This article discusses the definition of economics given by different economists like Adam Smith, Alfred Marshall, and Lionel Robbins. The term Economics is derived from the Greek word Oikonomik which refers to ‘household management’. The concept of economics was brought in the earlier period by Aristotle, and the Indian philosopher Kautilya in 400 BC (Approximately), but the detailed study of economics had been started in the 18th century.
Definition of Economics by Adam Smith
Adam Smith wrote a book named ‘An inquiry into the nature and causes of wealth of nation’ in 1776 and defined economics as the science of wealth of nation. Since then the study of economics as a separate had been started. That is why Adam smith is called the father of economics.
According to Adam Smith, economics enquires into the nature and causes of the wealth of nation and it studies about the economic man whose major objective is to earn and make wealth.
Key Points of Adam Smith’s Definition of Economics
Economists like David Ricardo, J.B. Say, J.S. Mill had supported the Adam Smith’s view point. His definition has following key points:
- Study of Wealth
Economics studies about the wealth. - Priority of Wealth
Economics deals with wealth at first. - Study of Economic Activities
Economics studies about those man who is involved only in earning money. - Investigation of Causes of Wealth
Economics investigate the ways to increase wealth of nation. - Employed Labor is the Source of Wealth
Criticisms of Adam Smith’s Economics Definition
Economists like Raskin, William Morris have criticized the wealth of nation definition of Adam Smith. They have pointed out the following downsides of this definition
- Narrow meaning of wealth
Adam Smith considered only the materials things as wealth but there is also existence of non-material things - Too much emphasis on wealth
Wealth is for man but man is not for wealth - Assumption of economic man
It is impossible to find such man who thinks only about wealth and money. - Negligence of economic welfare
He had only focused on wealth but economic welfare is also a subject matter of economics.
Definition of Economics by Alfred Marshall
In the 19th century, neo-classical economists criticized the classical definition and put forward a new definition. Alfred Marshall is the main neo-classical economists.
He wrote a book named Principles of Economics in 1890 and defined economics as a study of mankind in the ordinary business of life, which examines part of individual and social action which is mostly connected with the attainment and with the use of the material requisites of well being.
Key Points of Marshall’s Economics Definition
The key features of his definition of economics can be stated as follows:
- Consideration of Economics as a Social Science : Economics studies the needs, expenditure, and desire of all human beings.
- Study of material welfare: Welfare can be gained from material or non-material objects but economics studies about material welfare only.
- Less Priority to Wealth
- Study of Ordinary and Social Human
Criticisms of Marshall’s Definition
His definition was criticized during the mid of 20th century by some economists, Lionel Robbins was also one of them. Lionel Robbins has pointed following downsides on Marshall’s Economic concept:
- Unclear definition of material and non-material welfare
- All welfare cannot be quantitatively measured
- Study of only social human beings, human beings beyond society are also part of economics.
- Ignorance of barter economy.
Definition of Economics by Lionel Robbins
Lionel Robbins wrote a book named as ‘Nature and Significance of Economic Science’ in 1932 and defined that economics is a science which studies human behavior as a relationship between ends and means which have alternative users. He has focused mainly in following dimensions:
Means are scarce: Resources available to fulfill human needs are limited. Therefore, this definition is also known as scarcity definition of economics.
Unlimited wants: Human is never fully satisfied and all the desire can not be fulfilled at once.
Resources are capable of alternative application: Resources are scarce but can be use in many alternatives. For example, If A has Rs. 100, he can use this money either for buying book or buying ticket.
Criticism of Robbins’s Definition
Even though, Robbins’s definition is far better and contextual than classical and neo-classical economists, it has been criticized as follows by economists like Barbara Wooteen.
- Scarcity is not the only one problem of economics.
- Ignorance of economic growth and production.
- It is incomplete because he did not mention about unemployment, production, and consumption.
Comparison Between Marshall’s and Robbins’s Definition of Economics
Although two theories came in different time but they have some similarities because both the theories contributed to define economics. While comparing these two theories, following similarities can be seen in the both definitions:
- Both have focused on Rational Man.
- Wealth/material and scarce means are similar concept.
- Both have given priority toward study of man.
Along with some similarities following dissimilarities are identified.
There are mainly two dissimilarities between the definition of two economists.
- Marshall focused on economic activities related to material welfare, whereas Robbins focused on the activities related to scarce means.
- Marshall said that economics studies about social man, whereas Robbins said that economics studies about all human being.
Conclusion
These three definitions are major definitions of economics, but there has not been clearly identified any universal definition of economics. Economists have been publish their book and contributing to upgrade the scope of economics since the starting point of time.
Overall, economics is such a field of study which deals with economic activities and problems of human, society, and Government.
See Also: Problems of Industries in Nepal
FAQ
What is best definition of economics?
Economics is the study of scarce resources and its implications to produce goods, to fulfill needs, and to enhance welfare oh human being.
Why Is Adam Smith Called the Father of Economics?
Adam Smith is called the father of economics for his contribution on capitalism, free markets, and supply and demand theories.
Economics definition for students ?
For economics class 11 and 12 students, three major definitions given by Adam Smith, Alfred Marshall, and Lionel Robbins are suggested to read. In sum up, economics deals with the economic activities done for the fulfillment of needs and desire by allocating scarce resource with priority.
Types of Economics?
Economics can be classified in many ways. For the basic classification there are two types of economics: Microeconomics, and Macroeconomics.
