Posts Tagged ‘Scarcity and Choice in Mainstream Economics’

Scarcity and Choice in Mainstream Economics

Tuesday, April 6th, 2021

Scarcity and Choice in Mainstream Economics

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Picture a situation where the head of a company comes into the office with an assortment of goodies and asks each to take goodies as they please until they’re over. On the contrary, visualize a situation in the street where a lorry full of unregistered money breaks down. All the money within the lorry pours onto a crowded street while people were going on their day, searching for money. According to Stilwell (2019), the mainstream economist emphasizes the presence and continued existence of rational actors within the world of trade-offs. This perspective implies that people are motivated to conduct business for the good of their self-interest and self motivations.
In mainstream economics, government actors’ role is downplayed in favor of the rationality of the individual economic entity/ actor. In a world of rationality, the company’s head will see the first person who gets to access the goodies take them all, and the rest will have to wait on his good mercies. A similar situation will be seen in the streets. As soon as the lorry overturns, hordes of people will clamor and fight for the last cent on the street with everyone seeking to take off as much as they can as this is free money, and they have their self-interest to fulfill. But this may not be the case, especially for the first scenario.
The social value system and respect for the head of the company may see the first employee-only take a single goodies unit. This unsaid rule will reign throughout the office. Even the last person in the office line up might get the goodies. This is because the company head acts as an unofficial regulator. His presence gives off an energy of respect. The authority bestowed on him will provoke everyone else to maintain cordial interaction with the goodies, in, in the full knowledge that the goods are scarce, and ability to choose as they are an assortment. They will refrain from taking much. They will also have to establish which of the choices is the best and critically choose to forgo one good over the other for the benefit it will bring to them. This is where political economists come in. They believe in power of regulation of the market so that all actors can access the market place. This is in full knowledge that the availability of goods is scarce as resources are finite. They would also have to make a choice about what resources in their scarcity should be shared and in opportunity costs, people will have to make critical decisions on what to forgo and what to capitalize on.
Mainstream economists believe in rationality, which will be in favor of self interest and as such, always socially unconscious or lack of acknowledgement that most aspects in the economy may need regulatory frameworks. In the above example, lack of a regulatory identity in the streets when the lorry full of money overturn will not restrict self interest, and most people will have to take as much money as they need or they can without shame or fear of social repercussion. In the office, this behavior may be termed as greed and will likely affect how the head of the company sees the employee. As Martins (2011) indicates, political economists identify the need for a figure of regulation (head of the company), while mainstream economists identify that people will act rationally and choose their self interest in the process.

References
Martins, N. (2011). The revival of classical political economy and the Cambridge tradition: from scarcity theory to surplus theory. Review of Political Economy, 23(1), 111-131.
Stilwell, F. (2019). From economics to political economy: Contradictions, challenge, and change. American Journal of Economics and Sociology, 78(1), 35-62.