Quote: 5) Lionel Robbins – definition of economics

Lionel Robbins (*):

Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses

This is the fundamental definition of economics that I adher to when I write here. In all honesty this is not the sole definition of what people “see” economics as – however, it THE definition of what I would term “economic science”.

This definition fits neatly with the theoretical and applied versions of micoeconomics – however, without appropriate “microfoundations” it is hard to decide whether marcroeconomics sticks to this definition of what economics is – is macroeconomics raising the TRUE trade-off between scarce resources in the entire economy?

Ultimately, Milton Friedman felt we make macroeconomics consistent with this view (and useful) bu focusing on predictive accuracy – like many economic models, this made sense once you converged to your result, but not out of equilibrium 😛

  • DR. JEFFREY M DOYLE

    PLEASE EDIT THIS POST AS NEEDED

    The Effectiveness of “Traditional” Neoclassical Economics in Solving current problems

    My name is Jeffrey M Doyle. I ATTENDED THE UNIVERSITY OF MICHIGAN, ANN ARBOR AND MICHIGAN STATE UNIVERSITY, RECEIVING MY Ph.D. IN 1977.

    FOR OVER THIRTY YEARS MY [AND OTHERS] IDEAS WERE DISMISSED AS UNPROVEN AND NOT RELEVANT. TODAY MOST
    OF WHAT I PROPOSED IN A 1977 PH.D. DISSERTATION HAS NOT ONLY GAINED ACCEPTANCE BUT IS BEING ACTIVELY
    PROMOTED AND PUT INTO PRACTICE. BETTER LATE THAN NEVER.

    IN TERMS OF OUR ECONOMY, WE ARE CURRENTLY IN THE WORST SHAPE SINCE THE GREAT DEPRESSION OF 1929. HARD
    CORE, DEEPLY ENTRENCHED ADVOCATES OF NARROWLY DEFINED ECONOMICS WILL STAUNCHLY DEFEND THEIR
    ICONIC VIEWS-EVEN IN THE FACE OF ONE DISMAL FAILURE AFTER ANOTHER. GALILEO’S REWARD FOR PROVING THAT
    THE EARTH ORBITED THE SUN INSTEAD OF THE OPPOSITE SCENARIO ESPOUSED BY THE VATICAN, LED TO A LIFETIME OF
    HOUSE ARREST.

    MY WORK IS BEST SUMMARIZED FROM THIS EXCERPT FROM WIKIPEDIA “…Energy economics relating to thermoeconomics, is a
    broad scientific subject area which includes topics related to supply and use of energy in societies. Thermoeconomists argue that economic
    systems always involve matter, energy, entropy, and information.[12]Thermoeconomics is based on the proposition that the role of energy in
    biological evolution should be defined and understood through the second law of thermodynamics but in terms of such economic criteria as
    productivity, efficiency, and especially the costs and benefits of the various mechanisms for capturing and utilizing available energy to build
    biomass and do work.[13][14] As a result, thermoeconomics are often discussed in the field of ecological economics, which itself is related to
    the fields of sustainability and sustainable development.
    Georgescu-Roegen reintroduced into economics, the concept of entropy from thermodynamics (as distinguished from the mechanistic
    The Effectiveness of “Traditional” Economics in solving Current Problems… http://connect.bioneers.org/profiles/blog/create
    1 of 5 10/21/2008 10:36 AM
    foundation of neoclassical economics drawn from Newtonian physics) and did foundational work which later developed into evolutionary
    economics. His work contributed significantly to bioeconomics and to ecological economics…”

    The traditional [1970’s] curriculum of natural resource economics emphasized fisheries models, forestry models, and minerals extraction models
    (i.e. fish, trees, and ore). In recent years, however, other resources, notably air, water, the global climate, and “environmental resources” in
    general have become increasingly important to policy-making.
    The economics and policy area focuses on the human aspects of environmental problems. Traditional areas of environmental and natural
    resource economics, include welfare theory, pollution control, resource extraction, and non-market valuation, and also resource
    exhaustibility,[3] sustainability, environmental management, and environmental policy. Research topics could include the environmental
    impacts of agriculture, transportation and urbanization, land use in poor and industrialized countries, international trade and the environment,
    climate change, and methodological advances in non-market valuation, to name just a few. These items made up the core of my 1970’s
    curriculum.
    Natural resource economics also relates to energy, and is a broad scientific subject area which includes topics related to supply and use of
    energy in societies. Thermoeconomists argue that economic systems always involve matter, energy, entropy, and information.
    [4]Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the
    second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits of the
    various mechanisms for capturing and utilizing available energy to build biomass and do work.[5][6] As a result, Natural resource economics are
    often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.
    In recent years more attention has been given people such as Frederick Soddy who in Wealth, Virtual Wealth and Debt, turned his attention to
    the role of energy in economic systems. He criticized the focus on monetary flows in economics, arguing that real wealth was derived from the
    use of energy to transform materials into physical goods and services. Soddy’s economic writings were largely ignored in his time, but would
    later be applied to the development of biophysical economics and ecological economics and also bioeconomics in the late 20th century.
    The rise, and absorption into the mainstream of Keynesian economics, which appeared to provide a more coherent policy response to
    unemployment than unorthodox monetary or trade policies contributed to the decline of interest in these schools.
    After 1945, the synthesis of Keynesian and neoclassical economics resulted in a clearly defined mainstream position based on a division of the
    field into microeconomics (generally neoclassical but with a newly developed theory of market failure) and macroeconomics (divided between
    Keynesian and monetarist views on such issues as the role of monetary policy). Austrians and post-Keynesians who dissented from this
    synthesis emerged as clearly defined heterodox schools. In addition, the Marxist and institutionalist schools remained active.
    Hence, while mainstream economics may be defined in terms of the “rationality-individualism-equilibrium” nexus, heterodox economics may be
    defined in terms of a “institutions-history-social structure” nexus. Note that there is a different emphasis in distinguishing mainstream and
    heterodox economics in this way than is involved in distinguishing them as closed-system and an open-system approaches respectively. It is
    often claimed that neoclassical theory is appropriate as a tool only under certain limited conditions, where there is “perfect” or “near-perfect”
    competition. While there is a large body of neoclassical analysis of imperfect competition, this terminology may be seen as incorporating the
    assumption that non-competitive markets represent minor deviations from an ideal or perfect norm
    Fields or schools of heterodox economics
    American Institutionalist School
    Austrian economics # (partly within, and partly outside of mainstream economics)[20]
    Feminist economics #
    Binary Economics
    Political economy (the term is used in various ways, also to describe certain kind of economics)
    Post-Keynesian economics
    Post scarcity
    Sraffian economics #
    Marxian economics #
    Socialist economics #
    Bioeconomics §
    Complexity economics
    Evolutionary economics #§ (partly within mainstream economics)
    Institutional economics # (partly within mainstream economics)
    Ecological Economics
    Neuroeconomics
    Supply-side economics
    Technocracy Incorporated (Energy Accounting)
    Thermoeconomics
    Ecological economics
    Econophysics
    # Listed in Journal of Economic Literature codes scrolled to at JEL: B5 – Current Heterodox Approaches.
    § Scrolled to at JEL: C73 – Stochastic and Dynamic games; Evolutionary games.
    Research is also being done in the multidisciplinary field of cognitive science on individual decision making, information as a general
    phenomena, distributed cognition and their implications on economic dynamicity.
    Some schools in the social sciences aim to promote certain perspectives: classical and modern political economy; economic history:
    The Effectiveness of “Traditional” Economics in solving Current Problems… http://connect.bioneers.org/profiles/blog/create
    2 of 5 10/21/2008 10:36 AM
    sociology and anthropology; gender and racial issues in economics; economic ethics and social justice; development studies; and so on.
    [edit] References
    1.^ a b LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political
    Economy Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093
    2.^ Barry, C. (1998). Political-economy: A comparative approach. Westport, CT: Praeger.
    3.^ Case, K. & Fair, R. (2008). The principles of economics. New Saddle River, NJ: Pearson.
    4.^ http://www.eoearth.org/article/Soddy,_Frederick Soddy, Frederick – Encyclopedia of Earth
    5.^ a b DAVIS, John B. The Nature of Heterodox Economics. post-autistic economics review, issue no. 40, 1 December 2006, article 3,
    pp.23-30.
    6.^ GABRIEL, Satya J. Introduction to Heterodox Economic Theory. , June 4, 2003 Satya J. Gabriel is a Professor of Economics at Mount
    Holyoke College
    7.^ DOW, S. C. Prospects for the Progress in Heterodox Economics. Journal of the History of Economic Thought 22 (2): 157-170., 2000.
    8.^ GABRIEL, Satya J. Introduction to Heterodox Economic Theory. , June 4, 2003, Based on lecture’s notes at the author’s website. Copyright
    © 1996-2007, Satyananda J. Gabriel, Mount Holyoke College.
    9.^ GABRIEL, Satya J. Introduction to Heterodox Economic Theory. , June 4, 2003, Based on lecture’s notes at the author’s website. Copyright
    © 1996-2007, Satyananda J. Gabriel, Mount Holyoke College.
    10.^ GABRIEL, Satya J. Introduction to Heterodox Economic Theory. , June 4, 2003, Based on lecture’s notes at the author’s website.
    Copyright © 1996-2007, Satyananda J. Gabriel, Mount Holyoke College.
    11.^ Colander, D. (2007). Pluralism and Heterodox Economics: Suggestions for an “Inside the Mainstream” Heterodoxy
    12.^ Baumgarter, Stefan. (2004). Thermodynamic Models, Modeling in Ecological Economics (Ch. 18)
    13.^ Peter A. Corning 1 *, Stephen J. Kline. (2000). Thermodynamics, information and life revisited, Part II: Thermoeconomics and Control
    information Systems Research and Behavioral Science, Apr. 07, Volume 15, Issue 6 , Pages 453 – 482
    14.^ Corning, P. (2002). “Thermoeconomics – Beyond the Second Law” – source: http://www.complexsystems.org
    15.^ Cleveland, C. and Ruth, M. 1997. When, where, and by how much do biophysical limits constrain the economic process? A survey of
    Georgescu-Roegen’s contribution to ecological economics. Ecological Economics 22: 203-223.
    16.^ Daly, H. 1995. On Nicholas Georgescu-Roegen’s contributions to economics: An obituary essay. Ecological Economics 13: 149-54.
    17.^ Mayumi, K. 1995. Nicholas Georgescu-Roegen (1906-1994): an admirable epistemologist. Structural Change and Economic Dynamics 6:
    115-120.
    18.^ Mayumi,K. and Gowdy, J. M. (eds.) 1999. Bioeconomics and Sustainability: Essays in Honor of Nicholas Georgescu-Roegen. Cheltenham:
    Edward Elgar.
    19.^ Mayumi, K. 2001. The Origins of Ecological Economics: The Bioeconomics of Georgescu-Roegen. London: Routledge.
    20.^ A Companion to the History of Economic Thought (2003). Blackwell Publishing. ISBN 0631225730 p. 452
    [edit] See also
    Marc Linder, Anti-Samuelson.
    Austrian School of Economics”
    “competition: Austrian conceptions”
    Behavioural economics”
    Bioeconomics
    “biological applications of economics”
    EAEPE
    Francis Green & Petter Nore (eds.), Economics: An Anti-Text.
    The following are entries for the above from The New Palgrave: A Dictionary of Economics (1987):
    Institutional economics
    Post-Keynesian economics
    Marxian economics
    Socialist economics
    Sraffian economics
    [edit] External links
    Association for Heterodox Economics
    Brazilian Journal of Political Economy (bilingual)
    Cambridge Journal of Economics. founded in the traditions of Marx, Keynes, Kalecki, Joan Robinson and Kaldor
    Conference of Socialist Economists
    Departments of Economics With Heterodox Interests
    Dollars and Sense
    Debunking Economics
    Evolutionary Economics – John P. Birchall
    Green Economics Institute (links, aims, activities)
    Heterodox Economics Web
    The History of the Economic Thought Website
    Institutional & Behavioral Economics
    The International Journal of Development Issues, Faculty of Economics and Business, University of Sydney, Australia
    International Journal of Green Economics (publisher’s description)
    The London School of Economics at the HET website
    Post-Autistic Economics Network – heterodox economics: sanity, humanity and science – pluralism in economics
    ROBINSON: Research On Banking International and National Systems Or Networks, University of Ottawa, History of Economics Thought
    ROUSSEAU, Jean-Jacques.Page at The History of Economic Thought Website
    The Effectiveness of “Traditional” Economics in solving Current Problems… http://connect.bioneers.org/profiles/blog/create
    3 of 5 10/21/2008 10:36 AM
    STEDMAN-JONES, Gareth. Saint Simon and the liberal origins of the socialist critique of Political Economy. King’s College, Cambridge
    University
    “Teaching Heterodox Economics Concepts”, Andrew Mearman (2007) in “The Handbook for Economics Lecturers”
    Union for Radical Political Economics
    LINKS: University of Utah. Economics Dept. Heterodox Economics Student Association
    [edit] Publications on heterodox economics
    Articles
    LEE, Frederic S. “heterodox economics,” The New Palgrave Dictionary of Economics, 2008, 2nd Edition, Abstract.
    Books
    Blatt, John Markus: Dynamic Economic Systems: A Post-Keynesian Approach, Armonk, 1983, ISBN 0710802730
    COHN, Steven Mark. Reintroducing Macroeconomics: A Critical Approach. M. E. Sharpe, Inc, December 2006 ISBN 978-0-7656-1450-6
    ISBN 978-0-7656-1451-3
    DAVIS, John, editor. The Theory of the Individual in Economics: Identity and Value. Routledge, 2003 ISBN 0415202191
    FULLBROOK, Edward, editor. A Guide to What’s Wrong with Economics. London: Anthem Press, November 2004 ISBN 1843311488
    HARVEY, John T. and GARNETT JR., Robert F. Garnett, Editors. Future Directions for Heterodox Economics, Series Advances in Heterodox
    Economics, The University of Michigan Press, 2007. ISBN 978-0-472-03247-1
    LAVOIE, M. (1992) Foundations of Post-Keynesian Economic Principles, Aldershot: Edward Elgar.
    McDERMOTT, John. Economics in Real Time: A Theoretical Reconstruction, Series Advances in Heterodox Economics, The University of
    Michigan Press, 2003 ISBN 978-0-472-11357-6
    ROCHON, Louis-Philippe (1999) Credit, Money and Banking: An Alternative Post-Keynesian Approach, Cheltenham: Edward Elgar.
    ROCHON, Louis-Philippe and ROSSI, Sergio, editors. Modern Theories of Money: The Nature and Role of Money in Capitalist Economies.
    Edward Elgar Publishing, 2003 ISBN 1840647892
    Articles, conferences, papers
    COHN, Steve. Common Ground Critiques of Neoclassical Principles Texts., 2003. Knox College (Illinois).
    COLANDER, D. The Death Of Neoclassical Economics. Journal of the History of Economic Thought, 2002, 22 (3), pp. 127-43. Online
    readable, free link – Copyright JHET, All rights reserved
    LAVOIE, Marc. Do Heterodox Theories Have Anything in Common? A Post-Keynesian Point of View.
    LAWSON, Catherine & LAWSON, Larry (1990). Financial system restructuring: lessons from Veblen, Keynes, and Kalecki. Journal of
    Economic Issues 24 (1): 115-31.
    LAWSON, Tony. The nature of heterodox economics. Published by Oxford University Press on behalf of the Cambridge Political Economy
    Society, 2005, in: Cambridge Journal of Economics 2006 30(4):483-505; doi:10.1093/cje/bei093
    MINSKY, Hyman (1996). Uncertainty and the institutional structure of capitalist economies. Journal of Economic Issues 30(2):357-68.
    RANSON, Baldwin Heterodox theoretical convergence: possibility or pipe dream? (Notes and Communications)(Report). Journal of Economic
    Issues, 01-MAR-07
    SECCARECCIA, M. Early Twentieth-Century Heterodox Monetary Thought», Money, Financial Institutions, and Macroeconomics, ed. by A.J.
    Cohen, H. Hagemann and J.N. Smithin, Boston: Kluwer Academic Publishers, 1997, pp. 125-39
    Retrieved from “http://en.wikipedia.org/wiki/Heterodox_economics”
    Categories: Heterodox economics | Political economy

  • John

    Well, Matt!?

  • John

    “He criticized the focus on monetary flows in economics, arguing that real wealth was derived from the
    use of energy to transform materials into physical goods and services”

    isn’t it implied that markets reflect the real wealth of energy? though while some look ahead and see a crash the mob only reflect on the immediate (business as usual), but when the crash happens it’s too late.

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  • Hi Jeffrey,

    Thanks for the substantial comment. I am currently a bit too tied up to write anything substantial – but I will try to have a post up about your comment by the end of the week.

    Personally, I think holistic analysis provides a useful tool – however, the goal of a science must be to try and explain phenomena from the bottom up, hence the method of “mainstream” economics. I will get into more detail another time.

  • Andrew W

    More in the same vein:
    http://www.nature.com/nature/journal/v455/n7217/full/4551181a.html

    Hope you find time to get back to discussing this Matt.

    Regards

  • Indeed, hopefully I do get a chance. I will be away for a couple of weeks – so maybe after that. Definitely by Christmas.

  • “Personally, I think holistic analysis provides a useful tool”

    Sorry I completely mis-read the comment. I will make a useful comment on it in a separate post 😛

  • Ok I have got some timed posts coming up on them.

    The 4th of Nov at 2pm I will discuss Dr Doyles piece. The 5th of Nov at 2pm I will discuss the article you linked to Andrew. Feel free to leave comments but I will not be able to reply until the 17th as I will be out of the country.

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  • Tamon Ransom

    There something great inthis writing which i will find out soon.(i am a student at the universityof buea.reading banking and finance)

  • Tamon Ransom

    There is something great in this writing which i will find out soon.(i am a student at the universityof Buea Cameroon. Ireading banking and finance)

  • Tamon Ransom

    There is something great in this writing which i will find out soon.(i am a student at the universityof Buea Cameroon. Iread banking and finance)

  • Pingback: Conception of economics: Comment from Andrew W « The visible hand in economics()

  • JEFFREY M DOYLE

    Economics is not physics. The behaviour of human beings is not nearly as predictable as matter in physics [be it sub-atomic or macro.] While I understand the desire of many Economists to regard their Discipline as a deterministic, mathematically precise science, the reality is [with notable exceptions conceded] it is not a mechanistically elegant discipline like physics.

    INTERDISCIPLINARY UTILIZATION AND INTEGRATION OF PHYSICS, BIOLOGY AND ESPECIALLY THERMODYNAMICS
    INTO ECONOMIC ANALYSES, WILL GREATLY ENHANCE OUR ABILITY TO ADDRESS AND SOLVE CURRENT SOCIAL PROBLEMS–ESPECIALLY IN THE THE AREAS OF OF ENERGY AND ECOSYSTEM STABILITY

  • “The behaviour of human beings is not nearly as predictable as matter in physics”

    Indeed. However, we have to ask why – it is a result of the lack of observability of the fundamental building blocks of peoples decisions, their preferences. As we don’t have this we are just trying to come up with the best method for understanding peoples choices – given their preferences.

    As far as I can tell you are merely stating that we need to more fully map the scarcity implicit in natural resources when we analyse an issue. This is no different that the essence of the fundamental economic method but it matters when we try to apply the method.

    Lionel Robbins quote is about “economic science”, the broad method which we both seem to agree upon. You appear to believe that there are major issues that need to be included in applied work – areas where we mis-specify the very relationship we are trying to analyse. I do not disagree with that, however without some specific detail about how you aim to do this I can’t really say much about it.

  • you may be interest in my book looking at anti-capitalist economics, its been published by pluto and I have blogged the first few chapters here http://babylonandbeyond.blogspot.com/.

    I think if economists ignore Ostrom’s insights on the commons which provide an essential insight into the ‘relationship between ends and scarce means which have alternative uses’they will continue to miss something vital.

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  • Hi Derek,

    I will be sure to have a look 🙂

  • Graham Anderson

    Hi Matt,
    For many years I’ve been telling students that Robbins defined economics as, “The study of mankind in the ordinary business of life choosing between ends and scarce means that have alternative usage”. What is the source of your defintion? My research suggests that my the definition I have been used was a quote from Robbins based on Marshall’s defintion!! Best wishes.

  • Hi Graham,

    I think I nicked this definition from a methodology book somewhere along the line – I’ll have a little investigate 🙂

  • Hi again Graham,

    I found the quote in An Essay on the Nature and Significance of Economic science on page 31 (16th page of the book) of this link:

    http://64.233.169.132/search?q=cache:Rjz59BT5BzEJ:mises.org/books/robbinsessay2.pdf+Lionel+Robbins+%22An+Essay+on+the+Nature+and+Significance+of+Economic+Science%22&hl=en&ct=clnk&cd=1&gl=us

    The difference is that the definition uses “the” instead of “a” – the pdf copy of the book I have has “a” – which is where I suspect I actually got the definition from initially.