3. Scarcity versus Abundance

True enough, the scarcity theory of economics has been and is being advocated in America and elsewhere. The difficulty seems to arise when money is confused with things. As producers, some groups discover that by making an article scarce they can increase its price. This is, of course, true; and the idea is embodied in all sorts of schemes to curb production-featherbedding, licensing all kinds of business, limiting the hours of work and the number of bricks a mason may lay in a day, restricting the width of paint brushes, maintaining the number of firemen on a diesel locomotive, and so on and on. Not long ago, we were told that this nation could become 20 richer by destroying some of its real wealth-by such tactics as plowing under part of its cotton crop and destroying some of its pigs. Also, each individual producer observes that if all others producing the same thing would limit their out put, he could get a higher price for his product. But looking at prod~ction from the consumer's standpoint, hardly anyone will deny that an abundance of the things people want is what makes possible a high level of living.

Bastiat put it this way: "The consumer is richer in proportion as he pur chases all things cheaper; and he purchases things cheaper in proportion to their abundance; therefore it is abundance which enriches him. This reasoning, extended to all consumers, leads to the theory of plenty . . . . As sellers we have an interest in dearness, and consequently in scarcity; a& buyers, in cheapness, or what amounts to the same thing, in the abundance of commodities . . . . "If man were a solitary animal, if he laboured ex clusively for himself, if he consumed directly the fruit of his labour-in a word, if he did not exchange the theory of scarcity would never have appeared In the world . . . . No solitary man would ever have thought that in order to encourage his labour and render it more productive, it was necessary to break in pieces the instruments which saved it, to neutralize the fertility of the soil, or give back to the sea the good things it had-brought to his door. He would per ceive at once that labour is not an end, but. a means."

21 4. Who ·Profits from Free Exchange? When two men voluntarily agree to trade horses, it is certain that each believes he is to get something better than what he is to give up. Why else would either con sent to the trade? This is so obvious that it should not be necessary to defend it. When exchange becomes more complicated-when money is traded for goods or services, or when there is a three-way exchange-we sometimes lose sight of the fact that all parties involved consider themselves bene fited by the exchange, if it is voluntary. There seems to be a general feeling that when money is· exchanged for, say, an automobile, it is only the seller of the car who benefits. But doesn't the buyer benefit as well? Doesn't he value the car more than the money he gives up? If not, why does he willingly make the ex change? Is it any different when the bargaining parties happen to live in different cities? Or in different states? Or in different, countries? If an importer in.New York volun tarily gives up dollars to a British exporter of woolens, who is to say which party benefits?-and by how much?