Within capitalism can a point be reached where there is always an abundance of goods and services for everyone?
An abundance of goods and services for everyone is, i think, the point which most people would like their society to reach. Some might argue that western countries have almost reached that point (I'd point out the significant amounts of homelessness, poverty etc that still exists in western societies). But that aside, I don't think capitalism can achieve abundance globally in theory or in practice. Of course we know that within capitalism companies try and sell as much stuff as they can to as many people as they can in order to try and make as much profit as they can. And at first glance you might think that sooner or later there will be an abundance of stuff! But isn't there a contradiction here because markets actually require scarcity to function? Indeed, if there was an abundance of something there wouldn't be much profit in selling it. Moreover, we see the problems this contradiction creates in the form of recessions - which are essentially caused by an over abundance of something. For example the recent recession was cause by an abundance of cheap mortgage credit which led to a credit crunch in order to reinstate credit scarcity. It is this which leads me to the conclusion that capitalism would be unable to provide an abundance of stuff for everyone in a stable economic system.
So within our capitalist system which has two contradicting forces (one pushing for abundance and the other scarcity) can we get to a point where there is a stable and lasting abundance of goods and services? OR Perhaps you don't think this question is valid because you think this assessment of how capitalism works is wrong, in which case I'd love you to tell me where you think I went wrong!
- William NLv 510 years agoFavorite Answer
I think you may have a misunderstanding about the concept of scarcity. As long as there is one more person who wants something than there is a supply of it, you will have scarcity. So unless you produce more than everyone on the planet could possibly want of an item or resource, there will be a scarcity of it. And if you were able to provide everyone with some good, producing it would mean that there would be less of another good that someone also wanted, and so you would still have scarcity in the economy.
Even if, in the case of houses, somehow you managed to provide everyone with one, then you would have the issue that not everyone had a house of the size they wanted, the quality they wanted, and in the place they wanted. And if you managed to do that, some people might want more than one house, and so you could never satisfy all demand without the using prices to constrain demand.
Capitalism is simply one method of dealing with the necessary rationing of available resources so that demand equals supply. Think of other economic systems, and you will realize that they each have their own methods of rationing resources, but that they all do it by necessity. Communism did it by government central planning, while socialism does it by providing a base level of goods and services, and then letting people compete for the remainder.
Recessions, such as the one that we had recently in the United States, are not caused by an overabundance of something (in this case, credit) but a combination of a misallocation of resources into the housing sector and the failure of the regulatory authorities to prevent activities in the finance sector that might have been individually rational, but which were collectively destructive. Not to mention that there were many bad actors who arguably committed crimes for which they have not been prosecuted.
Hope this helps.Source(s): MBA in finance, BA in economics
- 10 years ago
The USA will not admit it, but to survive , the USA has had to develop a MIXED ECONOMY...
and to continue to survive, the USA will constantly require SOCIALIST programs of REFORM.
SOCIAL SECURITY is SOCIALISM. The V.A. is SOCIALISM. Practically every public work that is put in place to benefit people in the modern economies - is SOCIALISM.
Here are some nations that have had openly socialist givernments: Canada, France, the United Kingdom, Norway, Italy,Sweden, Hungary, Spain, Iceland, Germany... I could go on and on. The USA likes to point out only 3rd world nations that have had violent revolutions and some fledgling form of socialism in a struggle against fuedal early stage capitalist nations ie. Cuba and Vietnam and to some extent China and the old USSR, but even in these cases, socialism was something actually beneficial ie, Ernesto Che Guevara helped to more than double the literacy rate in Cuba and socialism helped Cuba to achieve a more just society. Vietnam is now an independent nation with a dynamic mixed economy. China is the most dynamic economy on earth. Russia today is recovering from years of stagnation and is growing again and it is doing so with a multi-party system in which the communist party is the 2nd largest party in its government.
The baseline of a socialist nation is the recognition that bigoted class discrimination is wrong - and that the urgent need is to develop a society that is CLASSLESS and has a HUMANE ECONOMY , an economy where healthcare is a right and poverty is not tolerated. Homelessness and Joblessness and Country Clubs cannot be mutually tolerated. Ghettos and Country Clubs both must come down.
Karl Marx and Friedrich Engels both believed that socialism would only come about when capitalism had reached a stage of development where its ruling clss could be displaced by a new proletarian class that was ready for the new socialist economy. Engels was extremely critical of Russia and believed it simply could not skip a stage of development and bring about true socialism. So in asense one is waiting for the day when the torch can be passed. I think nations like Sweden and Iceland and Norway and Germany have in recent years shown the world that it is possible at last to do so.
During the recent crisis the unemployment rate in Germny has actually gone down instead of up due to Germany's better safety net and more efficient programs regarding universal healthcare and education.
- Spotty JLv 710 years ago
Let me explain scarcity for you and for the other answerers above. Because few people seem to understand this. Scarcity means something is not available in infinite quantities for free, whenever and wherever it's desired. Something can be abundant but still scarce. It's not that the public demands one more of an item than it available -- You could have a massive inventory buildup of unwanted items sitting in a warehouse. But those items are still scarce, because if someone somewhere else wanted one, it would cost time and money to ship the item to them. And if styles changed and consumers wanted those items, there is not an infinite supply available.
When something is scarce, society must determine how to share and allocate that thing. And that's where money and the pricing mechanism come into play. That's how we decide what to supply, where, when, to whom, and how much.
If there is a price tag on something, it is scarce. Always. Period. But lots of things are abundant. Milk. Bottled water. Batteries. And a billion other things. These things cost money, because they are scarce, but there is plenty available at an affordable cost. There will always be some people who have no money at all and can't buy anything, but that fact does not mean things are not abundant.
Things in this material universe will always be scarce; but a nice objective for an economy is that everything people need will be abundant. Free markets are a nice answer to finding the balance -- just enough abundance to meet people's needs, without wasting resources making too much of something (though that something would still be scarce!).
I suggest you look to the term "free markets" as opposed to "capitalism". They are not the same thing. Capitalism is useful in that it supports free markets and is in harmony with free markets (whereas socialism and communism by definition fundamentally oppose free markets) -- but free markets are the overriding most important thing to strike the balance between abundance, waste, and scarcity.
- 10 years ago
NO because their is a finite amount of resources at any given time.