We are living in collective trauma. Conventional wisdom tells that the world is finite, that all resources, including the money supply, is scarce. Malthus is among the brightest articulator of this wisdom, with Darwin applying Malthusian theory to biology and both libertarians and Marxists making economic and sociological applications. Climate change and overpopulation are two recent moral panics about scarcity, panics that have caused some to seriously suggest eating bugs and humans to adapt to the coming food shortages (either caused by a climate catastrophe, overpopulation, or both). On the right, accelerationists in the vein of Nick Land and Guillaume Faye attempt to deal with the problem of scarcity via neo-feudalist and archeo-futuristic models, opposed to what is usually dubbed “globalism.” There is a startling alternative to this, one that sounds patently absurd, but is the only way out of dystopia: we live in a post-scarcity world.
Let’s take a second to say what we do not mean. We do not mean that humans are currently sharing in an abundance of wealth…I, at least, do not see that reflected in my bank account. We also do not mean that there is an infinite number of resources…we do not live in the set of all real numbers. So, what do we mean? Firstly, scarcity does not exist because our ability to produce will always outstrip our ability to consume. Secondly, money can be created out of nothing, is being created out of nothing all the time, and this does not devalue the currency in the slightest. If this seems absurd to you, then you are a victim of that collective trauma I mentioned earlier. Before we explain that trauma, let’s first defend the thesis that we live in a post-scarcity world, explain why things suck in spite of that, and then circle around to how humanity came to suffer this trauma known as “the scarcity mind-set.”
Since we mentioned production and consumption before money, and because I know the comment section will be filled with pitchforks and torches because of what I will say about money, let’s begin there. Victims of the scarcity mind-set are often scared about a few shortages, food and energy being the two most common. With food, the issue is not scarcity but allocation. According to a 2022 study (https://www.rts.com/resources/guides/food-waste-america/), 88 billion pounds of food is thrown a way per year in America. Why? Part of this is people throwing away food that went bad because they forgot about it in their fridge or bought too much to eat all of it. A much larger part is that restaurants have to order before they know how many customers will come it, and those customers that come in do not always clean their plate. If that food was able to be saved and distributed amongst 350 million Americans (assuming everyone eats the same), each American would have 251 extra pounds of food per year. According to Reference.com (https://www.reference.com/world-view/many-pounds-food-average-adult-eat-day-3f49d34cd3d872cd), the average American eats 1,996 pounds of food per year. Divided by day, the average American eats 5.6 pounds. If those 88 billion pounds of wasted food were saved, each American would receive 50 free meals a year. If there was some service offered to restaurants that would collect unused food and was either able to give it to a food shelter, preserve it and sell it at a discount store, or even give it to a soup company, potentially a lot of food could go back on the market. Better yet, if it were possible to accurately gauge how many customers would come in to dine, or a meal planning app that houses could use to make sure their food gets eaten before it goes bad, then the food going back on the market would be much more desirable.
Food waste is just one example of the problem of allocation. If food waste was fixed, and assuming every American had the same dietary needs, you could give each American 50 free meals a year if you wanted to. We do not need to solve the waste problem, however. It would be nice, yes, but we already produce more food than the entire planet could possibly eat, enough to feed 10 billion according to our friends over at Huffington Post (https://www.huffpost.com/entry/world-hunger_b_1463429). Hunger exists because of an allocation problem. To use the imagery of a water spigot, the flowers in the garden are not withering because the spigot is not flowing, the flowers in the garden are withering because the spigot is only being pointed at some flowers and not all. Is the solution to allocation problem a Communist bureaucracy? I highly doubt it. All communistic governments have only made the allocation problem worse. We are not looking for a solution to that, however, we are simply saying that allocation is the problem, and not scarcity.
What about energy? There is only so much oil in the ground, right? Some have argued that Peak Oil is a localized phenomenon (https://www.psu.edu/news/research/story/probing-question-peak-oil-myth/), and that the task is simply to move from one oil reserve to the next. Every prediction of when Peak Oil will happen, if it has not already happened, assumes that we will uses the current oil reserves the same way we do now and do not drill in other reserves or use the oil differently, which means that it is not set in stone. Even if Peak Oil is not a localized phenomenon, and we will run out of oil before the oil reserves deplete themselves, this does not mean that energy is scare. Oil is only one source of energy, and we could move to solar, nuclear, or hydrogen if we desired. As with food production, some parts of the world, like India, (https://mercomindia.com/india-likely-have-energy-surplus-during-2022-23-cea/) are on track to produce more energy than needed.
So, we produce more food than needed, Peak Oil might be a localized phenomenon, alternative energies are possible, and some parts of the world have an energy surplus. We do not have scarcity in food or energy. Things suck because the abundance we have now is not being allocated properly. The spigot is flowing, but it is not being pointed at flowers. What about money? Surely, unless you want the money printer to send us into giga-death inflation, the money supply has to be limited…right? Now I get to introduce to you the world’s greatest living economist, Richard Werner. What makes Werner so great is that, unlike most economists, he does empirical studies. Dr. Werner is the only economist, for example, who did an empirical study on money creation. There are three main theories on how money is created: credit creation theory, fractional reserve theory, and financial intermediation theory. Werner’s proof for credit creation theory will take too much time and it would be better to read his study yourself (https://www.postkeynesian.net/downloads/Werner/RW301012PPT.pdf). What can be done here is explain what the credit creation theory is, and how money can be created out of nothing without causing inflation.
When a bank gives a loan, let’s say $10,000, the recipient receives $10,000. Unlike a private lender, the bank, by nature of having a banking license, does not have to transfer $10,000 cash to the recipient. Instead of drawing down on cash to pay the recipient, the bank makes a $10,000 deposit to the recipient’s account. A deposit, however, is not money; it is how much the bank owes whoever has the deposit. A $10,000 loan from a bank means that the bank will owe the recipient $10,000, not that the bank has given $10,000 to the recipient. Legally, a deposit is considered part of the money supply, which means that every time a deposit it made, money is being created out of thin air. No real money is needed to make a deposit. When the recipient wants to use the deposit given to them by the bank, let’s say $5,000, if the recipient and whoever they are using that deposit with, let’s name him B, are part of the same bank, then the bank will then owe B the $5,000 instead of the original recipient. B can then use that $5,000 with someone else who is a member of that same bank, so that this new party, let’s call her C, is whom the bank owes $5,000 to. Assuming the transactions stay within the same bank, all that changes is who the bank owes, but the bank never has to draw down on cash to pay that amount. If the original recipient wants to use his deposit outside of his bank, then the amount owes gets transferred to the other bank’s “orbit.” Now the second bank is whom the first bank owes. Either party with the second bank deals with someone in the same bank, and we see how this plays out, or she deals with a member of a third bank and now the third bank is owed the money/ This can continue indefinitely. If, however, someone wants to withdraw their loan in cash, either the bank does not allow it and insists upon transferring the deposit from one account to the next (which is not uncommon), or cash is drawn down upon, with the cash drawn down being sourced from the bank’s investments. Banks legally own the money you deposit. Yes, they have to give you what you put in (under most circumstances), but they can, and always do, use that money to invest and from those investments cash can be drawn down.
Why does this not cause inflation? Well, what would cause the value of money to decrease? The value of money, under credit creation theory, is trust. USD is more valuable than the Ruppe because American banks have shown themselves to be more trustworthy than Indian banks. Maybe you do not trust an American bank…but would you trust a bank in Dubai? Werner rejects the idea that the value of money is tied to precious metals, and if value is tied to trust, then it can only be concluded that utilizing precious metals is indicative of a low-trust society.
Not only are food and energy not scarce, but neither is money. Yet, although the individual’s memory is short, the species’ memory is long. There was once at time where food and energy were scarce. Fans of Uncle Ted will hate me for saying this, but before the rise of modern technology there was scarcity. Since our productive powers have skyrocketed with the industrial revolution, scarcity quickly became a thing of the past. Due to a very real trauma, the trauma of limited food and energy supply, we have been traumatized to think that the present will always be like the past. Libertarianism, Marxism, Climate Change, and overpopulation are all instances of someone poking a finger into our collective wound. This wound, this trauma, makes people think that eating bugs or eliminating whole segments of the population is not only needed but ethical. If we can heal from this collective trauma, or if our policy makers can, then we can live in a very bright future. Just imagine what the world would look like if policy makers realized there is no food scarcity, no energy scarcity, and money can be created out of nothing. We could, and should, be reaching the stars.