Man lives in a society and has to perform certain activities to fulfill his wants. Out of these activities, economics deals with the economic activities of a man in society. Economic activities are those activities, which concerned with the efficient use of scarce resources, which can satisfy human wants. Production, consumption, exchange, distribution, etc are the main economic activities. Thus, economics is concerned with man’s wants and his efforts to satisfy his wants.
The history of economics is as old as the history of mankind. The start of economics took place with Plato and Aristotle in 400 B.C. According to great Greek Philosopher Aristotle, economics is the science of household management and an art of wealth-getting and wealth-spending.
What is economics?
A definition gives the concise meaning and essence of a thing or subject. Economics is a dynamic subject. Therefore, it is not an easy task to provide a single and accurate definition of economics. In fact, economics is an unfinished science and is always in the socio-economic conditions. Here we can get several definitions by several economists. There is famous statements by Mrs. Barbara Wooten, “Whenever six economists are gathered, her are seven opinions.”
For the sake of simplicity, several definitions of economics can be divided into four parts.
1. Wealth definitions or Classical definitions.
2. Welfare definitions or Neo-classical definitions.
3. Scarcity definitions or Modern definitions.
4. Growth definitions or recent definitions.
1. Wealth definition
Adam Smith was the first economist to present a systematic analysis of economics. Therefore, he is regarded as the “father of Economics”. In this famous book “An Enquiry into the Nature and Causes of the Wealth of Nations” published in 1776, Smith defined economics as a science of wealth. From 1776 to 1850, several great economists such as J.B. Say, David Ricardo, T.R. Malthus, J.S Mill, etc. had fully supported and followed the economic ideas of Adam Smith. So, they are called ‘classical economists’. They were of the view that economics is concerned with production, consumption, exchange and distribution of wealth. Some important definitions are as follows:
According to Adam Smith, “Economics is an enquiry into the nature and causes of the wealth of Nations.”
In the words of J.S Mill, “Economics is the practical science of production and distribution of wealth.”
According to J.B. Say, “Economics is the body of knowledge which relates to wealth.”
Characteristics of Wealth Definition
1. Study of wealth,
2. Secondary place to the study of man,
3. Meaning of wealth,
4. Study of economic man,
5. Investigation of the causes of wealth.
2. Welfare Definition
Alfred Marshall, an eminent English economist, recognized the incompleteness of the earlier definition of economics and brought about a fundamental change in it. According to him, economics is, on the one side, a study of man. Marshall’s “Principle of Economics” Published in 1890 he defined economics as a subject concerned with those activities which promote the material welfare of mankind. Many economists such as A.C. Pigou, Cannon, Beveridge, etc supported this view. An opinion of different scholars is given below:
According to A. Marshall, “Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being.”
According to Pigou, “Economics deals with that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money.”
In the words of Cannon, “Economics is the study of material welfare.”
Characteristics of Welfare Definition
1. Primary concern,
2. Study of ordinary man,
3. Study of material welfare,
4. Social science,
5. Normative science.
3. Scarcity Definition
Professor Lionel Robbins of London School of Economics, in his book, “An Essay on the Nature and Significance of Economic Science”, published in 1932 gave a more exact and precise definition of economics. He defined economics entirely in terms of scarcity of means. Economists like Karl Manger, Peter, Stigler, etc. supported the view of Robbins. Opinions of different economists are as follows;
According to Robbins, “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”
In the words of Stigler, “Economics is the study of principles governing the allocation of scarce means among competing ends when the objective of allocation is to maximize the attainment of the ends.”
According to Scitovosky, “Economics is a science concerned with the administration of scarce resources.”
Characteristics of Scarcity Definition
1. Unlimited ends,
2. Scarce means,
3. Alternative uses of means,
4. Wants differ in urgency,
5. Problem of choice
Criticism of Wealth Definition
This definition has been criticized by many writers such as Ruskin, Carlyle, Bailey, Morris, etc. They have characterized it as a 'Bastard Science' or 'Dismal Science' or 'Bread and Butter Science' or 'Gospel of Mammon'.The main criticisms are as under:
1. Narrow meaning of wealth,
2. Undue importance to wealth,
3. Unrealistic concept of economic man,
4. Narrow subject matter of economics,
5. Neglect of economics welfare.
However, the importance of this definition is that they have provided a unique place to economics.They could distinguish economics from other social sciences such as political science,ethics,etc. It was only with the publication of Adam Smiths book,'The Wealth of Nations'that economics could develop as an independent and important economic discipline.
Criticism of Welfare Definition
This definition of economics has been strongly criticized by Robbins on the following grounds:
1. Difficults to separate material and non-material things,
2. Connection between economics and welfare,
3. Welfare cannot be quantitatively measured,
4. A social science,
5. Confusion between ordinary and extra ordinary business of life
Criticism of Scarcity Definition
Several economists like Boulding, Fraser, Durbin, Beveridge, Wootton, etc.have strongly criticized Robbins' definition of economics on the following grounds:
1. Hidden concepts of welfare,
2. Even abundance may create economic problems,
4. Economics not only a positive science,
5. Incomplete definition.
However, Ribbins' definition is analytical, scientific and universally applicable.His definition, with minor changes here and there forms the basis of all other definitions of economics that has been given since Prof.Robbins gave his definition.