DEFINITIONS OF ECONOMICS

In General way, economics is a social science which deals with the production, distribution and consumption of goods and services. There are a large number of economist give their different definitions. Some say that there is no requirement of definition of economics this is because economics growing continuously. But most of the economists agree with the view that defining economics is must. On the basis of these economist, the definition of economics is divided into four parts such as: 

• Wealth definition given by “ADAM SMITH”
• Welfare definition given by” MARSHALL”
• Scarcity definition given by “ROBBINS”
• Growth-oriented definition given by “SAMUELSON”

These definitions of various economists are explained with the help of features, merits and demerits as given under:

• Wealth Definition by Adam Smith

Adam Smith was an important Scottish political philosopher and economist whose famous work Wealth of Nations (1776) set the tone for work on politics and economics for many people even through today. This was, in fact, the first comprehensive effort to study the nature of capital, the development of industry and the effects of large-scale commerce in Europe. Adam Smith says “The self-interested pursuit of wealth may not be individually satisfying but leads to an aggregate increase in wealth that is in the best interests of a nation.”

Some other economists like J.S. Mill, J.B. Say, and Walker etc. also follow the wealth definition. These all economists are agreed on the point that economics is the study of production, distribution, exchange and consumption of wealth. In other way economics is the body of knowledge, which deals with the wealth. 

Definitions

Some definitions of different economists related to Economies given as under:

Adam Smith- Economics is an enquiry into the nature and causes of wealth of nation.

J.B. Say- Economics is the science which treats of wealth. 

J.S. Mill-Economics is the practical science of the production and distribution of wealth. 

Senior- The subject treated by political economics is not happiness but wealth.

• Features of Wealth Definition 

The following are the features of the wealth definition:

1. Meaning of Wealth. Wealth is the term in this definition; those material goods which are used to satisfy our wants and which are also scare. Goods are divided in parts that are material goods and non-material goods. Material goods are those which are tangible means which we can be seen and touched for example books, radio, television, mobile and paper etc. and non-material goods are those which are neither seen and nor touched for example service of a teacher, service of cell phone network and service of a doctor etc. are not treated as a wealth.

2. Economics is the Wealth Only. According to this definition economics is only the study of wealth. This definition gives first preference to the wealth and then to the study of man. It also tells about how to increase the wealth of a nation.

3. Economic Man. The user of this definition of economics are think about a man who fully know about his self-interest and who also know how to satisfy his wants this man is called economic man.

4. Causes of Wealth. This definition tells us about the ways by. which the wealth of a nation is increase, which means economic development. To increase wealth, production of material goodwill has to step up. There are two ways to increase the wealth such as (1) by increasing the demand of goods (2) by increasing the supply of goods.

•  Merits

Wealth definition is telling us about the ways by which the wealth of the nation is increase. This is the main merit of this definition, which helps in growth of economic condition of a country. It also tells about the causes by which the wealth is increase.

• Demerits 

Following are the main demerits of the wealth definition:

1. More Importance to the Wealth. This definition gives more importance to the wealth than man. This definition ignore that wealth is used to satisfy human wants not an end. Man and not wealth should have been given more importance. Wealth has been given primary and man only secondary place.
2. Neglect of Welfare. This definition not tells about the welfare of the society. It gives too much importance to the wealth. It gives no attention to the well being of the society by proper use and equal distribution of wealth.
3. Narrow Meaning of Wealth. In this definition wealth is only the tangible things and all non-tangible things such as services of a doctor, service of a professor and cell phone network service etc. have been remain outside the scope of economics. Economics is not only concerned with obtaining of wealth, its aim is the welfare of man.
4. Neglect the Problem of Scarcity. This definition not use the two main terms of economics that is scarcity and choice. In economics a problem is created because the wants are unlimited and the means, which satisfied the wants, are scarce. The problem is also arising due to the choice.
5. Individual and Social Needs are not Separated. This definition is only told about the wealth not about to the needs of the individual. It tells how to use the wealth to satisfy the need of society not about to the individual.

• Welfare Definition by Alfred Marshall 

Alfred Marshall was born in London, on26 July 1842. Professor of Political Economy at the University of Cambridge from 1885 to 1908, he was the founder of ·the Cambridge School of Economics which rose to great eminence in the 1920s and 1930s. Alfred Marshall’s magnum opus, the Principles of Economics was published in 1890. Marshall relates the definition of economics with material welfare.

Some other neoclassical economist such as Cannan, Beveridge, and Penson etc. who are also shifted the emphasis of economics from wealth to welfare. They tell about that economics is the study of human welfare. They also tell us that wealth is for human and human are not for wealth.

In the other words economics is the study of economic welfare, being described as that part of social welfare, which can be brought directly or indirectly into relation with the measuring rod of money.

• Definitions 

Some definitions of different economists related to Economics given as under:

Marshall-Economics is the 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 requited for well being.

Cannan-The aim of political economy is the explanation of general causes on which the material welfare of human being depends.

Beveridge-Economics is the study of the general methods by which men co-operate to meet their material needs.

Penson-Economics is the science of material welfare.

• Features of Welfare Definition

The following are the features of the welfare definition:

1. Economics is the Study of Man. This definition gives more importance to the man then to wealth. Wealth is a thing, which is used to satisfy the needs or wants of a man. Main objective  of economics is to study human welfare.
2. Ordinary Business of Life. According to this definition wealth earning and wealth spending is the ordinary business of life.
3. Goods for Well-being. This definition also tells us about the goods are required for well-being such as books, food, pen etc.
4. Study of Social Man. According to this definition economics study the activities of that man who are live in the society. Those men who are participating in the activities of the society are the part of this economics and those who are not participating are remaining outside the scope of economics.
5. Tell about Real Man. The men who are working for himself only are not the part of this economics. Economics is study the real man who participates in societal activates for economic and non-economic motives.
6. Science and Art. Economics is both science and art. It science because it is also a systematic study like science and art because as art is based on certain rule and laws it is also.
7. Money is the Measure of welfare. Economic welfare is the part of social welfare. It can be measured directly or indirectly with the rod of money.

• Merits

Welfare definition is more advanced than wealth definition. It tells about the human welfare and then wealth and also those things which are required for well-being. This definition is more scientific, relevant better than wealth definition.

• Criticisms of Welfare Definition 

Following are the main criticisms of the welfare definition:

1. Neoclassical economics is sometimes criticized for having a normative bias. In this view, it does not focus on explaining actual economies.
2. The focus on individuals in the economy may obscure analysis of wider long term issues, such as whether the economic system is desirable and stable on a finite planet of limited natural capital.
3. Large corporations might perhaps come closer to the neoclassical ideal of profit maximization, but this is not necessarily viewed as desirable if this comes at the expense of neglect of wider social issues.
4. Problems with making the neoclassical general equilibrium theory compatible with an economy that develops over time and includes capital goods.
5. In the opinion of some, these developments have found critical weaknesses in neoclassical economics. Economists, however, have continued to use highly mathematical models, and many equate neoclassical economics with economics, unqualified.
6. The basic theory of a downward sloping aggregate demand curve is criticized for its allegedly strong assumptions.
7. In general, allegedly overly unrealistic assumptions are one of the most common criticisms towards neoclassical economics.
8. The basic theory of production in neoclassical economics is criticized for incorrect assumptions about the rationales of producers.
9. Often at individual levels, variables such as supply and demand, which are independent, are assumed to be independent also at aggregate level. This criticism has been applied to many central theories of neoclassical economics.

• Scarcity Definition by Lionel Robbins 

Lionel Robbins was a peculiar Englishman in the economics world of the 1920s. His tools were the London School of Economics and a famous 1932 essay on economic methodology. It was his 1932 Essay on the Nature and Significance of Economic Science where Robbins made his Continental credentials clear. He redefines the scope of economics to be “the science which studies human behavior as a relationship between scarce means which have alternative uses.”

Some other economists like Scitovosky, Harvey, Stonier and Hague also gives scarcity definition of economics. They point out some criticism in the welfare definition that’s why they give there scarcity definition. In other words they say, “Economics is the study of those principles on which the resources of a community should be so regulated and administered as to secure communal ends without waste.”

• Definitions 

Some definitions of different economists related to Economics given as under:

Lionel Robbins-Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

Scitovosky-Economics is the science concerned with the administration of scarce resources.

Stonier & Hague-Economics is the fundamentally a study of scarcity and the problem which gives rise.

Harvey-Economics is the study of how men allocate their resources to provide for their wants.

• Features of Scarcity Definition

The “following are the features of the scarcity definition:

1. Wants are Unlimited. Human wants are unlimited. In economics we study the wants of human which are related to the goods and services. Though a particular want is satisfied another is created. Thus the man never satisfied all his wants.
2. Limited Resources. The resources, which are satisfied human wants, are scare means limited in amount. A man has to decide which want has to satisfy and which has to leave. Wants are greater than resources.
3. Resources have Alternative Uses. This is the third important problem of an economy that the resources are having alternative uses. For example milk is used to make a number of products such as curd, tea, butter, and cheese etc. if more is used to tea then less amount is available for other things.
4. Wants Change with Time. This means that the wants of a man is changed with time and they are never remain same. Such as want differ in urgency. Parents want food, house and all the facilities to his child but if the child sick, the want is changed to medical facility.
5. Opportunity Cost. We cannot fulfill our wants simultaneously. If we complete our one want we have left another. For example, if one have Rs- 5 but he want two things pen and food then he spend it on one thing and left another.

• Merits

The following are the merits of the scarcity definition:

1. Economics is Positive Science. According to this definition economics is a positive science. This deals with the economic activities. It is not told about the welfare.

2. Explain Economic Problem .This definition have more reasons to explain the economic problem. The economics problems are due to the limited resources, unlimited wants and alternative uses of the available resources. This definition explains more clearly about the economic problem.

3. Study Human Behaviour. This definition is study human behaviour and also about the social man. Economics study the all activities of man in the society. Economics study the behaviour of both the individual and social.

4. Universal. This definition is concerned with the universe. It related with wants and scare means of the human being in the universe.

• Criticisms of Scarcity Definition 

Following are the main criticisms of the scarcity definition:

1. 1.                           Economics is not only a value theory. According to this definition given by Robbins, economics has been concerned to the theory of value but the scope of economics is very big. It also includes the study of national income and employment also.

1. 2.                           Not use social aspects of economic activities. This definition is wrong when it holds that the activities of those who live outside the society also from the part of economics.

1. 3.                           Not obey the concept of wealth. This definition does not use the concept of wealth. It is only concerned with that to allocation of resources in such a manner by which we get maximum satisfaction. Not tell about the goods, which are required to satisfy our wants.

1. 4.                           Economics is not only a positive science. According to this definition economics is only a positive science which deals with satisfactions of our wants. Bu} economics is also a normative science.

1. 5.                           Economics is not only micro analysis. According to this definition economics is concerned with the satisfaction of individual unlimited wants with scare resources.

• Growth Oriented Definition by Samuelson 

Paul A. Samuelson has personified mainstream economics in the second half of the twentieth century. Paul Samuelson has not been unjustly considered the incarnation of the economics ‘establishment’- and as a result, has been both lauded and vilified for virtually everything right and wrong about it. Paul Samuelson’s most famous piece of work, “Foundations of Economic Analysis” (1947), one of the grand tomes that helped revive neoclassical economics and launched the era of the mathematization of economics. Samuelson was one of the progenitors of microeconomics and the Nee-Keynesian Synthesis in macroeconomics during the post-war period.

Some other modern economist like Benham, Lipsey, C. E. Ferguson etc. also give the growth oriented definition of economics. Problem of the present use of resources is mainly a problem of choice making and problem of their future growth is a problem of economic growth. Growth oriented definition is concerned with the effective allocation and use of resources so that economic growth can be increased.

Economics is the study of how, in a civilized society, one obtain a share in what other people have produced, and of how the total product of society change and is determined.

• Definitions

Some definitions of different economists related to Economics given as under:

Prof. Samuelson-Economics is tlze study of how people and society end up choosing with or without the use of money, to employ scarce productive resources that could have alternative uses, it produce various commodities over time and distributes them for consumption, now or in the future, among various persons and groups in society. It analyses cost and benefits of improving patterns of resource allocation.

Benham-Economics is the study of the factors affecting employment and standard of living.

C. E. Ferguson-Economics is the study of the economic allocation of scarce physical and human means (resources) among competing ends, an allocation that achieves a stipulated optimizing or maximizing objectives.

Porf. J.K. Mehta-Economics is a science wltich studies human behaviour as a means to reach in a situation free of wants. 

• Features of Growth-oriented Definition

The following are the features of the growth oriented definition:

1. 1.                           Resources. This definition describe about the economic resources which are used to satisfy human wants. These resources are getting by payment of some price.

1. 2.                           Allocation of Resources. Choice is the main problem of economics. Effective allocation of resources is helpful in full utilization of resources

1. 3.                           Full utilization of Resources. This definition described about the economic growth is not increase till the resources are not fully utilized.

1. 4.                           Improvement in Resources. There are some resources which can be increased by us. By increasing or improving these resources we improve our economic growth.

• Merits

The following are the merits of the growth-oriented definition:

1. 1.                             Practical in nature. These growth-oriented definitions of economics are more practical in nature than the other. These definitions help in solving the economical problems. These are also helped in making economical polices.

1. 2.                             Universally applicable. These definitions of economics are universally applied. These are related to all type of economic polices and problems of all countries such as developed  developing and underdeveloped. Unemployment, standard of living and per-capita income are the main problem of the universe. These definitions of economics are related to these areas.

1. 3.                             Solved present days problems. There are many present day problems i.e. production, distribution and consumption of economic resources, it is also solved the future problems related to these resources. It provides the ways of utilization of economic resources.

In the last the growth oriented definitions of economics are complete and advanced. Growth oriented definition is formed by combing the two other definitions i.e. Welfare definition and Scarcity definition. All the merits of these definitions are covered in the above definition. These definitions are universal, practical and dynamic in nature.

• Comparison of Marshall and Robbins Definitions of Economics 

There are many differences and similarities between the welfare (Marshall) and Scarcity (Robbins) definitions. First some differences of these definitions are given below and then similarities:

• Similarities of Marshall and Robbins Definitions of Economics

There are many similarities between the welfare (Marshall) and Scarcity (Robbins) definitions, some of them are given below:

1. Study of Man.Both Marshall’s and Robbins definitions of economics are give more stress to the study of man then the wealth. In the both definitions the man is primary and wealth is secondary function.
2. Science.Both Marshall’s and Robbins says that economics is the science.
3. Welfare. Marshall says that the objective of economics is to maximization of human welfare. Robbins says that to utilize the scare resources in such a way that are help in human welfare.