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The Business of Less

KoinBlog, April 3, 2025March 24, 2025

If you want to understand how the modern economy works, forget supply and demand. Forget competition, efficiency, or the invisible hand. The real engine of capitalism—the thing that keeps profits high and the wealthy wealthier—is something far simpler: withholding.

Manufactured scarcity is the defining strategy of corporate power. It is not a bug in the system but the system itself. The idea is straightforward: create the illusion that something is rare, control its availability, and then charge a premium for access. The trick is that the scarcity doesn’t have to be real—it just has to feel real.

Let’s take the case of diamonds. Before the late 19th century, diamonds were expensive not because they were beautiful, but because they were actually rare. Then, vast deposits were discovered in South Africa, and suddenly, the market faced a problem: too many diamonds. If supply flooded in freely, the price would crash. Enter De Beers, a cartel that figured out a simple way to maintain the illusion of exclusivity: limit the number of diamonds released, stockpile the rest, and use aggressive marketing to convince the public that a diamond—specifically, a diamond engagement ring—wasn’t just a gemstone but a necessity.

It worked brilliantly. The value of diamonds was never about their natural rarity. It was about control. Even today, despite the rise of synthetic diamonds, the industry fights to preserve the idea that a “real” diamond is something special, something worth paying thousands of dollars for. It’s a sleight of hand that has endured for more than a century.

The same principle applies to almost everything we buy. Beer companies have long used artificial scarcity to boost demand, most famously with seasonal releases and “limited edition” brews. Take Bud Light, a product that exists in quantities beyond measure. It is, for all intents and purposes, infinite. Yet beer brands routinely push the idea that certain flavors or packaging are available for only a short time—forcing customers to act quickly, pay more, and feel as if they are getting something exclusive.

This playbook extends far beyond diamonds and beer. Fashion houses destroy unsold merchandise to keep their products from appearing “too available.” Tech companies roll out features at a controlled pace, ensuring that each new iPhone feels like an upgrade even when it isn’t. The housing market—perhaps the most consequential example—thrives on scarcity, with developers and investors artificially constraining supply to keep prices high, making homeownership a distant dream for millions.

Scarcity is money. And when real scarcity doesn’t exist, the market creates it.

This is not a failure of capitalism. It’s what capitalism does best. The drive for wealth does not stop at “enough.” Those who accumulate capital want more of it, and the easiest way to get more is not by increasing supply but by limiting access. A wealthy person doesn’t just own valuable things—they own the mechanisms that determine who else can have them.

This is why, despite extraordinary advances in technology and productivity, modern economies still suffer from artificial shortages. Why can’t we build enough houses? Why is insulin still so expensive? Why does it feel like everything is just slightly out of reach? Because abundance does not serve those who profit from control.

In theory, capitalism rewards innovation. In practice, it rewards restriction. And as long as wealth depends on keeping the right things scarce, there will always be less than there should be.

Join us in making the world a better place – you’ll be glad that you did. Cheers friends.

Finance and Economy Making Money Social and Self-Help

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