Lecture 10: The Normative Foundations of Scarcity

Economics is considered to be a "positive" science. It deals with facts, not with opinions or value judgments. This is not true. In fact, many value judgments are buried within the framework of economic theory. In this essay we show that the concept of scarcity, which is the foundation of economics, is actually a normative concept.

The elevation of scarcity to the fundamental economic problem rests on some unstated normative assumptions. These include a political commitment to private property, a methodological commitment to not inquire about taste formation, and the idea that human welfare is roughly equivalent to preference satisfaction. The problem arises because current methodology is based on certain positivist principles, and needs revision in light of subsequent collapse of positivism.