This essay originally appeared in Rick Aster’s World in May 2002.
Economics is called the “dismal science” because it is about scarcity and limited resources. Priorities matter because you can’t have everything you can imagine; among the things that matter to you, you have to decide which are the most important.
The cliche of “food, clothing, and shelter” expresses this idea of priorities. These “necessities,” or top priorities, come before everything else. That doesn’t mean that that these are really your most essential physical needs. The average human’s most urgent needs are oxygen, water, and electrolytes. These, though, are not the scarce resources that economics is about. They are available in virtually unlimited quantities, so economics skips right past them to get to more interesting problems, such as food and clothing.
The nature of “necessities,” though, has been changing in recent decades. In the 1970s, improvements in textile technology changed the way people relate to clothing. It is rare now to throw away an article of clothing because is tattered and torn. Instead, if people throw away clothing at all, it is just to make room for newer, more interesting clothing. When a person who already has too much clothing buys more, it can hardly be called a necessity, so what is it really about?
Similar questions can be asked about food, shelter, and most of the other things people spend their money on. If you look at the reasons behind most of the things people buy today, there are two main purposes or objectives that you will find again and again. People want to express themselves, and they want their unique qualities to be recognized by other people. Most of the money that people spend goes to these two objectives, self-expression and social recognition.
The challenge that economics faces is that self-expression and social recognition are not scarce commodities. In economic terms, self-expression and social recognition are noneconomic. They can, at least in principle, be found in unlimited quantities. You can have as much of them as you can imagine.
Self-expression and social recognition could be considered imaginary products, because they are literally created out of people’s thoughts and imaginations. Even when physical products are involved, it is not really the physical work or physical materials that create self-expression and social recognition. I believe it is better to think of them as spiritual things, since they are not made of mere ideas and information, but are something more than that.
Regardless, the question remains: What is an economy in which most of the money is being spent on spiritual or noneconomic things? There is no simple answer, but it seems safe to say that this economy is something new and different from anything that has come in the past. It will not be a surprise if we find that many of the basic assumptions of economics no longer fit the new spiritual economy.