New Economy rant

[Forstater, Mathew]

there are different types of scarcity. first there is absolute scarcity, meaning
exhaustible natural resources, or Van Gogh originals.  then there is relative
scarcity, but there are different conceptions of relative scarcity, because
there is always the question of relative to what? neoclassical scarcity is
relative to 'unlimited wants' so you get finite resources vs. infinite wants,
thus decisions have to be made about 'allocating scarce resources among
competing uses', opportunity cost, blah blah blah. one could conceive of
different kinds of relative scarcity, relative to basic needs, for example. But
we know that famines and the like are almost never due to real scarcity, but to
politics and distributional conflicts.  of course 'scarcity' is one of these
very elastic words--so you can speak of a 'scarcity of aggregate demand,' even
though the idea of deficiencies in effective demand is usually associated with a
view that is contra the usual neoclassical 'scarcity' conception of scarce
resources.  the keynesian insight was that with unemployment, resources are not
scarce, there is no opportunity cost to employing unemployed resources.  in the
classics, there is an assymetrical view of the sectors in a capitalist economy,
with manufacturing exhibiting increasing returns and various kinds of economies,
and agriculture and mining sectors characterized by diminishing returns. in the
neoclassical story, it's all collapsed into one u-shaped cost curve, with
confusions about scale vs. substitution (proportions).
the revival of the classics and marx and the increasing ecological concern has
challenged the neoclassical view.

-----Original Message-----
From: Doug Henwood [mailto:dhenwood at panix.com]
Sent: Monday, September 25, 2000 11:42 AM
To: lbo-talk at lists.panix.com
Subject: Re: New Economy rant

Charles Brown wrote:


>CB: Doug, isn't scarcity neo-classical, not Marxist ?

Scarcity is in large part a construct of capitalism. The New Econ 
types sometimes sound as if it's already been abolished under 
capitalism.

Doug