An Essay on the Nature and Significance of Economic Science

• 1. Lionel Robbins, 1932

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  "An Essay on the Nature and Significance of Economic Science" appeared in 1932, authored by Lionel Robbins. He opened with what seemed like a modest disclaimer: he was not claiming originality. His ambition was to give expository force to principles he felt were "not always clearly stated." The work would later be described as having destroyed the view classical economists held of their own science. What was the definition at the center of this argument? And what made a 158-page work of economic methodology outlast the decade in which it was written?

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• 2. The Defining Principle

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  Philip Wicksteed, Ludwig von Mises, and other Continental European economists formed the intellectual backbone of Robbins' argument. He referred to their work as providing "accepted solutions of particular problems," establishing the best modern practice he would build on. His analysis moved from those established foundations toward a more precise definition of what economics studies as a science.

  At page 15 of the 1935 edition, Robbins stated his core proposition. Economics, he wrote, is "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." The definition was structural rather than topical. It did not list domains of life that economists study. It identified a condition: wherever ends compete for means that are scarce and could be used otherwise, economics has something to say.

  At pages 16 and 17, Robbins pressed the argument further. Economics was not about certain kinds of behaviour, he wrote. It concerned "a certain aspect of behaviour, the form imposed by the influence of scarcity." At page 24, Robbins took a further step with a claim about economics' relationship to human goals.

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• 3. Neutral Between Ends

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  "Economics is entirely neutral between ends," Robbins wrote at page 24. In so far as any end depends on scarce means, he continued, it is "germane to the preoccupations of the economist." This was not a value judgment. It was a claim about scope. The economist has no special standing to rank one goal above another. Economics simply tracks the influence of scarcity on the pursuit of any goal whatsoever.

  Page 47 sharpened this by addressing wealth directly. "Wealth is not wealth because of its substantial properties," Robbins wrote. "It is wealth because it is scarce." The argument stripped away any intuitive sense that certain goods belong inherently to economics while others do not. What qualified something as economically relevant was the presence of scarcity, not the nature of the thing itself.

  The scope Robbins described at page 24 carried a constraint he developed later in the Essay. If economics cannot rank ends against one another, it cannot derive conclusions about who should benefit from economic outcomes. Robbins took up that constraint directly at pages 137 and 141.

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• 4. Science Without Judgment

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  Pages 137 and 141 contained one of the Essay's most pointed arguments, directed at a claim common in welfare economics of the period. The law of diminishing marginal utility, Robbins declared, "whether true or false, can never be verified by observation or introspection." This placed it outside the domain of confirmed scientific knowledge.

  The inference that transfers from rich to poor would increase total satisfaction was a common conclusion drawn from that law. Robbins rejected it at page 141. Such a conclusion "does not at all follow from the positive assumptions of pure theory," he wrote. He acknowledged the claim was "interesting as a development of an ethical postulate," but kept it firmly outside the scope of economics as a science.

  Page 148 stated the governing principle. Economics as a science is about "ascertainable facts," Robbins wrote, distinct from normative judgments on economic policy. What an economist can describe from given conditions is one kind of statement. What a society should do with those conditions is a different kind entirely. The demarcation Robbins drew at page 148 became a point of broad agreement among economists in the period that followed.

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• 5. Influence and Expansion

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  For the period from 1932 to 1960, the Essay ranked as one of the most-cited works on the methodology and philosophy of economics. Economists started treating Robbins' definition as generally accepted within the field. Controversy accompanied this process; the definition's entry into textbooks was not unchallenged.

  Social and "non-economic" problems proved to be the engine of the definition's expanding prominence. As economists applied their methods to domains once considered outside the discipline, the breadth of Robbins' formulation became an asset rather than a liability. A definition tied to scarcity rather than to any particular subject could travel wherever scarcity could be found.

  The broad behavioural definition the Essay advanced proved consistent with the expanding boundaries of economics in the decades that followed. By anchoring economics in a formal relationship between ends and scarce means, Robbins had narrowed the definition. By refusing to limit the subject to particular kinds of behaviour, he had left the discipline's reach open. Pages 3 and 4 had warned against the alternative. An insufficiently restrictive definition, Robbins argued there, scatters economists' efforts away from filling explanatory gaps. The precise definition he offered gave the discipline a single question to carry into every new domain it entered: is scarcity at work here?

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