- Elgar original reference
Edited by Jan Peil and Irene van Staveren
Chapter 61: Scarcity
61 Scarcity Rutger Claassen The postulate of scarcity in economic science The scarcity postulate delineates the object field of modern economic theory.1 Although it was already implicit in theories of marginal utility of the 1870s (Xenos 1989, p. 67), its most authoritative statement is found in Lionel Robbins’s essay on the nature and significance of economic science. Robbins contrasted the ‘materialist definition’, which maintains that economics is the study of the causes of material welfare, with the ‘scarcity definition’, which maintains that economics studies the allocation of scarce means between competing ends (Robbins  1984, pp. 12–15). According to the latter definition, both ends and means can be of a material or a non-material nature. For example, the need for aesthetic beauty or religious inspiration is no less potentially subject to scarcity of means than the need for bread and butter. The satisfaction of all of these different types of needs under conditions of scarcity marks the ‘economic aspect’ of action. Since every action has such an economic aspect, every action is a legitimate subject of economic analysis. Thus the domain of economics is principally unlimited.2 For Robbins, and most economists after him, scarcity is characteristic of the human condition.3 It arises from the unavoidable opposition of endless wants and limited means to satisfy these wants. The concept of ‘opportunity costs’ explains why means (time and resources) are always limited in supply: every choice for one course of action implies the costly sacrifice of alternative courses of action. Under...
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