Issues related to the conceptual changes and perception difficulties of scarcity

Abstract

Scarcity is a basic concept in modern economics. This
article briefly describes the changes that the various theoretical
schools have made during the past 250 years in this concept
until the emergence of its current notion. Formerly, scarcity was
defined on the basis of production. Later, this notion was
completed with an increasingly dominant definition on the basis
of consumption. This dominance is currently seen gradually
weakening. By now the equilibrium price, based on the general
equilibrium theory of Walras, has become the benchmark and
best definition of scarcity. Actually, it includes the scarcity
notion of both production and consumption, although the level
and impact of the two cannot be clearly distinguished. It means
that prices and the underlying market mechanisms alone cannot
– even under the best conditions (e.g. in case of perfect
competition) – prevent the stock of certain resources from
dropping below a critical level that may substantially hinder the
successful achievement of the future goals of economic players
or society as a whole. Apart from market mechanisms, there is a
need for the proper operation of other – such as ethical or
bureaucratic – coordination mechanisms to enable economic
players to timely adjust to, or to avoid altogether, the emergence
of bottlenecks.