Normative Foundations of Scarcity

In the early twentieth century, under the influence of logical positivism, Lionel Robbins changed the definition and the central concern of economics. Abandoning "material welfare" as unobservable and hence unscientific, scarcity was made the new foundation of the discipline. Despite apparent objectivity, this concept embed three major normative assumptions, as this paper shows. The first of these is the "exogeneity" of tastes, which prevents examination of how capitalism shapes tastes to sustain overproduction, while staying within discipline boundaries. The second is the assumption that human welfare is maximized by preference satisfaction - people always choose what is best for them. This justifies libertarian and laissez-fair economics, but empirical results from behavioral economics show frequent violations - people often make choices which harm their welfare. The third assumption is a Lockean commitment to private property. This means that one cannot contemplate redistributive policies which would improve collective welfare. The message is that these normative commitments are concealed within the methodological framework, while claims of objectivity and value-neutrality are made for the discipline.