Scarce Means, Competing Ends: Lord Robbins and the Foundations of Contextual Economics

Abstract

This paper analyses the role of Lord Robbins' definition of economics (RDE) emphasizing scarcity and choice, as well as its usefulness for clarifying the foundations of contextual economics. The reasons for RDE's appeal and some strategic benefits of its flexibility / openness are discussed, along with a brief analysis of some of the criticism which has been raised with respect to the methodological and epistemological background, notably the status of empirics, of introspective knowledge, of motifs and of value judgments. RDE is found to impose restrictions regarding contextual interdependences related to endogeneities of contract enforcement, of preferences, and of technologies. Following David Hume, scarcity moreover will be considered as a contingent contextual condition of the environment rather than an aprioristic starting point of economic analysis.

Environment as a Resource, not a Constraint

“…It has prominently neglected the role of institutions in economic and social life. However, the importance of economizing remains paramount also for institutionally minded economists (Sturn 2016). For example, in Williamson's (2000) institutions-based model of multi-level economizing, higher levels are imposing constraints on the levels immediately below.…”

“…In this sense, such analysis of institutions stands solidly in the neoclassical tradition of spotlighting relative costs and benefits as the relevant determinants of behavior. However, as Sturn (2016) points out, the focus on economizing within constraints has led economists to ignore certain types of contexts where the relationship between individual agents and their environment is not as straightforward as standard theory suggests.…”

“…The central argument of this paper builds on the assertion by Sturn (2016) that contextual economics should abandon the notion of economizing within "the orderly world of pure economic transactions" as its central analytical concern (80). Instead, it should move toward embracing the analysis of "complex, messy situations" (ibid.).…”

“…Instead, it should move toward embracing the analysis of "complex, messy situations" (ibid.). Sturn (2016) argues that the exclusive focus on economizing has resulted in the neglect of certain types of contexts where scarcity is not the defining feature but where various non-scarcity interdependencies result in dynamics of increasing returns. This view, however, still conceives of the environment as having an essentially passive role.…”