Learning Objectives
By the end of this section, you will be able to:
- Discuss the orthodox definition of economics.
- Understand the organization of the orthodox definition of economics.
- Describe the paradigmatic direction of orthodox economics.
Sometimes, in order to better understand how something works it is useful to break apart, or deconstruct (de-engineer), the object of examination. During periods of war, oppositional armies are known to commandeer their opponent’s weaponry in order to de-engineer, or deconstruct, the equipment. The United States Army Air Forces Operation LUSTY (Luftwaffe Secret Technology) sought to capture German technology both during and after World War Two. By taking apart a piece of equipment piece by piece the examiner gains insight into both how the equipment operates as well as its weaknesses. In times of war, stealing good ideas and developing better ways to destroy an opponent’s weapons can be invaluable. The object of deconstruction does not have to be physical or mechanical for the process to be useful; deconstructing an idea is also a valuable process for enriching understanding. Regarding the orthodox definition of economics, as it is the object of both examination and critique, this same type of deconstruction will also be useful.
In the first chapter of this text an example of the orthodox definition of economics was provided to the reader. The definition provided, similar to variations on the orthodox definition of economics in most textbooks, owes its origins to a famous early 20th century economist, Lionel Robbins. Robbins famously defined economics as, “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” Contemporary orthodox economic textbooks tend to utilize a generic variation on Robbins’ definition, often stipulating something akin to “Economics is the study of the allocation of limited resources over unlimited wants.” In order to examine the appropriateness, or lack thereof, of the orthodox definition of economics, a closer examination of the definition is necessary.
One approach toward deconstructing the orthodox definition of economics is to define, specifically within the context of the orthodox economic meaning of the words, the other terms within the definition. Given the organization of the orthodox definition, with wants being conditioned by the availability of resources, one possible starting point for deconstruction is the orthodox definition of the term resources.
As should be noted from chapter two of this text, the orthodox economic definition of resources emphasizes that resources are those things that are needed for production. While other resources may be relevant, orthodox economics nearly exclusively focuses on Land, Labor, and Capital as the essential resources necessary for production. When more resources are present, more production is possible and when fewer resources are present, less production is possible. Obviously, if resources are unlimited, then production would be unlimited and all wants, and presumably needs, could be met. Of course, as noted by the definition, resources are assumed to be limited, otherwise referred to as scarce.
The terms “limited” or “scarce” are fairly self-explanatory. By definition, if something is scarce or limited, then there is only so much of the thing in question. In this case, orthodox economists are assuming that Land, Labor, and Capital are in some way constrained. In many ways this is a sensible assumption as the planet we reside upon has only so much available land, human population, albeit significant, is limited to 7.4 billion people, and capital, consisting of tools and equipment, are limited because only so many machines are available at any one time. Given limited or scarce resources, the ability for wants to be met must be limited.
Limits to wants are an important consideration. Given the orthodox definition of economics, the term wants could, presumably, represent any and all things people could want. However, because wants are deemed to be conditioned by resources and what resources are capable of producing, it stands to reason that what orthodox economics means by its use of the term “wants” are those things that are produced by resources. Since resources are factors of production, land, labor, and capital, then “wants” must be those things that are produced by land, labor, and capital—essentially products (goods and services).
But why do people want products? According to orthodox economics people want products because people garner satisfaction or utility (happiness) from their consumption of products. Given that wants are considered to be unlimited, which is to say endless or infinite, then, by logical continuation, people must have an endless desire for utility or happiness. Importantly, considering that wants must be the byproduct of the products produced by resources, orthodox economics is arguing that people have an endless desire for happiness and that happiness is derived, apparently exclusively, from the products that people acquire. Additionally, consistent with the circular logic of orthodox economics, if human beings have unlimited wants, then resources must be scarce. All wants can never be met, rendering resources on a finite planet scarce, if wants are endless.
In summary, given the above set of definitions the following if-then statement provides a summary of the belief of orthodox economists. If wants are unlimited and resources are used to produce the things that people want, those things being products for consumption, then economists assume people have an insatiable desire to acquire products (aka. inherently greedy). Additionally, if, presumably, products bring happiness and people have an endless desire for products, then it must be that people have an endless desire to be happy.