Actually, I wasn't referring to food (I was thinking more along the lines of non-renewable resources like oil), but since you've mentioned it... yes, the earth could can easily sustain all 7 billion of us (otherwise, we wouldn't be 7 billion and growing, would we?). You did allude to artificial scarcity and I could see how that could be true. But the reality is that even the basic needs such as food is scarce for an alarming proportion of the population, primarily because they do not have the means to obtain it (by cultivating or using industry to afford it). Yes, it is such an inefficient way to exist but that is how people behave, and conditions are exacerbated when the number of people increases.
Furthermore, my main point is that people in poor countries have a propensity to have more children because they do see them as a form of security (when the parents get older) and income potential. That is an axiom accepted by sociologists and scholars. It is also a generally accepted idea that opportunities are scarcer in centers where numbers are greater.
In theory, your idea works when people see themselves as part of a larger collective (or a Utopian state) and behaves as such. Sadly, that is not the case, especially in situations when resources are scarce. Socialism is a great concept but I have yet to see it work, we as humans are just not sophisticated enough. And though it may be true that all us can be potential producers and innovators, present conditions play a very big role in whether or not that becomes a reality. Josh and Rogelio are classic examples.
Compassion and charity are easier when you have, not when you have not. I like your idea, but that's just not the reality.