Abundance is bad for business
Solar power panel was costing 77 US dollars per watt forty years ago and guess how much does it cost now…
20 cents per watt!
What if this cost tends toward 0 cents in the next decade?
Recently, I had the good fortune to listen to Mr. Upendra Kohli’s talk on big trends across political, economic, social, technological, environmental and legal spectrum. He got me wondering about the coming world of abundance.
Business models are based on scarcity
Basic economic theory suggests that whenever and wherever demand exceeds supply there is a potential business.
Demand can range from essential food, clothes, shelter, education to comfort goods such as washing machines, TVs to notional status symbols such as expensive art, jewelry etc.
If there is no scarcity, there is usually no profitable business there. Who would pay for dirt? Whatever is abundant no one can make a business out of it.
Human ingenuity, as much as it comes up with ideas to bridge gap between demand and supply at least cost and hence most profit, it also creates artificial scarcity and/or demand to sustain businesses: diamonds and advertisements!
If what is scarce becomes abundant, business models would be forced to evolve too.
History of conflicts over energy sources
Throughout the history of life on earth, species have been jostling for dominance to have access to more sunlight, water, fertile land, coal, oil, labor and markets.
Human endeavor has been to understand nature to harness its energy for sustenance, enjoyment and continuation of species.
When a neighboring state has more natural resources such as fertile land, cattle or water, invasion and occupation is considered the logically and morally the right thing to do. Human values such as courage and valor are about protecting one own resources and forcibly taking over resources of other neighboring areas.
Almost all of the wars have been about economic resources even if they get dressed up with emotional issues such as religion or righteousness.
What if solar energy is ubiquitous, abundant and cheap?
Sun is the big bulb in the sky. Always on and warm. Abundant source of energy. One hour of sun energy reaching earth is sufficient to satisfy humanity’s energy needs for perhaps a year!
Imagine a world where there is a contraption in the living room or roof of your home or office building or moving aircraft or vehicle producing all the needed electric energy from sun light or similar electromagnetic radiations. If electricity is produced at next to nothing cost, what would happen to the dynamics of supply and demand and hence all our old business models?
If solar power is free and say water is scarce, desalination of sea water will solve the problem. Pure drinking water will cost nothing if desalination plants are run with solar electricity and water transport will cost nothing if water pumps and transports run with solar electricity.
If goods can be produced wherever the raw materials are available with solar power, assembled and transported with machines which run with cheap and available solar power, no sections of humanity need to suffer because of scarcity.
Pursuit of happiness
If you are an entrepreneur, what would your enterprise be in such an abundant environment? If you are one of the handful of businesses controlling the world, how will you hold on to your dominance? If you are part of a political system, how would you keep your members together?
If all material demands can be met either directly or indirectly powered by abundant solar energy, what would the wars be about?
If survival is not a problem for all humanity, what would guide our evolution?
Humans would perhaps finally and completely realize that abundant material well-being is not the way to achieve fulfillment and happiness.
A spiritual, yogic journey may yet begin in earnest…from individual toward universal, finding the universal in individual.
Abundance is us…good for business or not!