5 Elements of the Scarcity-Oriented Theory as Formulated by Robbins

If one analyses the definition of Robbins one will find the following elements.

(a) Our wants or ends are unlimited.

(b) The resources to satisfy these wants are limited.

(c) Scarce means are capable of alternative uses.

(d) Wants can be classified in order of importance.

(e) Economics is related to all kinds of activities which involve ‘choice’.

(i) Human wants or ends are unlimited:

The desire to have a commodity is called want. As there is no end to desire in man’s life, there is no end of wants in man’s life. So ends or wants are numerous. These are limitless and numberless. If one human want is satisfied another takes its place immediately. This is the basis of economic problem.

Man is said to be a bundle of wants. For example, if a student feels the want for a book, he can have it. The moment for a book is satisfied, he may feel the want for a shirt and then he may need a pair of shoes and this process goes on continuously.

Not only the want of a particular individual is unlimited but also the want of a country is also unlimited and numerous whether country is developed or undeveloped. Because of multiplicity of wants one has to choose the important wants to satisfy and the less urgent wants are either given up or postponed.

(ii) Scarce resources:

The second element which gives rise to economic problem is that resources are scarce in relation to wants. If the resources like wants were unlimited, no economic problem would have arisen because in that case all wants would have been satisfied and there would have been no problem of choosing between the wants and allocating the resources between them. Since the resources are scarce, all wants cannot be satisfied.

Therefore, human beings have to decide for the satisfaction of which wants the resources should be used and which wants should be left unfulfilled. It should be noted that means or resources here refer to natural productive resources, man-made capital goods, consumer goods, money and time available with men etc.

As the income at the disposal of an individual is limited to satisfy innumerable wants, so also the society as a whole has limited resources to undertake several economic activities like, construction of roads, railways, building, industries and providing basic services like education, health and housing to the people in a welfare state.

In view of these fundamental facts Robbins emphasized in his definition on the concept of ‘scarcity’ of resources which builds the core of his definition of economics.

(iii) Alternative uses:

These scarce means are capable of alternative uses. Every means may be money or energy can be put into alternative uses. To take an example, if a student has Rs. 300/- with him he can purchase, books, shirts, shoes and the like. But he cannot purchase all.

He has to make a decision. This decision is known as choice as to which commodity he should have and which commodity he should give up. Similarly, a nation can use its resources on different alternative like production of more agricultural commodities or industrial commodities. A choice indicates the scales of preferences.

(iv) The Ends or Wants can be graded in order of importance:

All the wants are not of same importance. Some wants are more urgent and essential in comparison to others. But wants vary in importance and they can be graded in terms of priorities or urgencies. Wants are satisfied on the basis of their importance keeping in view the availability of resources.

(v) Economics studies kinds of activities involving choice:

Economic problem arise not because of numberless wants or limited money at our disposal to satisfy them. It arises because of all our four conditions such as unlimited wants, limited means, capable of being alternative uses and wants can be graded in order of their importance. Therefore economics becomes a science of choice. This can be explained with the help of two examples.

One is the example of family and another is the example of a nation. A family or household which has got monthly income of Rs. 3000/- faces these problems of choice. The wants of the family are food, cloth, house furniture, sweets, and cinema or holiday trips.

These wants are multiple. The means Rs. 3000/- in comparison to wants are limited. The money income can be put into various uses. But does the master of the household do?

He orders or grades the wants in order of importance and tries to satisfy the most urgent wants and postpone the less urgent. He must first purchase the food and cloth. Then he can search house to live in. A cinema Ticket may be given the last importance.

An economic man is a rational man. He always tries to find out the best from the given resources. This is known as problem of economising. The problem of choice is the essence of economics.

At the national level also similar problem arise. The income of nation like that of household is limited. So a nation has to decide how much it should spend on defence and how much it should spend on development. Should it produce more of food or more of atom bomb?

Given its resources a judicious and intelligence choice has to be made so that maximum satisfaction can be achieved. This is otherwise known as exercising or making a choice. Therefore, economics is related to all kinds of behaviour involving the problems of choice.