We humans have a problem: we want more than we have available to us. We feel like we can’t afford the things that we want because everyone else wants the same thing. In science fiction like Star Trek, people of the future can create their food, and almost anything else they need, using a replicator. Payment isn’t necessary, because the production costs are so cheap that there is an abundance of those things. This is what we would call a post-scarcity era. In a post-scarcity era, items are so cheap to manufacture that they are essentially free.
I was walking through K-Mart and was reminded of this concept. Pictured is a jaffle iron. You put buttered bread in it, together with your spaghetti bolognaise left overs (or baked beans, or whatever you want), close and lock it up, and within a few minutes the ingredients are transformed into pockets of mouth burning bliss (tasting kind of like a pizza pocket with the same pain waiting for the impatient). When I was a child (1990s), a product of this quality would cost around $40. You would expect that given inflation over that time you might expect to pay $50 or $60 today, right? Wrong. This product is priced at $8 (everyday price, not sale price). What is even more amazing is that most retailers mark up at roughly 100%, so K-Mart only paid $4 for this item to the factory that produced it.
While it is true that this product is made in China, and part of the reason this is so cheap is that the labour used to make it is priced so poorly, most of the reason this is so cheap is due to technological advances. It should be remembered that the ancestors of these jaffle irons from the 1990s were also regularly made in China or Taiwan which both had very low wages. The reason why these are so much cheaper now is automation. Machines are making the plastic exterior and the metal plates. Machines are making the cords and the elements, mostly without human intervention. Machines are even cutting and folding the boxes! Humans are responsible for the ever diminishing number of tasks that are too awkward for machines to do at the moment (but soon even those tasks will be performed by machines). All that will be left for humans to do is to make sure the machines are working correctly. In addition to this, many advances in labour optimisation and administration have reduced labour costs and company overheads. Production lines are designed to ensure that bottle necks don’t occur to ensure that labour is used efficiently. Overhead costs like accounting have been reduced through the information technology revolution. Today, one accountant can make the payslips, transfer funds and file the taxes for tens of thousands of employees. 30 years ago such tasks involved a lot of paper, a lot of hand written work and many more people. Computers and information technology have allowed companies to cut much of their overhead costs.
As I walked through K-Mart, I felt that the only reason why I wouldn’t buy more of these appliances is that I don’t have a space to put it or a real desire to use the appliances. I could walk out of that K-Mart with 10 reasonably high quality appliances for under $100. The only reason why I didn’t buy more than I did is because I would be unlikely to use these appliances often enough to justify this token payment. This is why I feel like we live in a partially post-scarcity era: a lot of things that we want are produced at such cheap prices as to make the number on the price tag irrelevant. It doesn’t matter whether the price tag says $5 or $8: it’s an appliance for under $10! The only question that matters is “Do you actually want a jaffle iron?”
In the post-scarcity era, things would likely not be free, but would be very cheap indeed. There needs to be a token payment attached to the items to stop excessive waste. When I was very young, the local bus company would give away free timetables, and as a result they were losing thousands per year on printing them. Each time people got on the bus, they would ask for a new timetable, then lose or throw away the timetable almost instantly. So instead of looking after this timetable, the bus riders were wasting something which was very close to free to produce, but the waste was on such a scale as to make the provision of timetables extremely expensive. The bus company had a simple solution: charge people 5 cents per timetable. 5 cents appears to be not much money to the everyday person, which makes this solution interesting. Even more interesting is that the timetables cost the bus company closer to 15 cents to produce. However, this token payment acted as a very slight economic pressure to those handful of wasteful commuters to not make excessive waste. A post-scarcity world is not one in which you can have a whole planet for free, but a world in which almost all your needs are provided at an extremely low cost.
Although we may not be entirely in the post-scarcity era now, we are certainly heading towards this direction. For many items that we can purchzse, the cost of purchase is little more than a token payment. Further automation and technological developments will only bring us closer to a world in which people have the basic things that they need.