Adumbration

I wrote here about how people make adjustments to changing conditions.  I was motivated by an off line remark to elaborate.

Scarcity represents the condition of human wants in the face of "finite stuff".  As for combining this with "infinite consumption", the trivial response says that the definition of infinity precludes the concept.

A more complete response begins with recognizing that people's wants exist in the context of their limited resources.  People choose among their objectives in the face of those constraints.  The situation applies equally to non-material circumstances and resources, including our most limited one - our personal time and attention.  The process drives us to do more with less, and apply our resources to their most valuable ends.

As for determination of value, in the general sense we share many and disagree on others.  In the concrete cases of the actions people take in their daily lives, their personal values distill into particular choices - whether to weed the garden or read a book, to buy vanilla or regular soy milk, to enter a new profession or keep ones day job, and to attend the theater or have a couple pints with friends at the local, to consume today or save for tomorrow.   People make choices at this level based on their subjective values, driven by tastes and fashion and personal goals.  In the realm of social interaction we call the market, prices reflect the balance aggregating from our individual, subjective, and relative valuation of goods and services.

Resource scarcity contributes substantially in those prices.  It takes time, attention, and energy to locate scarce resources, to develop them into usable form, and make them available to consumers.  Those factors contribute to costs, which compare to consumer value.  Consumers choose based on satisfying their most valued aims.  Some value those resources more than others, and willingly pay higher prices for them.  A sufficiently high demand drives search for more of the same resource and for suitable substitutes.  In the case of oil, consumer demand drives the search for more oil and energy substitutes (which include more energy-efficient products).

As for those for whom the ideas of a market and prices do not apply, such people do not escape the reality of constrained resources.   Governments have tried for centuries to escape this by imposing controls on how individuals value and exchange goods and services, typically through imposing some maximum price level.  Promoters advocate such schemes on the suggestion that by holding prices down everyone will have everything they want;  shortages result instead.

Markets or no, prices or no, one must make choices among priorities in the face of limited resources.