Saturday, 5 January 2013

ALFRED MARSHALL’S DEFINITION OF ECONOMICS


ALFRED MARSHALL’S DEFINITION OF ECONOMICS

                   Marshall is a well-known economist. He was behind Smith and for him all the way, approximantely hundred twenty years after Smith’s book on Economics. Alfred Marshall wrote a book in Cambridge which was entitled “PRINCIPALES OF ECONOMICS”.
In this book, Marshall defined Economics as an instrument to remove the doubts of the people regarding the subject.

            Marshall stated , “Economics is the study of mankind in the ordinary business of life; it examines that part of individual and social Action which is most is closely connected with the attainment and use of the material requisites of well-being”
From the definition, we able to achieve three main points:
(i) Ordinary business of life or Economics as a social science.
(ii) Attainment and use of material requisites or production and consumption of wealth.
(iii) Well-being or welfare of the society.


(i) ORDINARY BUSINESS OF LIFE OR ECONOMICS AS A SOCIAL SCIENCE:
            According to Marshall, Economics is studies the economic behavior of the people living in the society. Economic activities of the people outside the society are not, therefore, considered in the study of economics. Hence Economics does not study the isolated individuals or any “Robinson Crusoe”. By thie he show that economics is asocial science.


(ii) ATTAINMENT AND USE OF MATERIAL REQUISITES OR PRODUCTION AND CONSUMPTION OF WEALTH:
        In the ordinary business of life, human beings perform different types of activities such as political activities , sports, economic activities , moral and religious activities, of all these activities of ordinary life, Economics Studies only those activities which are related with the attainment and use of material  requisites or in other words, the production and consumption of wealth. So far he is of the same view as that of Adam smith that Economics is a science of wealth.


(iii) WELL BEING OR WELFARE OF THE SOCIETY:
         According to Marshall, the objective of the study of Economics is to promote the material welfare of the people, to Marshall. Economics focusses on only material aspects of life and therefore studies material requisites well-being. Hence, according to him economics does not regard wealth to be the goal of all human activities. Instead, it is only a mean to achieve an end and that end is the economic welfare of the people or the raising up of the standard of living of the people, Particularly of the poor, So that they may lead a better economic life.


CRITICISM ON MARSHALL’S DDFINITION

        In 1931, another economists, Loinel Robbins, wrote a book entitled “NATURE AND SIGNIFICANCE OF ECONOMIC SCIENCE” In this book he criticized Marshall on the following grounds,

   (1) THE DEFINITION NAROWS THE SCOPE OF ECONOMICS: The use of the word “Material” by Marshall narrows the scope of economics as well need both the material and non-material requisites of life i.e. goods and services.
      The need for non-material requisites is certainly over-whelming , Examples of the nonmaterial requisites are the service of lawyers , teachers and doctors etc, these non-material requisites satisfy our wants in the same way as material requisites (or goods) and if we exclude them from the study of economics, the scope of economics would certainly be restricted.

(2)  WELL BEING IS A NONMEASURABLE CONCEPT: True enough in its meaning one cannot measure “wellbeing”. It is something that cannot be estimated to figures , although it can be stated in theories. Thus, according to Robbins, well-being cannot be measured as stated by Marshall.


(3) ECONOMICS SHOULD NOT PASS VALUE JUDGEMENT: According to Robbins, Economics should emphasize only on human and their satisfaction and, therefore it is not concerned with whether these wants are being satisfied buy good things or bad things. For example, human beings needs food clothing and shelter and they are essentially required to be provided, but as far as wants for alcoholic drinks, cigarettes and gambling are concerned, they are also required to be satisfied according to Robbins as people are ready to pay for them  disregarding the welfare aspect of these things, thus what Robbins is trying, is “just satisfy wants and don’t bother whether they are for the better or the worse”

(4) IT CREATES PROBLEMS FOR POLICY MAKING: According to Marshal, the study of economics should be directed to pursue the concept of welfare, but Robbins objects to this point of view on the ground that the concept of welfare would place the government in a vulnerable position in the making of economic policies, For example , some people may object to the production of alcohol and cigarettes on the ground that these things retard welfare, but other might say that they want these things for the satisfaction of their wants and are ready to pay for them. Thus the question of liking of some production on the basis of welfare will create problem for the government in the farming of economics policies.

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