Lionel Robbins turned the tables by proposing a whole new perspective of economic. He was strongly against Marshall’s definition of human welfare and termed it as “impossible” in modern economic situations. Robbins was a highly esteemed faculty of the London School of Economics.
What is Economics
Robbins proposed the most famous definition of Economics that says, “Economics is the science that studies human behavior as a relationship between ends and scarce resources which have alternative uses”.
By terming economics as a mix of material and immaterial resources and needs, Robbins widened the scope of economics; he tried to term Economics as pure science that has more scientific applications than the normative uses to humans. Simultaneously, Robbins distinguished economic from the natural sciences such as Physics and Biological Sciences termed it as social and behavioral science.
The definition of Lionel Robbins is general and is not confined to the industry and market; it relates to the basic levels of social business interactions, barters, and loans.
The core of Robbins’ definition i.e. “Scarce means” has profoundly been explained later. By scarce means, he tried to emphasize the system on which the world works. There are two types of resources available to mankind, economic and uneconomic resources.
The former is in limited quantity and is available only when you have some resources to avail of them. The latter i.e. uneconomic resources are in abundances such as air, water, and sunlight. They are inexhaustible and can be reused over and over.
The definition of Economics by Lionel Robbins was not based on the fact and figures in all; most parts were rather analytical, he observed and justified his definition based on human behaviors, the limited resources as of today, and the needs of mankind.
Scarce resources mean there are limited possessions available while human needs are unlimited; the human wants and desires can’t be contained. Everyone’s looking for a better lifestyle, a good car and house, and more money. The unlimited needs can’t be fulfilled under the limited resource formula; hence there’s an imbalance in the world’s economy.
Some are rich while others are middle class and poor. The whole idea represents the capitalist economy that controls the modern world. Mankind struggle the whole life to make its lifestyle better than what it has today. To meet the needs, humans always look for alternate resources and methods, these results in innovation and economic justice in society to some extent.
According to Robbin’s definition of economics, economic resources are always scarce, therefore hard to get. They can be put to alternate use when not in need. For example, a piece of land can be used for multiple purposes; it is utilized for shelter, businesses, agriculture, and transportation, etc.
Each economic resource has multiple purposes; the problem of choice arises in limited economic resources. The means are scarce; therefore, humans have to make a choice between limited resources. For example, a person in possession of a limited piece of land has to make a choice to use it either way.
There are multiple choices and some of the choices are better than the other ones or most needed at the given time, so the problem of choice is solved by opting for the one that’s in the best interest of a person or the most urgent one.
Criticism of Robin’s Definition
There’s been a lot of criticism on Robbin’s theory; Robbins was criticized for his idealist theory about economics by Durbin and other prominent economists. He oversaw several key aspects while formulating his theories in his book, “An Essay on the Nature and Significance of Economic Science”. He was criticized for his misleading or incomplete views.
Robbins was among the first ones to criticize and reject Marshall’s definition of economics that was based on human welfare. He emphasized the reality by defining the needs and available resources as well as human desires. The theory of scarcity motivates people all over the world to get up every day and look for their share of wealth.
Humans are not satisfied even in the abundance of goods and wealth; the needs grow along with the amount of wealth accumulated. Robbins stated that if wealth and resources are in abundance, humans will be more satisfied, it somewhat relates to Marshall’s definition too.
The theory of scarcity is not applicable to all the nations; the wealth of the nations is distributed unequally, the world is divided into three main blocs based on their economic stability and resources. The modern world has somewhat unlimited resources to produce and buy goods from less developed nations.
Contrary to that, third world countries have rich human resources and scarce reserves. The theory of scarcity does not apply to all the nations of the world.
In Robbin’s definition of economics, the scope of economics was widened beyond its limits, it included almost all the human activities as economic practices regarding the problem of choice. The problem of choice wasn’t confined to economic activities; instead, it is a natural phenomenon not only faced by humans but every living being on the earth. The problem of choice can’t relate to economic means solely.
Robbins claimed that economic imbalance arises due to the scarcity of resources. His theory is not acceptable because of the fact that the economic balance is not related to the abundance of resources.
For example, The Great Depression of 1930 in the United States of America occurred due to a large number of goods and services hence causing a great economic imbalance in the States. There is a balance of nature between the two ends to create an economic balance in any culture or society, scarcity of goods is only a part of economic imbalance.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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