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Over the years I have been engaged in community development work. It never dawned to me to further investigate the correlation of mainstream economics and the politics of the day, but economic injustices such as accumulation of wealth at the expense of others have pushed me to put my arguments forward. Allow me to use the following discussion to put forward my insights to demonstrate that the dominant economic ideology on scarcity of resources is not true.
Mainstream economics is defined by Davies et al. (1996) as a study of ways in which people make the best use of scarce resources. Robbins (1932) defined economics as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. In my understanding it means making priorities on limited resources to achieve the best results. I do not agree that resources are scarce because this economic system was born out of capitalism which is based on accumulation of wealth. This free market economy leads to few people to control means of production and as result have a skewed distribution of resources. Smith (1776) disagrees with scarcity, he sees the unregulated market as an impractical ideal that puts the concepts of freedom and anti-protectionism at the service of vested wealthy interests, allowing the rich to attack labor laws and other protections of the working classes.
I agree with the above postulation because if the market is left to regulate itself it creates artificial shortages (speculative tendencies) in order to maximize on demand of commodities. Wages will be diminishing or stagnant whilst profits are increasing for the owners which create class divisions, those with power over and wealth and the powerless who are in need. Galbraith (1970) raises an interesting argument that firms continue to expand the system of needs by telling consumers to expand bundle of goods to be happy through advertising created by the owners. This leads to high consumption of commodities and promoting artificial scarcity. This system to me makes it very difficult to have an egalitarian society which is an aspiration of the masses. Karl Marx points out that people today in a capitalist society are enslaved by the very things capitalism produces (like toys and entertainment), which keeps them from seeing that capitalists take all the money. This means that this ideology occupies the mind of the people through persuasion by ideological structures i.e. media and societal norms.
In contrast to the above postulations neoclassical economists argue that human beings have infinite needs, where nature provides them with finite quality of resources one day they will diminish. This means that resources are scarce because human beings have unending needs. It is further augmented by submissions that scarcity is part of human conditions rather than a product of today`s wealth society. However there is no enough empirical evidence for me to agree with this, besides assumptions and assertions on natural resources depletion i.e. that the next World War will be on water for example journalist Solomon (n.d.) argues that water is surpassing oil as the world’s scarcest critical resource. In order to give credence on scarcity of resources neoclassical economists have created a notion that the market has “an invisible hand “that allocates scarce resources among compelling ends by adjusting prices so that supply and demand are balanced. This means that market forces regulate themselves to minimize competition for scarce resources. Let me point out that there is nowhere in the book where Adam Smith spoke about the invisible hand of the market. It is a creation of neoliberal and neoclassical economists to support uneven scale of resource allocation (capitalism), the invisible hand is not there at all (Stilgitz, 2002) and (Smith, 1776).
This modern capitalist system originated in the 14th century due to conflicts between the land-owners, agricultural producers and the serfs after the collapse of slavery. It is premised on the accumulation of wealth by owning means of production which are land which gives rent, capital for profits, labor for wages and entrepreneurship for profits. The accumulation of wealth led to high production of goods and services which resulted in massive economic growth. This system gave rise to new innovation to introduce new ways of calculating and tabulating economic growth i.e. GDP and GNP. Gross Domestic Product (GDP) is defined by Brezina (2012) as the monetary value of goods and services produced in a nation during a given time period, usually within a year. Wikipedia defines Gross National Product (GNP) as the market value of all products and services produced in one year including remittances or business establishments beyond the borders. To me these are myopic and flawed indicators of development because they pay attention to work done in exchange of monetary value ignoring reproductive work done by a marginalized class of people for example women in the society. This means it deems the services provided free by family and community. It ignores informal economy, corruption, rule of law, and the natural environment as of no value because they are un-priced and lie outside the mainstream market economy.
This system has manifested itself as capitalism ideology. The free market economy is a market where the price of a good or service is determined by supply and demand, rather than by governmental regulation, has led to hegemony of classes in the society by owners of the means of production. The society has three classes (high income – owners, middle income – mangers and low income- peasants and workers). This is a result of cliché of industrial owners who influence decision making at political and ideological structures. These mighty institutions as indicated by Gramsci`s Dynamic model, a tool that shows how overtime structures of society operate and interact, is created by political structures to force the powerless and peasants to accept the whims of the powerful. It is a conception of hegemony that is an ever-evolving set of political, economic, ideological, and cultural processes by which the dominant social sectors elicit consent from the popular sectors (Hope and Timmel, 1984) and (Hall et al., 1986). The two summations conclude that these are forces that use persuasion and force to make peasants and marginalized groups to cow to the capitalistic economic ideology. Gramsci (n.d.) supports this summation by postulating that man is not ruled by force alone, but also by ideas, as observed by Marx who says the ruling ideas of age have ever been the ideas of its ruling class. This means that gate keepers or leaders are controlled by owners who have money to influence these economic ideas that create an unequal distribution of wealth. The model also shows us that owners of corporations are not usually present in countries where they have investment interests.
These dynamics in decision making on reproduction, production, consumption and distribution are called political economy which explains how political institutions and the economic system—capitalist, socialist or mixed influence each other as well as income distribution. This means the study of the relationship between mainstream economics and existing political structures. It helps us to understand policies and forces that influence income distribution in an economy to ascertain whether it improves the well being of the people or not. To me it is an alternative which helps to understand the influence of power in resource allocation to my community and country. In contrast to mainstream economics which focuses on quantitative indicators of economic growth whilst political economy considers qualitative indicators of human development in relation to policies promulgated by political structures.
The qualitative indicators are defined as alternatives to measure economic development and social indicators. These help in policy planning and making of decisions. These are the Human development index, genuine progress indicator and quality of life indicators. The Human Development Index (HDI) is a composite index measuring average achievement in three basic dimensions of human development based on education, longevity (life expectancy) and standard of living. This means to measure significant improvement of people`s lives in order to determine whether economic growth trickles down to the poor. Genuine Progress Indicator (GPI) is concerned with resource depletion, pollution, long term environmental management, damage, housework and non market transactions” (Cavanagh et al, 2002, p203). The quality of life indicator looks at health, family life, community life, political freedom and gender equity. These three help us to understand whether decisions made by the powerful ruling elites benefit the poor.
It is my humble conclusion that resources are not scarce but the scarcity is a result of a dominant free market ideology, which is perpetuated by dominant political structures and ideological structures.