THE POLITICAL ECONOMY OF SCARCITY

Conrado Krivochein (UFF)1

Abstract

It is hard to find the meaning of scarcity in the economic thought for what the word
signifies. It’s many synonymous as lack, or depletion, or absence, or exhaustion, or non-
existence and so on, doesn’t seem represent scarcity singularly among distinct economic
ideas. Although scarcity and its synonymous generally refer to the nonexistence of
something once existent, there appears to be a major distinction between the
expressions: what is limited from what you don’t own. For understanding scarcity in
economic ideas it seems important then to distinguish between natural or human-Nature
relation – as for the absolute idea – and social or human-human relation – as for the
relative idea of scarcity. The establishment of scarcity in this sense becomes
distinguished in an ontological manner since in human-Nature relations the problem is
identifying low quantities or the nonexistence of something affluent or pre-existent
before in Nature; and in human-human relations, although affluence and existence are
identified, the access to something is restricted because of social constraints (property
relations, government, income, social class, etc.). The objective of this paper, is to
present an argument that tries to clarify the term scarcity in economic ideas, as it can be
seen in some definitions of the discipline and in the attempts of representing scarcity
analytically. As scarcity is reproduced in distinct ways, this discussion will provide a
political economy of the term in a restricted way. We will depart from two principles: i)
scarcity is viewed in economic ideas by how economics is defined as considering its
distinct theories, approaches and worldviews (or ontologies); then ii) the political
economy of scarcity depends on the idea that scarcity became a more logical and
concrete concept although it is fundamentally an abstraction. This idea can be
confirmed on what we call political economy, and in this case we will consider John
Stuart Mill’s argument in “On the Definition of Political Economy and the Method of
Investigation Proper to It”, since he establishes the basis for scientific inquiry in a
specific way that can represent scarcity in Economics nowadays.

1. Introduction

“there is no scarcity in the true sense of the word.”

(WIESER, 1927, p. 44)

The reader may notice that the ideas in this paper are widely dispersed, as it doesn’t
follow a specific theoretical framework. In fact very distinct theories and worldviews
will guide the argument in this discussion. But such a diverse orientation might not
represent a problem in this case. Actually, there is a growing tendency in Economics –
understood as a science and considering that the discipline can be placed as such – that
shows how it is transforming itself in a more and more expanded and also hybrid field
of knowledge. This view is related with the possibility of Economics Imperialism in the
discipline as presented by well renowned economists (MAKI, 2008; HIRSCHLEIFER,
1985). The tendency of the expansion of the field of Economics through other
1
PhD student – Fluminense Federal University (UFF) – conradokrivo@gmail.com
disciplines can be associated with the possibility that some methods of economic
analysis became so practical in the general branch of human relations – which is
allocation of things called resources – that influenced other fields of social sciences. But
this form of representation of the aspect of the human behaviour that deals with
allocation of resources only takes place when one important condition is inserted in
these human relations: the scarcity of these resources. In this sense, scarcity was the
‘problem’ – identifiable in a real world concrete perspective – and the ‘solution’ –
universal idea in an abstract aprioristic scientific perspective – for Economics
transformation into a unique science.

The use of the expression “allocation of scarce resources” in Lionel Robbins definition,
as Maki (2008) explains it, was tremendously scope expanding for economic ideas as a
description of what economists were doing or studying in that time – the 1930s. Since
´it´ what Robbins was defining, as pointed by Colander (2007), should be understood in
relation with multiple ends, ´it´ was also related with many activities in the social world.
What happened then was that scarcity transformed itself in a natural condition for
economists and other social scientists to tackle reality. Subsequently, as scarcity is
established as a logical condition for explaining value this form of explanation became
cyclical in itself – scarcity explains value and value explains scarcity –, as it can be seen
in Robbins definition. But Robbins definition is not where the idea of scarcity emerged
in the economic thought. In fact, a naturalized idea of scarcity could only be possible
when Nature could not be understood objectively within the edifice of modern science
and when human beings did not developed property relations over the world. When the
idea of Nature was associated with how humans represent their existence – and mainly
their needs in a objectified view of Nature as a stock of resources – scarcity became a
self-evident fact which could be seen as a natural condition of the world. That is how
scarcity was established as a universal concept or condition that allowed such
methodological generalization of the scope of Economics in Robbins’s sense.

In this paper it will be discussed that it is always necessary an interlocutor or a third

party or a human entity so that scarcity can be established and naturalized in social
human relations, mainly the ones considered as economic phenomena. If scarcity was
actually conditioned as a form of economics imperialism of its own methods – mainly
neoclassical ones – over other fields of knowledge it is important to identify the origins
of the idea of scarcity which allowed such a generalization of economic analysis. In the
works of Auguste Walras (father of Léon Walras) we can find evidence that the
neoclassical concept of “scarcity” emerged from natural law debates about private
property. Cirillo (1981) and Brown (1987) identify such construction of the neoclassical
concept of scarcity. The association with John Stuart Mill’s attempt to describe the
scope of the discipline in the nineteenth century and the naturalization of scarcity in the
twentieth century is in the almost ´natural´ transformation of economic analysis in a
(positivist) science. Actually Robbins recurred to Mill in structuring his definition of
science in his Essay. We will try to establish an idea of scarcity, one that can be more
general but not in the narrow (and also universal) sense of Robbinsian definition. The
idea of scarcity that we propose is not restricted to cost-benefit – or resource allocation
– kind of analysis. But it can be more faithful with social reality, considering human
existence and social (property) relations in capitalist society. It will be defended that
scarcity is a form of anticipation of human-human and human-nature relations although
ever materially realizable. It’s a form that economists choose to interpret the world –
natural resources, material things, relations, properties, feelings, other living beings, etc.
– as a limitation of consciousness, as a collective society always confronting Nature and
establishing itself outside of it. To say that something is scarce is a rhetorical rather than
a logical statement, since scarcity and abundance of the same thing doesn’t necessarily
impose a contradiction – it is not logical.

2. The Positive and Normative Political Economy of John Stuart Mill

As Redman (1992) stated, debates on scientific method during the eighteen and
nineteenth centuries were just as important as the results of scientific research
themselves. This is one important assertion since it shows that the way in which science
was constructed became the scientific method in itself. In other words, the process of
obtaining scientific knowledge validates the significance of that knowledge by itself.
Concerning the classical economic ideas mainly in the nineteen century, a crucial period
of construction of the ideas of classical economists and the episteme of political
economy, these discussions on scientific method were clearly influential on the
possibility of separation of the economic thought from other disciplines – considering
the positivist context of science in the passage from the nineteenth to the twentieth
century should be unique and universal. Although Adam Smith, David Ricardo and
Thomas Malthus are the well-known references of the political economy of that time,
John Stuart Mill will be the centre of this discussion on scarcity in economic ideas.

It will be shown that Mill’s argument in his essay “On the Definition of Political
Economy; and the Method of Investigation Proper to it” (Essay V), dated from 1830,
contains his view of political economy that was totally different from the thinkers of his
time, as John Elliot Cairnes – an adept of Mill’s ideas – pointed. The use of political
economy conception of Mill’s Essay in here should not be understood as an attempt to
qualify that his definition was better than others in anyway. The motive of the
recurrence to Mill’s political economy definition is that it stands for what the idea of
scarcity became in modern economic thought and how it is understood nowadays.
Mill’s definition is ambiguous for positioning political economy as a science, but at the
same time as an inexact science. Scarcity, as will be discussed, stands exactly in the
passage of a scientific Political Economy (as in Mill’s definition) to an economic
science (as in Robbins definition). It is not clear where scarcity stands because it
concerns property relations (a fact of Social Economy in Leon Walras ideas) and value
relations (a fact of exchange also in L. Walras). We relate this ambiguity with Mill’s
attempt of definition of Political Economy because although it is ‘separation’ from
(classical) political economy, as Cairnes stated, it is not clear about its scientific
method. The natural aspect of scarcity was the aspect that conditioned the separation (as
a scientific theory) and, at the same time, the union (as an analytical tool) of economics
with other disciplines. The problem is that scarcity is not strictly a natural aspect of the
world – this will be discussed in the next section – and Mill’s methodological
discussion on what political economy should be, and some of his ideas on “A System of
Logic” published a few years after his Essay shows how scarcity could be placed as
such.

For Mill, the most appropriated method for political economy was the one used by Isaac
Newton and this is explicit in Mill’s System of Logic in many passages. The success of
Newtonian physics, understood as the most developed science under the illuminist
paradigm, was remarkable by its achievements on gravitational studies and classical
mechanic and it was influential on many thinkers after him. In the seventeenth century,
during the development of the theories of the Modern State, the contributions of
Thomas Hobbes, John Locke and Jean-Jacques Rousseau were influenced by the
atomism on the constitution of the individualistic principle for representing society.
This mode of thinking, departing from individuals isolated in a “state of nature” endure
the individual as the basic unity of analysis and object of investigation. In the case of
classical economic thinking, the impact of Newtonian laws of gravity gave the idea that
invisible structures of the world were subject to human understanding. Smith considered
Newtonian physics as ‘the greatest discovery ever made’ and was influenced by the
development of science, though not by the industrial revolution of his time (TABB,
2002). Smith and mainly Ricardo were major influences on Mill’s thought on Political
Economy, but Mill’s methodology as influenced also by Newton’s conception of
science moved him to overthrown Aristotle’s teleological method of science and set him
apart from earlier classical economists.

Newton’s Trinity notebook from 1663, the section “Certain Philosophical Questions”
starts with the revolutionary sentence: “I am friend of Plato, I am friend of Aristotle, but
truth is my greater friend” (“Amicus Plato amicus Aristoteles magis amica veritas”).
This provocative entry shows that Newton was concerned with a scientific method
where reason and observation should be joined together if the laws of Nature are to be
revealed, which stands against Aristotle’s method. In Newton’s “Mathematical
Principles” volume II – The System of the World – book three, in the rule IV of the
rules of reasoning in philosophy, he says (1846, p. 385):

“In experimental philosophy we are to look upon propositions inferred by

general induction from phenomena as accurately or very nearly true,
notwithstanding any contrary hypothesis that maybe imagined, till such time
as other phenomena occur, by which they may either be made more accurate,
or liable to exceptions.”

Newton clarifies that this rule, which is the last one of these rules of reasoning, sustains
“that the argument of induction may not be evaded by hypothesis”. This means that one
must trust what inductive thinking delivers. It may be discussed that Newton’s rules
present weaker influence on Mill’s canons of induction (NORTON, 2010), but we shall
be concerned here with the logic he establishes through induction in his works, as will
be seen below. This will lead to the defence of a scientific method which sustain his
view of a political economy, but different from the political economy of classical
economic ideas. The critical point of Mill’s conception of science can be stressed by
contrasting it with Aristotle’s syllogistic logic.

Truth in Aristotle’s logic is sustained by the separation of logos (universal) and physis
(particular) leading to the supremacy of reason over Nature. The formal Logic in
Aristotle is based on three principles: identity (A≅A), non-contradiction (or is or is not)
and the third excluded (there is no other option besides be or not to be). Within this
mode of thinking the congruence between the universal and the particular sustains the
construction of knowledge through the formulation of what is called a syllogism – an
argument consisting of three propositions: the major (a general truth), the minor (the
premise) and the conclusion, which is deducted from the major proposition through the
premise. Recurring to the famous example of syllogism, as used also by Mill:
Major proposition: All men are mortal.
Minor proposition: Socrates is a man.
Conclusion: Socrates is mortal.

We have here a classic example of syllogism where the universal – major proposition:
all men are mortal – and the particular – minor premise: Socrates is a man – allows an
adequate relation between particular and universal – the conclusion: Socrates is mortal.
From this passage from a particular to the universal truth is to be found in syllogistic
logic. But then how to infer that all men are mortal? This is what Aristotle sustained as
an “argument by example”, and for Aristotle this is a matter of observation and not
proper scientific inquiry in Aristotelian logic. It can be said, although not precisely, that
for Aristotle science is about objects (cognitive constructions), which cannot be other
than they are or which possess a teleological essence. Science in Aristotelian conception
is concerned with ends through deduction and reasoning. This is very controversial with
modern scientific method, which is based on René Descartes – Cartesian rationalism –
and Francis Bacon – Baconian empiricism – methods. Newton’s conception of science
inherits from these thinkers and his idea of inference by induction is a key point for
Mill’s conception of science.

For Mill, according to Schollmeier (1984), syllogism merely deciphers the inference
expressed in the major proposition. The major proposition rests on prior evidence that is
derived from observation since we can only observe individual/particular cases. Then
the major proposition is an inference from the particular case observed. General or
major propositions are obtained through the process of inference. But not only the
process of establishing a major proposition – through an induction – is important. Also,
the process of interpreting a major proposition – through deduction – is extremely
relevant for obtaining truth in his conception. Mill (1973, p. 193) in System of Logic,
book II says:

“All inference is from particulars to particulars: General propositions are

merely registers of such inference already made, and short formula for
making more: The major premise of a syllogism, consequently, is a formula
of this description: and the conclusion is not an inference drawn from the
formula, but an inference drawn according to the formula: the real logical
antecedent, or premise, being the particular facts from which the general
proposition was collected by induction.”

So, Mill’s conception of induction is the same as Aristotle conception of example, or

argument by example, which is also obtained from particulars to particulars. Science in
Mill’s conception is what for Aristotle is a conception of opinion, or the idea of objects
(cognitive construction), which can be otherwise, and this is not science for Aristotle.
As Schollmeier (1994) and Mahan and Friedrich (2002) points out, although modern
science appears not to have an ontology, it actually does if one considers a rhetorical
ontology. It is rhetorical because it explains itself when is practical with its own logical
processes of producing knowledge. The process, which seems to validate modern
science, is one issue that Mill’s Essay addresses directly: the separation of theory from
practice. One important question for Mill in his Essay is how to transform abstract
knowledge obtained from scientific reflections in knowledge liable to be applied in
practice (DE MATTOS, 2004).
In his Essay, Mill defended a more scientific political economy, using the distinction
between ‘science’ and what he called as ‘art’. His purpose was to ‘isolate’ Political
Economy from the discussions about rules or directions for conduct, which are aspects
of what Mill describes as form of ‘art’ in a practical sense. For example, Mill argues:
“Political Economy does not of itself instruct how to make a nation rich; but whoever
would be qualified to judge of the means of making a nation rich, must be a political
economist” (1967, p. 89). This is an ambiguous statement. Mill departs from the
distinction between ‘science’ of the Political Economy and the ‘art’ of policy, but then
defends that Political Economy has a practical application and the political economist
should be capable of giving advice with this scientific knowledge. If science is
concerned with what Mill calls a collection of general truths apart from practical rules,
then Mill is also saying that science is the practice of searching and defining general
laws of whatever the subject matter of a science is without a orientation for practical
application. The Political Economy as a science in Mill's Essay is constructed by this
distinction of positive (laws) and normative (rules) statements, where obtaining truths
and (general) laws are the objective of scientific activity – as similar to natural sciences.
Finally, the definition of political economy for Mill (1967, p. 99), is:

“The science which traces the laws of such of the phenomena of society as
arise from the combined operations of mankind for the production of wealth,
in so far as those phenomena are not modified by the pursuit of any other
object.”

As Mill indicates, Political Economy is an abstract science and its method is the method
a priori – or “reasoning from an assumed hypothesis”. The assumed hypothesis is the
arbitrary definition of a human being as “a being who desires to possess wealth, and
who is capable of judging of the comparative efficacy of means for obtaining that end”
conditioned by “two perpetual counter-motives”: aversion to labour and present
enjoyment of costly indulgencies. This can be considered as one of the first
formulations of the homo-economicus, although Mill never used the expression. Mill
makes a tremendous effort in presenting a scientific method for Political Economy to be
a science, but at the same time he does emphasize that in all social (or moral) sciences it
is seldom to make experiments and in Political Economy “it is vain to hope that truth
can be arrived at”. In other words, Political Economy is an inexact science. Since truth
cannot be arrived at in Political Economy the a priori method or “abstract speculation”
should be the method of investigation proper to it. According to De Marchi (1988),
Schumpeter’s “History of Economic Analysis” he states that Mill blurs the categorical
distinction between normative and positive science, mainly when he makes a direct
connection of the theoretical and the practical abilities of the political economist.

For Mill, for Political Economy to be a science in his terms, it should be universal and
this is what Lionel Robbins accomplished somehow with his definition of Economics
on his 1930’s work “An Essay on the Nature and Significance of Economic Science”.
The usage of scarcity in Robbins definition, although his definition doesn't describes the
scope of economics at least not anymore as Colander (2007) sustained, it clearly opened
the path for the reproduction of scarcity as a intrinsic aspect of the economic, social and
even the natural realms.

As Maki (2008) pointed out, Robbins definition of economics helped the discipline in
expanding itself to another branches of scientific inquiry of social sciences. So, the
importance of scarcity in economic ideas as in other attempts of definition of the field is
mainly because it naturalizes economic behaviour (understood as an aspect of human
behaviour) to the allocation of resources. For Mill, a definition of Political Economy
cannot be purely scientific by what it is, but it should be contrasted with other existent
sciences for the scientific uniqueness of Political Economy can be sustained. In this
sense Political Economy can be seen as a ‘residual’ science. The residual aspect of
reality, which remains after other sciences (political, social, historical and so on) and,
which gave economic thought the ‘label’ of science, was scarcity since no other science
could explain it in a logical sense. Since Political Economy should be “framed on
strictly logical principles and co-extensive with it's own practice”, we believe that
scarcity gave to the attempts of defining the scope of economics the uniqueness and
universality it was needed for scientific consolidation – of course in a positivist
perspective of a science.

3. The Problem of the ‘Labels’ of Scarcity in Economic Thought

As stated in the introduction, it is hard to find the meaning for scarcity in economic
thought strictly for what the word signifies. This abstraction is possible since scarcity
can be interpreted differently, when it remains with the same meaning as a real property,
but with different apprehension as an abstract concept. It’s many synonymous as lack,
or depletion, or absence, or exhaustion, or non-existence and so on, doesn’t seem
represent scarcity singularly among distinct economic ideas. Although scarcity and its
synonymous generally refer to the limited amount of something, there appears to be a
major distinction between the expressions: what is limited from what you don’t own. In
other words, it must be a clear distinction from what is scarce for the individual from
what is scarce for the whole economy or society. For understanding scarcity in
economic ideas it became common to distinguish between natural or human-Nature
relation – concerned with the depletion of all usable natural resources as in the absolute
(Malthusian) idea of scarcity – and social or human-human relation – concerned with
the depletion of a particular natural resource as for the relative (Ricardian) scarcity idea.
The imposition of scarcity in these views becomes ontologically distinguishable in
economic ideas. Firstly, when considering the human-Nature relation the problem is
how to identify and avoid the inevitable natural resources limitation with the growth of
population and the economy; and secondly, in the view of human-human relations,
although affluence and existence are identified, the access to something is restricted
because of social constrains (property relations, government, income, social classes,
etc.) and the problem is about allocation of resources from any kind, natural or not.

The idea of absolute scarcity is associated with Thomas Malthus’s principle of

population where “the increase of population is necessarily limited by the means of
subsistence”. Malthus uses two postulates that sustain logically the possibility of the
‘premature death’ of human beings. The first one is that food is necessary for human
existence and the second is that sexual intercourse is also necessary in human existence.
By using these two basic laws, Malthus argues that there is a more fundamental law in
Nature that determines the life of all living beings, and even humans. That is the limited
expansion in the production of the land – conditioned by Nature but clearly associated
with the idea of diminishing returns (as agreed by Ricardo (2004, p. 243) – against a
faster growing population – conditioned by misery and vices. In other words, Malthus
principle of population says that “population, when unchecked, increases in a
geometrical ratio. Subsistence increases only in an arithmetical ratio”. Population
checks is associated with the reduction of population by natural conditions or other
major events that implies a great number of human deaths, like war. If the production of
the soil occurs in an uncontrolled way – that is without population checks – the
possibility of the reduction of the population by the lack of food is inevitable. Scarcity
then becomes an unavoidable absolute condition, which is present in Nature, and is
consequently imposed to all human beings.

On the other hand, the idea of relative scarcity is associated – although problematically
– with the thought of David Ricardo. Ricardo allied scarcity of the means of subsistence
through his labour-value theory. Being labour the only measure of value for Ricardo it
was possible to establish a relation with the productivity of the land, by considering the
amount of labour utilized in the production. According to Blaug (p. 88), Ricardo
considered the economy as a ‘giant farm’ of wheat, in which the land was a fixed
resource of the production. An increase in the quantity of labour in the land implies in
the diminishing returns as the rent of the land used in the production activity is
increased. As lands differ from quality or fertility, with the population growth
production is increased and less productive lands starts to be used leading to the use of
more labour and capital to increase the productivity in these lands. For Ricardo, “rents
increases most rapidly as the disposable land decreases in its productive powers”. In
these terms, the return for unit of labour (or capital) or marginal product in the less
productive land decreases with the growth of population and of wealth as the
landowners receive higher rents the farmer deals with lower profits proportional to the
diminishing results of the production. Scarcity is distinct from the Malthusian view,
since Ricardo considers lands to be distinct in productivity what implies in the
possibility of substitutability of the resources. So scarcity is relative to the resource,
which is being used compared with other alternative resources. But this doesn’t exhaust
the possibility of absolute scarcity.

A more formal distinction of the two versions of scarcity is known through the work of
Barnett and Morse (1963) Scarcity and Growth, and it was this division that set the pace
for environmentalism and ecological critics of economic ideas of the 1960s and 1970s.
The authors propose to discuss the scarcity of natural resources departing from the
classical economists – particularly Malthus, Ricardo and Mill – and the discussions
raised by the Conservation Movement – movement that consisted on an important
phenomenon in the United States history and influenced resource scarcity discussions.
After presenting the Malthusian and Ricardian views of scarcity and separating them as
before, Barnett and Morse identify that John Stuart Mill made important contributions
towards these views of scarcity. Mill systematized the ideas of Malthus and Ricardo and
extended the scope of natural resource scarcity and effect to living space and the quality
of life. But his emphasis on diminishing returns was remarkably influential on the
development of economic ideas. For Mill (1820, p. 116):

“To resume; all natural agents which are limited in their ultimate quantity, are
not only limited in their ultimate productive power but, long before that
power is stretched to the utmost, they yield to any additional demands on
progressively harder terms.”

It doesn’t matter the infinite creativity and dedication of the human mind, the limitation
of the law of diminishing returns per capita for the growing productivity serves as a
logical explanation for many economic phenomena and scarcity is very present. In 1705
John Law presented the ‘value paradox’ using the problematic and curious relation
between the value of diamonds and water. By comparing these two resources the
paradox shows how can a thing so necessary for human life, as water, could posses such
an inferior value in the market as the value of diamonds, which doesn’t posses any
property that directly affects the human body as water essentially does. In this sense, the
attribution of value to these resources cannot be immediately logically understood, since
the quantitative availability of them and not human biological needs explain their
importance. Scarcity can explain then the value attributed to these items – water and
diamonds. The doctrine of diminishing returns per capita, as it was already present in
Malthus and Ricardo thoughts, was becoming embedded in economic theory as a self-
evident fact (1963, p. 51-52) and scarcity assumed a more general analytical and
theoretical importance.

The work of Barnett and Morse was extremely influential, mainly on ecological
economists. Herman Daly uses the same distinction discussing the problems of the
excessive orientation towards economic growth. For Daly (1974), the relative (or
“Ricardian”) scarcity refers to the scarcity of a particular resource in relation to another
resource or by itself and can be solved with substitution of this resource; and the
absolute (or “Malthusian”) scarcity says about the scarcity of all resources in general
and it cannot be solved through substitutions because it presupposes that they were
already been made. Discussions that are based on the idea of absolute scarcity promote
a critic to the scarcity of natural resources by contrasting it with the relative scarcity in a
more broad and universal sense, which is identified in the relative scarcity of Robbins
definition of Economics as a science (BAUMGARTNER et. al, 2006, p. 490-491)2.

The universalization and naturalization of scarcity is more visible during the marginalist
revolution in the end of the nineteenth century and beginning of the twentieth century.
Even though the influence of other natural sciences are also important, biology
influence is more relevant for our purposes in here. It guarantees the usage of
representative agents for describing human beings in the world, as making choices with
the extinguishing time and unavoidable death. Hermman Heinrich Gossen and also
Robbins used the scarcity of time as an attempt to construct a more fundamental and
universal idea of scarcity and contribute for a more scientific economics. Both used time
as the ultimate resource for obtaining all forms of needs. The idea of value can be seen
– similar as scarcity does – as a natural property of things since it represents revealed
choices (common human practices) of things that are useful to human beings. Even

2
Another attempt for distinguishing scarcity in economic ideas is presented by Roncaglia (2012). He
considers that there are “different notions of scarcity depending on the conceptual frame of reference (the
world-view)”, mainly between what the author distinguished as Classical-Keynesian-Sraffian approach
from marginalist-neoclassical one. From this, Roncaglia identifies two notions of scarcity respective to
each approach. For the Classical ideas, scarcity depends not only on technology but also on the possibility
of (persistent) underutilisation of resources. As for the marginalist approach, scarcity originates from the
early rudimental notion that the quantities of the various goods and services brought to the market or
available to individual agents are given. Mainly, Roncaglia argues that these views leads to two different
representations of the economy: in the Classical case it is considered as a circular flow of production and
consumption; in the marginalist approach the economy is seen as a one-way avenue connecting scarce
resources on one side, and the needs and desires of economic agents on the other. But still, scarcity in
itself doesn’t change from what it is, even by distinguishing these two methods of economic analysis. In
both it is easy to see that it is how scarcity is used that changes, but what scarcity is does not change.
Also, this doesn’t avoid the possibility of absolute scarcity and this is a problematic feature considering
the distinction between relative and absolute scarcities, which actually Roncaglia doesn’t mention.
Aristotle possesses a conception of value that distinguished use value from exchange
value, as similar as to the classical economists. The possibility of unifying and
standardizing a conception of value in economic analysis would be through the idea of
utility. Basically, marginalists sought to prove that the principle of marginal utility
would be enough to deduce exchange rates between goods that will settle in competitive
markets, and also deduce the conditions under which the amplitudes of these potential
exchange rates should be replaced with unique solutions (maximizing). As Meikle
(1995, p. 8) shows:

“The metaphysical gulf Aristotle establishes between use value and exchange
value makes it quite impossible, consistently with his metaphysics, to achieve
the object of the neoclassical theory of Jevons, Gossen, Walras, and Menger.
That object was, in Schumpeter’s words, to show ‘what A. Smith, Ricardo,
and Marx had believed to be impossible, namely, that exchange value can be
explained in terms of use value’. To achieve such a merger, it is necessary to
reject the Aristotelian metaphysics of substance and attribute.”

Schumpeter (2006) completes that in marginalist ideas the essential turning point is
related on the practical aspect of the ‘new’ theory of exchange, in which “marginal
utility analysis created an analytical tool of general applicability to economic
problems”.

For the delimitation of the scope of Economic understood as a science, Robbins (1945)
had to delineate first what science is and then identify the real and unique problem that
gives Economic Science the unique capacity for dealing with it. Robbins argued that
Economics definitions, which utilize the common element of wealth – as the study of
the causes of material welfare – are unable to find the real problem that a science has to
deal with. Wealth is an end in itself and doesn’t appear as a problem to be solved. The
material wealth could not be a criterion for defining Economics as a science, since it
doesn’t explain scientifically (logically) the existence of value. Robbins identified this
problem in classical thinkers as Smith, Ricardo and Malthus, mainly in the distinction of
different kinds of labour – such as productive and non-productive. So that which is
defined as productive doesn’t necessarily imply in material production or a material
counterpart. As Robbins (1945, p. 24) indicates, to speak of any end as being itself
‘economic’ is entirely misleading. Definitions that were made earlier which emphasize
the causes of material welfare are classificatory conceptions, and Robbins’s definition it
would be described as an analytical conception.

Robbins (1945, p. 16) definition of Economic Science says that: “Economics is the
science which studies human behaviour as a relationship between ends and scarce
means which have alternative uses”. In this sense the subject matter of Economics is
limited to an exchange economy because all human behaviour, as in all exchange
relations, is conditioned by the fact of scarcity; and the phenomenon of an exchange
economy can only be explained through these behaviours, which are conditioned by
laws of choice and are more visible when it deals with the behaviour of isolated
individuals. Robbins inquires that the causes of material welfare aren’t more or less the
same thing as the scarcity of means, although “it is true that the scarcity of materials is
one of the limitations of conduct [what does not exclude the consideration of absolute
scarcity]. But the scarcity of our own time and the services of others is just as
important”. Scarcity of means is so abroad to the point that influences in some degree
almost all forms of human conduct, in which the discussion about any form of
satisfaction as an end becomes totally misleading. For Robbins, the economic analyst is
concerned with the way in which the attainment of ends is limited; and if the attainment
of one set of ends involves the sacrifice of others, then it has an economic aspect (1945,
p. 24-25).

But this does not mean that all conduct coming from scarcity has its economic aspect in
Robbins conception. Previously, since Robbins stated that scarcity seems to involve
almost all kinds of conduct, it can be concluded that: if all conduct under influence of
scarcity has an economic aspect; at the same time that almost all form of conduct seems
to be influenced in some degree by the scarcity of means; then, for Robbins, all form of
conduct seems to have an economic aspect. What it should be highlighted in here is the
attempt of Robbins to describe Economics more analytically, resulted in presenting an
analysis of the economic aspect in all form of human conduct in a way that it is possible
to “find” scarcity in human behaviour in general. Robbins ‘restricts’ the economic
analysis to everything. According to Robbins (1945, p. 78):

“The propositions of economic theory, like all scientific theory, are obviously
deductions from a series of postulates. And the chief of these postulates are
all assumptions involving in some way simple and indisputable facts of
experience relating to the way in which the scarcity of goods which is the
subject-matter of our science actually shows itself in the world of reality.”

What Mill tried to prescribe with his definition of Political Economy, Robbins described
with his definition of Economic Science and it turned out to become a prescription for
economic analysis. This acceptation of Robbins definition happens mainly in the 1960s
where mathematical and econometric methods were gaining more relevance in the
discipline (BACKHOUSE, 2010). And this has changed, as Colander (2007, p. 231)
indicates: “if the study of allocation of scarce resources among alternative ends ever
was the defining nature of what economic science was, it no longer is (…). Because
economics is changing, it needs a new definition”. But Backhouse and Medema (2009,
p. 225) shows that “Robbins claimed that his definition did no more than sum up the
way economists thought about and practiced their discipline, but actually his definition
was very much a minority view at the time”; and it didn’t left any room for “empirical
analysis, history, and institutions – and it essentially wrote ethics out of economics”.
Backhouse and Medema also show that after Robbins definition there were occasional
“scarcity definitions” – as in Samuelson and Mankiw definitions of economics.

With the generalization of scarcity as the fundamental cause for economic relations or
the economic aspect of human relations, it was possible to avoid limitations of Mill’s
Political Economy and eventually avoid the terminology of Political Economy,
removing the ‘political’ towards a scientific definition of Economics. But Mill’s
construction of Political Economy and his defence on what was the scientific method in
his time is treated the same way as scarcity does, as an ambiguous idealization of
economic relations. They are ambiguous concepts, because both Mill’s Political
Economy and scarcity in economic ideas were too much dependent of logic in justifying
their existence and validity. But as economic science was developed during the end of
nineteenth and beginning of the twentieth century under the direct influence of the
positivistic scientific method, this form of logic becomes a scientific justification on its
own. As Mill defended in his view of Political Economy, as a science it should be:
“framed on strictly logical principles and co-extensive with it's own practice”.
The distinction between absolute and relative scarcity although they are separated
ontologically, cannot be separated like distinct general laws in kind. In principle, this
argumentation changes the interpretation of scarcity in economic ideas. In the absolute-
objective view, scarcity cannot be clearly identified because of two main problems:
complexity in which the natural resources are interacting with the whole environment;
and even if science demands that the lack of natural resources can be proved, production
processes don't concretize without a wide study and setting-up of a supposed stock of
resources in Nature. The tension is evident when absolute scarcity tries to be more
faithful with the aggregate of human economic practices in relation with Nature and it
fails because human relations in the market are in fact relations of relative scarcities.
But on the other hand the idea of relative scarcity doesn't account for property relations
as a proper way in which humans project themselves over the world. To say that
something is scarce in the relative view eventually becomes the same thing as in the
absolute view, a general law, and even natural law as Mill discussed, once it presents as
a universal aspect that affects each economic agent. But since scarcity works logically
as an inference for establishing a major proposition or a chief postulate in representing
the economic aspect of society, it became a ‘cause’ that operates in all cases.

Some recent studies (SAVENIJE, 2002; ARRAUT et al, 2011) show that water is
becoming a scarce item to society. But still, water is found on bathrooms and rivers
around the world. This is a problematic statement, since we have to think about it in a
relative way. In some African regions and in the northeast region of Brazil there is in
fact a lack of water. But, as already indicated, scarcity and affluence coexist in our
society. How does this affect people’s life? Human beings distinguish themselves from
all other animals in many forms but most importantly, because their cognitive capacity
to project ideas towards the future – next hour, tomorrow, next month, year and so on.
In this sense, the question concerning the future lack of water is a relative question since
it deals property relations over water and not with the lack of water in general. But still,
water is a natural resource essential to all human beings, which implies an absolute
conception of scarcity on the matter. What the problem is in this case depends on the
selection of the political economist or economic analyst, in order to proceed with
economic analysis. In other words, how will he interpret the general proposition of
scarcity as the problem he has to deal?

There is an analytical problem in inferring and defining scarcity as ‘the’ main aspect of
the world in its totality. This problem is consequent to the subjective idea of scarcity,
which doesn't clarifies to whom scarcity is imposed or to whom it presents as a
problem. As scarcity and affluence can coexist in this interpretation, logic and scientific
neutrality are not clearly separated from ethical aspects since there is an arbitrary
delimitation of which economic agent will face the problem of scarcity. This form of
existence of scarcity in economic ideas that is being identified in this study is based on
Mill’s conception of Political Economy, since both can be logically structured and at the
same time cannot be strictly a positive science – as it is an inexact science. In a logical
perspective, scarcity deals with the allocation of resources, but it cannot be clear from
property relations since it is necessary a third-party in guaranteeing individual property
over something. Scarcity can represent how individuals deal with the social and nature
relations, but this separation cannot be strictly logical because it deals with institutions
and government. If property relations in society distinguish individuals, then in resource
allocation and environmental economic analyses the difference is not in scarcity
concepts, but in what scarcity anticipates – economic goods or natural resources.
4. From Logical Scarcity to Rhetorical Scarcity: Mill’s Political Economy of
Scarcity

Methodologically, Mill’s argument over scientific inquiry in his Essay emphasized an

inescapable a priori element. But Mill was concerned with the effect of changing
external conditions and evolving human condition on economic propositions than most
economists (DE MARCHI, 1988, p. 160). As already seen, in Mill’s definition of
Political Economy he wrote “in so far as those phenomena are not modified by the
pursuit of any other object”, and this is which in turns makes him place Political
Economy as an inexact science. Although Mill sustain an coherent discussion on proper
scientific method (DE MARCHI, 1988), he formulated a more ‘loose’ definition of
Political Economy as a science in contrast with the one presented by Robbins almost a
century later. Since the positivist paradigm of science was becoming stronger – as it
could be seen among marginalist methodological discussions –, Robbins successfully
bring science and economic analysis together by concerning strictly with an aspect of
most human conduct. Mill and Robbins both did emphasize the causal factors with
which economics is concerned, but Robbins was not concerned with a particular domain
as Mill was – and that particular domain is Political Economy. Instead, Robbins
described what economists in his time were actually doing and identified a causal factor
– which is scarcity – that economics is concerned (HAUSMAN, 1992).

In this sense, the objective in here is not contrasting both economic (and Political
Economy) definitions, but identifying how scarcity could sustain itself as truly universal
in applicability (HIRSHLEIFER, 1985) and how it persists, even when Robbins
definition is not anymore the definition of the what economists are doing nowadays.
This is related with the idea of Economic Expansionism, in which consists in a “matter
of a persistent pursuit to increase the degree of unification provided by an economic
theory by way of applying it to new types of phenomena” (MAKI, 2008, p. 9). Maki
(2008) sustains that Robbins definition is “powerfully scope-expanding”, since “it opens
the door wider than previous definitions”. According to Hausman (1992), when Robbins
definition generalized economics as a study of an aspect of most of human behavior
pushed economic theory to phenomena that have not been part of the traditional subject
matter of economics in Gary Becker’s defense of Economic Imperialism. For Maki
(2008) Economic Imperialism is “a form of economics expansionism where the new
types of explanandum phenomena are located in territories that are occupied by
disciplines other than economics”. The relevance of scarcity is related with Mill’s
Political Economy because it stands as an important concept even when facing the
changing external conditions and evolving human condition, which affects economic
propositions, something that Robbins definition as a whole didn’t incorporate.

The idea of scarcity as a truly universal analytical category in applicability, as

Hirshleifer (1985) stated, shall be the concern of this section. Before explaining the
logical construction of scarcity in economic ideas, it is necessary discuss about its
origins. Cirillo (1981) and Brown (1987) works on Auguste Walras, father of Léon
Walras, are important in determining the origin of scarcity mainly in the neoclassical
ideas – since both studies emphasizes the influence of Auguste Walras on the famous
theory of Léon Walras. Most crucial in these analyses is the a priori existence of
scarcity. According to A. Walras (in BROWN, 1987, p. 104):
“Among the goods that man enjoys in this world, there are those who are
 distinguished from others by a special character in particular that is the
limitation or scarcity [rareté]. This limitation, which affects some goods,
produces a double phenomenon among them: it is what gives them value, and
is also what makes them appropriable. At this limitation that certain products
should report as a source of their wealth and that makes them property.”

In order to construct a more logical concept of scarcity (or rareté) as a causal factor for
value, A. Walras denied both utility and cost production theories of value. Since the
utility concept was based on self-interest, from the point of view of social justice the
institution of private property should be considered. Consequently, it is also needed a
valid theory of value for formulating a theory of property. For A. Walras there was no
logic explanation for the existence of private property – which stands as a social
problem – and logic for A. Walras was necessary for acquiring existence, what puts him
in the same scientific paradigm of Mill. Smith, Ricardo and Jean Baptiste Say were
major influences on the ideas of the father of Léon Walras. He saw the political
economy as “the only discipline that considered private property as the cause of the
accumulation of wealth”. On A. Walras perspective, once the state were appropriating
lands and natural resources, policy makers could recur to theoretical models of perfect
competition in a free market system for achieving the maximum social welfare of
society (CIRILLO, 1981, 309-310).

Under the influence of seventeenth and eighteenth century natural law doctrines, A.
Walras explained that scarcity is the cause of both value and exclusive property rights.
Grotius and Puffendorf were the most important influences on A. Walras argument on
how scarcity became the origin of wealth and hence property. The idea of rights as suum
in Grotius, as being the inherent right of the individual, introduced a radical
individualism in the language of rights in general and on rights to property in particular.
It established a standard for most part of discourses about natural rights on property and
it was influential on the development of Political Economy. This implied that the
concept of exclusion should be understood as a necessary aspect of property. So
property stands as an exclusive right, because it gives the right to the individual owner
to exclude others. Property then is defined through criteria of exclusion. For Grotius, to
‘have’ or to ‘possess’ implies that a thing belongs to a person in a way that this thing
cannot belong to someone else. In Puffendorf, exclusion results from the natural
incapacity of a thing to satisfy the necessity of other person at the same time.

As appropriable goods are those, which use/occupation implies or allows the exclusion
of others, then non-appropriable goods are those, which use/occupation neither implies
nor allows the exclusion of others. This means that, after the roman lawyers, natural
resources, as water of rivers, air, the sun and the sea, are, regarding their characteristics,
naturally destined to common use of all, since these resources remain inextinguishable.
But because humanity multiplied over the centuries, the right to common use gave
space to the right of private property, which is related with the insufficiency of the
‘fruits’ of the earth spontaneously produced. This population growth also resulted in a
greater need towards the facilities offered by the market. From this demographic
progression, labor and industry were necessary for stimulate the productive activity.
Labor and industry became ‘titles’ for property in the case of production of goods.
Exclusion is validated been maintained the renounce of the original rights of common
use. The comprehension of exclusion from individual use from others couldn’t sustain
itself without mutual agreement. In Grotius and Puffendorf ideas the exclusion inherent
from consumption leads to private property, either intentionally or unintentionally.
Through the physical aspect of certain things their simultaneous use by more than one
individual is impossible (BROWN, 1987).

After the “Wealth of Nations” there was a relevant separation in the history of classical
Political Economy due the separation between natural laws and Political Economy. In
this sense, property relations remained outside the scope of economics. For Brown
(1987), only after A. Walras and L. Walras the universal aspect of scarcity was possible
in Political Economy because their ideas reconstitute the connections between property
and value. Scarcity is both cause and measure of value because the use (and
consumption) leads to appropriation of goods and consequently in the exclusion of
others. For A. Walras, given demand, goods only have value because their quantity is
limited and this, for him, is the origin of wealth and, hence, property. The logical use of
scarcity by both Walras it only works by presupposing property, although scarcity
remains an absolute natural fact. Brown (1987) shows that this systematical connection
of value, property and scarcity is the triad of neoclassical scarcity, which signals the
need of an allocative system that defines and constitutes the dominion of neoclassical
economics.

Although in Robbins definition scarcity is also placed a priori, there is an omission

from the idea of scarcity of A. Walras. For A. Walras “the coercible things possess this
quality for its limitation or scarcity (rareté)”, and “who says property, says exclusion,
and exclusion is based on the limitation of owned things”. Since property is not a
material thing, but the right to appropriate something, how these exclusion and scarcity
are established? When exclusion becomes the consequence of appropriation, then what
is being discussed: property or possession? The direct use of something, in fact, results
in this form of ‘natural’ exclusion. But when the use is not direct? For Hodgson (2015)
the claim that possession of material things, or material accumulation, is a part of
human nature should not lead us to the false conclusion that property and possession are
the same. Property is reserved to the cases of institutionalized possession always
attributed and guaranteed by a third-party (through adjudication or enforcement of the
state or a ‘superior authority’) (HODGSON, 2015, p. 102).

One of the greatest intellectual achievements in society was the acknowledgement of the
distinction between the notions of ‘having a right to’ from merely ‘having’. It is through
this human projection over the material world that allowed mobilization of large
quantities of resources in order to construct or produce something in large scale. The
omission of property relations different from direct possession leads to the omission of
institutions that sustain and legitimate these property relations. Hodgson (2015, p. 107)
says that:
“Rights result from institutionalized rules involving assignments of benefit.
They always involve relations between people as well as relations with
things. The ability to enjoy may not involve more than an individual’s
relationship with an object.”

Scarcity then is intrinsically related with this discussion, since it deals with things
used/occupied. But the distinction of use from potential use seems to disturb the logical
comprehension of scarcity in economic ideas, such as neoclassical, classical, Walrasian
or Robbinsian. What seemed to have happened in these economic ideas is that the right
(or guarantee) to use something became use per se. Then recurring to A. Walras
argument, since that what limits the quantity of things is property – or the possibility of
appropriation of it –, property originated scarcity and scarcity could not be an a priori
assumption. The way in which humans relate themselves with the material world
doesn’t imply in the direct use necessarily but in a social mutual agreement over
property relations.

The omission of property relations, or its substitution by the idea of possession, is

justified by the necessity of keeping scientific methods applicable to economic analysis,
and this in consideration with scientific definitions of economic, such as Mill’s and
Robbins’s. Introspection guarantees the isolation of the result of each separated cause to
then explain the collective result. The removal of legal rights then is necessary for
avoiding value judgments and preserving the scientific method of economic analysis. It
was first necessary to cognitively appropriate the natural realm and its features before
discussing matters of allocation or even depletion. Since allocation and also depletion
presupposes availability, and Nature itself with all its features (its infinite processes of
transformations) could not be totally enclosed in such an available (knowable)
condition, then logic takes place in filling the gap.

The superiority of the human mind is imposed even when reality doesn’t cooperate. The
process of acquisition of knowledge then became knowledge by itself, as Schollmeier
(1994) identified in Mill’s logic. If what is logically explained is existent and real, then
the great issue that concerns scarcity is its unreality. L. Walras identified this but by
great influence from his father, A. Walras. The unreality of scarcity is what constitutes
the main problem in distinguishing scarcity in both relative and absolute views, because
both views believe the scarcity is real and concrete – scientific and logical –, and not
strictly a human interpretation. Instead, scarcity is unreal because it is constructed
through human relations and it is not strictly natural as it is generally accepted and
reproduced – mainly in neoclassical ideas as in L. Walras and Robbins. The problem of
scarcity is not a problem of depletion or lack in itself but is its non-existence in reality,
although it recognized by its truly universal applicability. The logic in scarcity, as it
explains valuation, is not in having a good, but instead is in not-having that good. That’s
why scarcity lacks an identifiable counterpart in reality since it can only be anticipated
in prices and valuation of things.

How then scarcity makes such an important sense in economic ideas? Mill already
presented the answer to this question. Unreality is not a problem in a positivist scientific
paradigm. But since scarcity came to be described as a real problem for economics to
deal with, there was other aspect of the human world, which instead of being placed for
what it is was simultaneously reduced when economics became a kind of science and
that is the idea of property relations. Scarcity was a logical replacement for property and
this was the theoretical contribution of A. Walras, father of L. Walras (CIRILLO, 1981;
BROWN, 1987). We believe that the idea of Mill of Political Economy represents how
scarcity is understood in modern economic thought – and this is why the title of this
paper is ‘the political economy of scarcity’. The interpretation of scarcity in Robbins
definition is associated with the outline of scientific inquiry of Mill's Political Economy,
which allows scarcity to became a natural property of the world. This transformation of
abstract truth in concrete truth is also associated with the problem of conflating property
with possession as discussed recently by Hodgson (2015).

In other words, scarcity was understood as a form of (general) law that explains – in
Mill's Political Economy sense – the causes and the measurement of value in the case of
neoclassical economics; and in the case of more heterodox economic ideas, such as
Ecological Economics, scarcity works as a ‘natural’ law that confronts humans with
nature directly. The problem with both these interpretations of scarcity is that they are
related and cannot be placed separately. They are separated because property relations
are neutralized from the idea of scarcity by considering mainly direct relations among
agents in the market or Nature; or analogically, they are separated because the
conflation of property with possession. This is actually related to Mill’s idea of Political
Economy when he argues about the separation between general laws from particular
ones.

Scarcity represents a kind of ‘living’ concept in economic thought, since it reflects the
‘merge’ of Political Economy – in Mill’s conception – and Economic Science – in
Robbins definition. The ambiguity in this is that scarcity merges the natural with the
social realms: on the one hand, by assuming direct use of things, reducing the scarcity
for one individual reflects in the exclusion for the rest of society; on the other, scarcity
pervades the individual and social realm simultaneously. But since logic sustain the
validity of scarcity as a universal feature, then how it allows abundance of things? In
this sense scarcity is a relation. It describes how humans are placed in the world of
economic analysis, in a sense of describing what is the main natural aspect, which puts
them in relation with this world. Scarcity sustains the right to affluence, since it departs
from an idea of a limited and separated nature for justifying this affluence, which is
something observable. That is not the logical but the rhetorical idea of scarcity in the
ontology of modern science, a function of the practical intellect.

5. Conclusion

The issue in this paper is that besides all the progress and triumph of science over nature
and the development of the human species, our generalities so far are not exhaustive
with reality. Mill’s attempt in constructing a scientific aprioristic method for Political
Economy revealed how logic can be, by itself, self-sustaining even totally a part from
observable reality. Although it represents an important part in the development of
society and population growth, science was established by its pragmatic capability and
not immediately for revealing necessary truths. This was the great achievement of
Robbins definition where it isn’t concerned with finding truths of economic phenomena,
but in describing what economists of his time were doing. Scarcity has a logic pedigree
in deductive thinking, but was also reproduced on inference by induction over the
establishment of property relations. It establishes a general truth for scientific inquiry on
economic analysis. But, as the epigraph of the beginning of this work has corrected
pointed, there is no scarcity in the true sense of the word. So, based on Mill’s Political
Economy, it was presented a Political Economy of scarcity, where the objective was
interpreting its logic by what Schollmeier indicates as the rhetoric ontology.

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