What is Abundance?
Do you work, purchase, or consume anything? If so this new understanding of Abundance effects you.
“You keep using that word. I do not think it means what you think it means.” The character Inigo Montoya from the movie “Princess Bride”
In 2000 I began a project to change the world. My partner in this project was The Shad0w, contributor to the BitTorrent protocol and creator of BitTornado program. Napster and other peer-to-peer file sharing systems were in full swing and BitTorrent was just starting to catch on. At that point we realized that it was impossible to stop people from copying information. Music, movies, books, or software programs are all just information. Any information can be digitized. Once digitized copies are basically free. But we also realized that if people weren’t paid to make new information the world would stagnate. The entire legal system of intellectual property was based on restricting copies and now that was impossible.
While Shadow worked on BitTorrent and other technologies I worked on business models for this new world we were entering. I began researching, doing experiments and reexamining everything I knew about information. The result of that were several profound discoveries. One of them was a completely different way of looking at economics.
Economics is the social science that studies the production, distribution, and consumption of goods and services. The word ‘economics’ is from the Greek words ????? [oikos], meaning house, and ????? [nomos], meaning custom or law, hence “rules of the house(hold).”
Most modern theories of economics use a definition similar to this “he study of how scarce resources are allocated among competing uses.” They assume scarcity.
But I discovered information isn’t scarce. Information is infinite. Once the first instance is made all the copies are basically free. But more than that, I realized there is infinite information to provide those first instances. And it doesn’t require someone to make it, just discover it. Normal economics doesn’t work. Information is abundant.
The world is moving to a new house with new rules.
When I say Abundance most people ask, “abundance of what?” See, abundance isn’t about quantities of one thing or even quantities of everything. Abundance is when you always have what you need and even want. It’s when you no longer even care about quantity because it doesn’t matter.
Abundance is the key to achieving innovation. And predictive innovation is the key to achieving Abundance. This new way of looking at things will help you successfully move into the new world that is opening up before us.
Abundance is the opposite of scarcity. You might say, “Well of course, everyone knows that.” Any dictionary describes abundance as having a lot of something, but that isn’t what I mean. Having a lot is not the opposite of scarcity.
Scarcity means there is a limit. In a scarcity system you have to give up something to get something else. You can’t have all you need or want. Scarcity is a world of tough choices, the better of two evils, or the best we can do. The ultimate scarcity is having none, zero, gone, non-existent.
We all are familiar with scarcity. So why isn’t the opposite of scarcity having a lot?
Having a lot of something still implies a limit. What I mean by abundance is having so much that it’s effectively infinite. Abundance means never going without. It isn’t just having a lot. It’s not giving up anything to get what you want. All the rules are different. Ideas of supply and demand have little meaning in an abundant system. And as I’ll try to explain, the rules of abundance are the exact opposite.
How is infinite different from a lot? Let’s say you have a lot of candy, 1 million pieces. That is more than any one person would want to eat. But if you plan to share your candy with everyone in Los Angeles, Paris, Tokyo or Mexico City you soon discover you don’t even have enough. And you certainly can’t share with everyone on the planet. So maybe 1 million pieces isn’t a lot of candy.
What if you had 60 billion pieces of candy? That is a huge number, definitely what most people would call, “a lot”. But again when you look at the population of Earth it’s not that big. In 2006 the population of the Earth is estimated at 6 billion people. So 60 billion divided by 6 billion is 10 pieces of candy. That isn’t a lot of candy. Most children could devour 10 pieces of candy in a few minutes. It certainly wouldn’t last all year and just forget about 10 pieces of candy lasting for your life time. So, 60 billion pieces of candy isn’t really a lot.
We could keep trying that with bigger and bigger numbers. But you see it’s the ratio that matters. That is scarcity. As one thing increases the other decreases.
Now let’s try something very different. The number zero and infinity. How much is infinity divided by 1 million? Infinity! And infinity divided by 100 trillion, again infinity. No matter how big a number you try infinity can’t be divided. Infinity is very different from a lot.
Zero also acts differently than other numbers. If you multiply or divide zero by any number you get zero. But if you divide by zero you get an undefined number. It doesn’t even work. Using calculus you see it’s a number that approaches infinity, either positive infinity or negative infinity. But you see that it doesn’t fit the types of things we are accustomed to dealing with.
So abundance is having an infinite supply. But that is impossible. As I explained in Infinite Supply Problem with Copyrights, there is always an infinite amount of information.
Infinity and zero are very important concepts in abundance. There is another concept that is equally important, that is 1. Yes I mean the number but I also mean the condition. Think about sharing the candy. There are 6 billion people in the world. To share it you would need 6 billion pieces. If you divide 6 billion by 6 billion you have one. If you divide infinity by infinity you get one. One is exactly enough. The condition of one is where you start to experience abundance. When you always have enough you have just stepped into abundance.
Abundance sounds great. And it is; but, moving from scarcity to abundance is a huge disruption. And I discovered that isn’t the only thing that the rules of Abundance effect.
Remember that with information the first instance is expensive but copies are free. That same rule applies to physical goods as well. Once you set up the system to make a product the cost per unit is very cheap. And with automation it approaches free. The only cost is the raw materials and energy. But through innovation even raw materials and energy will become free.
If all this is true why are prices going up?
Only some prices are going up. Many prices are going down, way down. Look at computer hard drives. In 1984 hard drives cost $120 US per megabyte and the largest drive was 20 mega bytes. Today a 500 gigabyte (500,000 mega bytes) costs $300 US. That is $0.0006 US per megabyte. The same applies for thousands of products. In 1910 cars had a top speed of 45 miles per hour with 25 miles per gallon. Today the Toyota Prius can go 105 miles per hour and get 70 miles per gallon. Many sports cars can go 200 miles per hour and there are super economy cars that can get 250+ miles per gallon. Everything is improving but not everything is getting cheaper, why?
Laws, business models, even relationships are based on scarcity. If a product is heavily controlled by a law based on scarcity it will be scarce. If the business model depends on limiting production it will be scarce. In a scarcity system if demand exceeds supply prices go up. In an abundant system demand never exceeds supply. So prices tend towards zero.
But the natural order of things is towards Abundance. So any system that is based on scarcity will face disruption by a competitor that uses Abundance properly.
Everything is changing. But it won’t happen over night. It will happen in stages and it will occur in some areas of our life before others.
What I’ve discovered are how to operate in Abundance and to smoothly transition from scarcity to Abundance. And I’ll show you how.
Some other places to read about Abundance
- Musings of a VC in NYC – Abundance
- This Blog Sits at the
Intersection of Anthropology and Economics – Surfing Your Own Wave: plenty, Netflix, and the creation of managed scarcity
- ZDNet – Is there an economics of demand-side scarcity?