The scope and subject-matter of economics is better understood by the questions that have been asked by economists from time to time and the central problems of an economy or basic economic problems they have been concerned with.
The mainstream economic theory assumes free market system and very well explains how the six basic problems- the problem of allocation of resources, problem of choice of a production method, problem of distribution of national income or produce, problem of economic efficiency, problem of the full employment of resources, and problem of economic growth- are solved by it and with what degree of efficiency.
Recently some economists in the industrially developed countries, especially the United States of America, are of the view that the important problem now confronting them is the problem of affluence rather than scarcity. During the past century or two there has been a rapid economic growth in these countries which has brought about unparalleled riches and welfare to their citizens. As such, the standard of living or richness of life of their people has gone up very high. It is believed that they have won over the problem of scarcity or choice but that is not the case. A society is faced with the problem of choice- choice among the vast series of wants (unlimited) that are to be satisfied. In addition, it also seems that they have won over the problem of poverty and are now facing the problems created by affluence and growth such as problems of mental health, leisure-work trade off or optimum use of leisure, environmental degradation, and environmental unsustainability etc. In the more recent past, what the whole world has witnessed is the novel COVID-19 whose repercussions are to stay for a very long period of time.
In contemporary times, growth and development economists are now thinking beyond economic growth and problem of choice (scarcity). J.K. Galbraith wrote a book namely ‘The affluent society’ in 1958 in which he clearly outlined the way in which the post-World War II United States was becoming rich in the private sector but poor as far as the public sector is concerned. Uncle Sam (US) lacked physical and social infrastructure which spread inequalities in the distribution of income and wealth. It is Galbraith who in his book has highlighted the problem of affluence. He argues that the concerns of Western Europe and the United States regarding the problems of scarcity and poverty are out-dated. According to him, the conventional economic notions and wisdom are inadequate because the problem has changed from scarcity to affluence and from poverty to prosperity. History is witness to the fact that developed nations with wellbeing still confront the economic problem of scarcity-the problem of using resources in such a manner so as to attain maximum satisfaction of human wants which are unlimited having alternative uses. He urged the economists through his book that they need to change their traditional economic ideas about the economic world since it has fundamentally changed. Keeping in view the changes and processes such as rapid industrialization, digitalization, globalization, and COVID-19, economists need to move beyond the question of scarcity and probe into the nature and cause of affluence alongside the questions relating to affluence.
The term scarcity in economics is used in a relative sense, that is, in the sense of scarcity of resources relative to the wants of the people. With technological advancements, no doubt, we have seen developed and rich countries increasing their resource base and production but at the same time we have also witnessed creation of new wants. In view of this, it is wrong to say that our resources have become abundant in relation to wants in these affluent countries. There is no denying the fact that there is eradication of mass poverty in these countries but that does not eradicate the question or problem of scarcity. In the economic sense, Scarcity and poverty are not two sides of the same coin but two different things. No doubt, affluent economies have somehow reduced coronavirus cases and followed norms pertaining to COVID-19 but still they face the problem of scarcity-the problem of using health and economic resources in a proper way in order to reduce if not eliminate the virus completely. Since, wants are unlimited in nature and multiplying with every passing day or growth and the COVID-19 vaccines (important resource in pandemic) fall short of the needs and wants of the masses, affluent societies will face the problem of scarcity and problem of affluence for a very long period of time.
It is important to remember that the ideas by which the people in general and COVID-19 infected people in particular interpret their existence and wellbeing (economic and mental in particular), and in a measure guide their behaviour, were not counterfeit or forged in a world of wealth and riches. These notions are the outcome of a world in which poverty is always regarded as man’s normal slice or characteristic. Moreover, nowadays these ideas are seen as the product of a world in which COVID-19, which is declared as pandemic by the World Health Organization, will remain an integral part of man’s normal life. The scarcity problem is an integral part of economics in general and the present economic world in particular which is characterized by COVID-19. It is present there in its full swing and affluence for them is still a far-off cry. In view of the scarcity of resources nowadays particularly COVID-19 vaccines and unlimited wants for more resources and vaccines, all countries of the world must utilize their resources properly so as to get protected from this pandemic. All countries are facing the economic problem of allocation of scarce resources. It must be resolved in order to achieve the maximum satisfaction of their people.
Dr. Binish Qadri, Assistant Professor, Department of Economics, University of Kashmir.