitions are meant to last. 20 years, 50 years, I read a recent report about the coming of automation. It said well, in the long run there won’t be any job destruction as a result of automation. But there will be a transitional problem. And so again, you wonder how long this
transitional problem is going to last. How deep is it? You could say that if populations exceeds resources, and half the population die, that is a transitional problem. Obviously equilibrium
is bound to be restored, it’s got to be restored. But the transitional
problem is quite huge. So again, you get into these little fudges that theorists produce in
order to save their bacon as objective analysts. – With the question of whether our wants are naturally insatiable, or whether it’s just the result of society in social construct, and wants themselves, whether they come about just from society or whether they’re there naturally. I think they are there
naturally to some extent. I don’t think we can say the society creates them completely. Because unless there was some basis for these wants and this insatiability of desire, then there would be nothing for society and advertising and so forth to build on and make stronger. So I think the basis is there and you can see it even in things like for example the need for- well, maybe this is more debatable but, the desire for a partner, and the desire for sex. I don’t think you can call
that a biological need. Essentially, you can
survive perfectly well without producing children and having sex. But, without having to see
anyone else doing that, that’s a very strong
desire for most people. So that’s an example of the sort of want that is natural, but I think that it’s true that society is making
these desires stronger and actually encouraging
us to develop them, through things like advertising, and always bringing out new iPhones and showing people, or the next iPhone and so forth. It actually makes our wants stronger. But I think the basis of
those wants is natural. – Well, it may be. It seems to me that human nature is much too wooly a concept. Almost everything can be attributed to human nature. I think unless you have some theory of genetics, then you’re a bit adrift. Because human beings seem to be capable of almost any kind of behavior. And you can call it all natural. You can call the propensity
to kill each other natural. And you can have a society that either enlarges that propensity or tries to suppress it. So what are you really saying in all this, except that the way in which our
wants express themselves or are allowed to express themselves, is the degree of allowance
for expressing themselves. That’s the key point, and that is social. On the other hand I think you’re right. There are different
degrees of physical wants. I mean people have divided. But the want for food is
the most basic of all. You don’t have it, you die. The want for shelter, clothing
and so on is less basic, sexual wants are still less basic, but they’re all basic, biologically driven. And a lot of people would
say that that’s seen in all animal life, just because it’s part of the reproduction of the species, the selfish gene has tried
to explain it in terms of genes needing to perpetuate themselves through humans and through any other means they can. So I think you get the hierarchy there. But wants seem to me to be quite separate. And to say, look, wants must be derived from some aspects that are already in human nature, is true, but I don’t think empty in the end. Because you can find
anything in human nature that you want if you look hard enough. – We’ve had, a lot of disciplines have tried to do this in some way but for instance in politics, we’ve moved past the idea, as with Hobbesian views of human nature or Rousseau’s view that humans have a specific kind of nature. And a lot of political theory has moved past that idea I think, but economics is more kind
of hidden under the surface or not discussed it, maybe. – Yeah, no I agree. I think that’s right. I think economics is quite challenged, as they say. Though it doesn’t, understand this because
it’s so sophisticated at the same time. – What I don’t completely agree with is the fact that wants
are completely separate from things you can’t live without. Because this essence of something
being defined as a need, like you said, we talked about food, water, air, but then the most basic
need for any human being is to belong. And that is dictated
by the average sort of human being you see in
your present society, for example. My needs, today, in London would be, a bank account. But is that the same need in say, rural agrarian economy,
somewhere in India, because they literally do not have banks. So for them, a bank account is not a need. So when we say, smart phones are just a want, they’re not a need, that’s not true because for example, you work for a firm and then, your main form of communication is e-mails or work groups. To me, a complete way
of defining a need is something that you need
in order to function well enough in your society. And it cannot be just defined in terms of materialist or
non-materialistic aspects of it. To me, just the way we
go about needs or wants in most discussions, we always imagine extremes in areas whereas
in needs or something, you need to not die, or just to survive basically, but it doesn’t happen that way anymore, does it? For example, you don’t need education, but given that transparency
has increased so much, you do need equality in education because otherwise there’s going to be social conflict, and digital revolt has made that so much easier for- – What’s been missing from the concept of the need to belong, and by that one means, the need to function effectively in the society of which one is a member. Are those needs insatiable? – By this definition I think they would be perfectly satiable. – How? – They would be near perfect if we define it this way. – Really? – Because there’s an elastic response between the social dictate or mandate for what’s a need, and then the individual response and he’s satisfied. And it wouldn’t be
aesthetic equilibrium again. It’s dynamic, but it’s very responsive
and it balances out. Did that all make sense? – Yeah yeah yeah, it does. And it’s a more hopeful- – So it’s a (mumbles) – It’s a slightly more hopeful way of looking at the economic problem than the straightforward Robbins insatiability as the given. So it suggests that there is satiability within structures, and they’re not imposed, so to speak. They result from elastic adaptation of individuals to the needs of their societies. – I mean, it’s also why
we have measures now of relative poverty rather
than absolute poverty. Because I know to some
extent people complain about that, they say, “how is having
access to the internet “or not having it, “makes you poorer in this country?” but it does in this country because you need it in order to reach a particular level of functioning in society. – It’s making you information poor, and that’s very important
to conduct your lives. – How would a mainstream economist, a neoclassical economist react to this social dimension of need? As opposed to biological. I think they would probably agree perhaps. I mean, would that disturb them if you took your view of
a want/need relationship? It would disturb them I think, because of the introduction
of insatiability into the mainstream. Insatiability seems to be at the heart of the mainstream view of the economic problem, and as soon as you start challenging that, you start challenging
the need for economics. It’s kept as a very useful set of tools because of insatiability confronting limited resources. So that’s what gives
economics it’s leverage in the world of thought and the world of policy. If you start weakening that, then of course the need
for efficiency is weakened. The need for efficiency in the way that economists
have defined it, that is really the production of wealth. Because you could imagine a society which is very efficient
in producing output, but where quite a lot
of the populations needs are not met, and you know, the needs you’ve described. And that could be quite
an efficient outcome from an economist’s point of view. That one section of the population is very productive, but most of them aren’t. But that doesn’t matter, maybe, or doesn’t matter enough for anything to be done about it. I think what we’ve established is, at any rate, to my way of thinking, is that we need to be very very critical about this way of defining
the economic problem. And when we see that in a textbook, we should put a line down the side of it with a great big question mark. And we should be quite critical of some of the consequences that are drawn, from defining it that way. – (mumbles) and what
we kept saying is that those needs differ, wants differ, from context to context. So it’s how we define
each economic problem. And in some cases, its (mumbles) economics is very useful. But the problem is it’s presented as a, what do you call that, a blanket answer for everything. So the logic is imposed, so essentially the theory tries to squeeze reality through it, rather than order itself according to reality. And that’s what I see the main problem with these blanket definitions, or only proposing one definition instead of a plurality of definitions in this sort of discussion, which is essentially pluralism. – In what context would
neoclassical economics be useful. – In that case where there’s limited resource and insatiable wants. (laughter)

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