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How economic growth becomes a cost: The scarcity multiplier
journal contribution
posted on 2023-05-17, 00:03 authored by Smith, Paul EdmundCompetent macro-allocation of natural capital would allow micro-allocation by economics to be fully useful and may help prevent the latter being confused with the former. This macro-allocation requires social choice, so to see whether it is likely to be competent the effectiveness of democratic politics is investigated. Dysfunction is predicted because democratic institutions produce elements of irresponsibility and ignorance. These permit inflation of want by supply (IWS), a positive feedback in which wants are increased by their supply, provoking more supply, hence more want. Four IWS systems combine under common conditions to indefinitely escalate the scarcity of natural capital, a crucial failure of macro-allocation. This ‘scarcity multiplier' causes apparently rational attempts to satisfy a few wants to exacerbate many, increasing dissatisfaction. Institutions for deliberative public participation may enable democracies to recognize and control IWS. Unless this is done the scarcity multiplier may make cost-benefit analysis misleading: it may make the costs of development projects exceed their benefits in proportion to their financial success.
History
Publication title
Ecological EconomicsVolume
68Pagination
710 -718ISSN
0921-8009Department/School
School of Geography, Planning and Spatial SciencesPublisher
Elsevier Science BvPlace of publication
Po Box 211, Amsterdam, Netherlands, 1000 AeRights statement
The definitive version is available at http://www.sciencedirect.comRepository Status
- Restricted