The Law of Conservation of Scarcity

The following is a guest post by OpenWater member Greg Sherwin, who is a on the Global Faculty of Singularity University Portugal.

Living in the shadow of Silicon Valley for nearly three decades, I got used to Tech’s many promises of disruption to deliver us from scarcity to abundance. Through technological transformation, what was once exorbitant and rare became cheap, plentiful, and democratized.

This isn’t a recent phenomenon. Despite being the third most common element in the earth’s crust, pure aluminum was once more rare and precious than gold, available only to kings. But in 1886 Paul Héroult and Charles Martin Hall developed an electrolysis process to extract aluminum from bauxite, an abundant sedimentary rock rich in deposits. Aluminum soon became so ubiquitous and cheap that today we pay people to collect it for recycling to reduce the impact of everyone just throwing it in the trash.

This pattern has repeated throughout history. Moore’s Law, or the exponential growth in the computing capacity of microprocessors, produced many stories of abundance. For example, in 1996 Sandia National Labs built a top secret super-computing initiative for $55 million to maintain the US government’s nuclear arsenal. A decade later, Sony released their PS3 gaming console to the public for $499, which had significantly more computing power.

Scarcity Cannot Be Created Nor Destroyed, It Can Only Change Form

Yet the more examples of abundance I’ve encountered, the more I’ve recognized what I call a Law of Conservation of Scarcity. It is analogous to the Law of Conservation of Matter, which states that matter cannot be created nor destroyed, it can only change form. Similarly, I’ve observed that scarcity cannot be created nor destroyed, it can only change form.

“Wait!” some of you might be thinking, “We create scarcity in consumer products all the time.” Think limited edition Supreme streetwear, the frequent rumors behind unavailable new Nintendo video gaming units, NFTs, and every advertised “limited time offer”. These marketing tactics and the conservative demand forecasting of corporations reflect locally controlled artifice, not true systemic scarcity.

A better example is information on the Internet. When CERN first invented the World Wide Web in 1989, it originally shared only high-energy physics academic papers. Usage organically grew until we needed directories, such as Yahoo!, and search engines, such as Google, to wrap our arms around it all. Add social media a decade later, and today we are drowning in an overabundance of information and content. AI will only accelerate this.

As digital information became supremely abundant, we exponentially faced a crisis of attention as our scarcest resource. Additional new “scarcities” included eroding social cohesion, coherent narratives, faith in institutions, even trust in democracy itself. Not to dwell on physics, but Newton’s Third Law also comes to mind: that for every action there is an equal and opposite reaction.

Where Abundance Led To New Scarcities

Similarly, a perceived abundance of suitable mates through dating apps has coincided with a scarcity in long-term commitments. Clean energy abundance directly correlates with a planetary scarcity in rare earth minerals, with all the paradoxical political and environmental consequences that brings. An abundance of music distribution through streaming services has created a scarcity of artist compensation and new artist success.

Technologies such as AI, digital biology, and alternative energy absolutely will transition some things from scarcity to abundance. But this requires a linear, myopic lens focused on a few key metrics while negligently ignoring other effects. At its roots is a familiar utopian capitalist mirage: namely, the promise of infinite exponential growth free from undesirable side-effects or trade-offs.

Maybe some of you are now nodding your heads in agreement that abundance might come with at least a side-order of scarcity. But so what? How is this useful?

Identifying Future Scarcity = Identifying Future Opportunity

Although there will be plenty of money to be made riding the abundance wave to Wall Street IPOs and equity success, not all of us can be at the forefront of bringing artificial general intelligence (AGI) to the masses. What I’m highlighting is the value of developing a new strategic foresight skill that anticipates new scarcities whenever new forms of abundance are in play. Finding a new scarcity can prove instrumental in identifying new opportunities for social need, innovation, and business.

We normally view scarcity as a negative, harmful thing. But contextually it can serve a vital purpose, especially for earning a living wage.

In the musician example above, many musical artists have compensated for their plummeting recorded music earnings by embracing the heart of scarcity: tours with in-person live performances. And as Sangeet Paul Choudry suggests in “AI won’t eat your job, but it will eat your salary”, your ability to command a skill premium depends on having skills that aren’t cheap, ubiquitous, and easily reproducible. In other words: scarce.

So the next time you learn about the next disruptive technology barreling its way to create an abundant future, look for where the new scarcity might emerge. These plausible future scenarios could be a great opportunity to zig while the rest of the world zags.