Friday, March 25, 2011

Definition of Economics

If we want to define anything we must find out the class and group to which it belongs. Then we shall find out its distinguishing quality.

It is very difficult to give a definition of economics. Because economists are not of the same opinion as to the class to which it belongs and a special quality possessed by economics. As a result of this, in different periods of time, different definitions have been given about economics.

Examples of definitions of economics.

1. Adam Smith - 1776

In 1776 Mr. Adam Smith published his book, "An Enquiry into the Causes of Nations", and tried to give a definition of economics as a "Science of Wealth".

An object may be regarded as wealth if it possesses the following qualities.

a) Utility
b) Scarcity
c) Externality
d) Transferability

2) In 1890 Mr. Alfred Marshall published his book "Principles of Economics" and in this book he gave the definition of economics as,

"The study of mankind in the ordinary business of life."

According to Mr. Marshall economics deals only with those activities of man, which can be regarded as business activities. Economics does not deal either with the body or the mind of man.

3) Lionel Robbins - 1931

In 1931 Mr. Robbins published his book "The Nature and Significance of Economic Science".

In this book he defined economics as "a science, which deals with human behaviour as a relationship between ends and scarce means which have alternative uses."

If we analyze this definition we can point out the following features of economics.

1. Science : According to Mr. Robbins, economics is a science because the knowledge of economics is a systematic knowledge.

2. Human behaviour : This science of economics deals with the behaviour of man. In other words, it deals with the activities of man.

3. Ends : Economics deals only with those activities of man through which man tries to satisfy his economic wants.

The three fundamental economic wants of man are

a) Food
b) Clothing
c) Shelter

4. Means : In order to satisfy the economic wants, man uses the means available in the society. But these means are scarce. They are limited in supply.

From the above we find out that the fundamental ends of human activities is the satisfaction of economic wants.

5. Alternative uses : The means by which man tries to satisfy his economic wants are not only limited in supply but also have alternative uses.
Because of the alternative uses, there is a need of choice. Man must make the choice of the best use of the available resources. Hence choice is one of the fundamental problems of economics.

Criticism of Mr. Lionel Robbins' definition

This definition has been criticized by many modern economists on the following grounds.

1. According to Mr. Robbins, economics is a science. But according to the critics economics cannot be regarded only as a science. Because in that case we shall be missing the human touch that exists in economics.

2. According to Mr. Robbins economics deals with the problem of choice. But according to the critics every choice made by man cannot come within the scope of economics. The choice must have an effect on the society of man.

3. According to Mr. Robbins economics deals with the problem of scarcity. But according to the critics all the problems of economics are not the problems of scarcity.

4. The definition of economics does not include the other aspects of economics, such as welfare of man, determination of employment and income in the society and the stability and growth of the economy.

Conclusion : Though there are some criticisms against this definition, this definition is one of the most popular definitions of economics. Even today many economists are trying to define economics along the line of scarcity. Even Mr. Samuelson has also defined economics on the line of Mr. Robbins.

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