The Political Economy of Opulence

Abstract

“Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” Lionel Robbins' well-known definition of their subject is one which most economists would probably accept, at least as a description of their workaday activities. The definition allows—and it was specifically framed by its author to allow—for the pursuit of other ends than purely material ends; but in practice economists devote themselves predominantly to the study of the allocation of material means between ends conceived and defined in material terms. Inherent in the way economists set about their task is the implicit assumption that material means are scarce and material wants are pressing—in short that economic society is materially poor, and resources must not be wasted. This assumption permeates the theoretical apparatus of the subject; it also directs what economists have to say about economic policy. In the debate which has been going on over the general problem of inflation, for example, economists have been divided between those who stress the loss of production and potential growth of output that results from anything less than full employment of labour, and those who stress the loss of production and potential growth of output that results from the misallocation of resources brought about by inflation. Again, in making comparisons between the Russian and Western economic systems, economists have generally tended to accept as their standard of performance the rate of growth of output per head, a standard which gives away most of the positive points on the Western side. In both cases, the adoption of the output standard implicitly assumes that the economic problem is of prime importance.

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