Scarcity and Choice Definition / Robbins’ Definition/ Modern Definition: (1932- up to now) (Economics as a science of Scarcity and choice)
The modern economist Lionel Robbins had criticized Marshall’s definition of economics. He gave the most scientific and logical definition of economics in his book “An essay on the nature and significance of economic science” in 1932 A.D. According to him, “Economics is the science which studies human behavior as a relationship between ends and scare means which have alternative uses.”
His argument is that economics is concerned with the problems arising from scarcity. People solve the problem of scarcity by allocating scare resources to best possible uses. Most of man’s economic activities are moving around the problem of scarcity and choice. This is the central idea of Robbins’ definition.
The main points of Scarcity and choice definition are as follows:
1. Unlimited human wants or ends:
According to Robbins, human wants are unlimited. These unlimited wants are not possible to satisfy at a time. If one want is satisfied, another arises immediately. Thus, there is a chain of wants. There is no end of human wants.
2. Scare resources/ limited means:
Human wants are unlimited but the resources to satisfy them are limited. The wants exceed the means. We call such a resource as limited. Whose supply is less than its demand. For examples, money, wealth, time etc.
3. Alternative uses of scare resources:
Human wants are unlimited but the resources to satisfy these wants are scare. But the scare means have alternative uses. For example, money can be used to buy food or a book or to go cinema. The main problem arises as to where utilization should be made first. i.e., People have to make choice regarding the use of scare resources.
4. All wants are not equally urgent:
According to Robbins, all wants are not equally urgent. They differ in urgency. Some wants more urgent than the other wants. Naturally, people go to satisfy their urgent needs first and then the remaining ones. For example, medicines are more urgent than the cosmetic for a sick girl.
5. Problem of Choice:
Although human wants are unlimited, all of the wants are not of equal importance. More important wants have to be fulfilled immediately and less important wants can be postponed. So, people make a choice of wants to derive maximum satisfaction, and choice making is an economic problem.
6. Human science:
In his definition, Robbins enlarged the scope of economics. According to Robbins, economics is the study of human behavior as a whole both within and outside the society.
Criticisms of Robbins’ definition:
Robbins’ definition of economics is analytical, logical and scientific. His definition is regarded as a superior definition to the rest of all definitions of economics. But his definition is also not far from criticisms. Many economists like K. E. Boulding, Fraser, P.A. Samuelson etc. have strongly criticized in the following points:
1. Hidden concept of welfare:
Robbins has criticized the concept of welfare given by Marshall, but Robbins’ definition itself includes the concept of welfare. Robbins ‘definition of economics is concerned with the choice between the wants and allocation of resources for maximum satisfaction is a sign of welfare.
2. Economic problem arises not only from scarcity:
According to Robbins, economic problems arise due to scarcity of resources. But the problems like inflation, unemployment etc. arise due to abundance of resources. The problem of unemployment is due to abundance of manpower. So, it is not correct that economic problem arises due to scarcity only.
3. Confusion between means and end:
Robbins believes that means and ends are easily and clearly separable. But, in practice, it is difficult to distinguish between means and end. For example; an M.A. student aims at getting M.A. degree. This is an end for him. Once he gets it, he uses it as a means to get a job. Thus, same thing may be means in one situation and the end in another.
4. Wider scope than needed:
Robbins’ definition includes the study of all human activities. So, its scope is being very vastly. It makes difficult to draw the line of demarcation of economics.
5. It ignores the theory of economic growth:
The theory of economic growth has recently become a very important branch of economics. But Robbins’ definition does not cover it. Economic growth explains how an economy grows by increasing the national income and productive capacity of the economy. But Robbins assumes resources as given and discusses only their allocation.
6. Economics is not only a positive science:
According to Robbins, economics discovers only the fact that give rise to certain problems and does not give suggestions as to how to deal with human behavior that varies from man to man and from time to time. Economics cannot be pure science. It discovers both cause and effect as well as suggestion.
7. Ignore Macro concept:
Robbins’ definition ignores the macro aspect because it has ignored the current issues of the economy as a whole like unemployment, inflation, poverty, national income, economic inequality etc.