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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ADAM SMITH ‘S DEFINITION OF ECONOMICS

ADAM SMITH ‘S DEFINITION OF ECONOMICS

         Adam smith wrote a book in 1776 entitle “The wealth of Nation” in this book he discussed the word “WEALTH” through its four aspects  i.e.  production of wealth.exchange of wealth, distribution of  and consumption of wealth. This clearly means that, according to Adam smith, Economics is a science of wealth.

          To analyze this definition we will diacuss the word “Wealth” and its four aspects. Wealth means goods and services transacted with the help of money, it is a matter of common observation that the transaction of goods and services  (wealth) takes place in our day-to-day life. But the question is : Why and how is the transaction of goods and services taking place?  To know the answer of this question we are require d to look into four aspect of wealth.

(1) PRODUCTION OF WEALTH: This means the production of goods and services by combining four factors of production  i.e. land, labour, capital, organization or entrepreneurship. Land is the natural resource such as soil, sea, minerals, livestock, forests etc  labour is a mental or physical work which is done for  the sake of reward . capital means manmade resources which help to produce goods and services. Whereas organization is the act of combining four factors of production to producing and marketing of the goods and services for the  sake of profit hence. Production of wealth means production of goods and services.

(2) EXCHANGE OF WEALTH: Entrepreneurs usually produce more goods and services than their own requirement s. Why do they do so?  Simply to get  their surplus produce exchanged in the market with the surplus goods and services produced by others. The process of exchanging of wealth continues throughout the year and as a result people get the goods and  services produced for each other. This enables everyone in the society to satisfy his multiple wants.

(3) DISTRIBUTION OF WEALTH: As a result of exchange of wealth in a country whatever falls to the lot of each individual or a section of society is called his or its share in the national wealth produced in a year. If the share of certain section of a society in the national wealth is bigger than that of other this will be the unequal distribution of wealth in a country. If all section of the society are enjoying  all goods and services being  produced in the country it will be fair and equal distribution of wealth.

(4) CONSUMPTION OF WEALTH: The ultimate objective of production, exchange and distribution is the consumption of wealth.  When people get their share from the national product they use it to satisfy their wants hence , the using up of the utility of goods and services for the satisfaction of wants  is known as the consumption of wealth .

     Thus, from the above explanation of wealth and its four aspect, it becomes clear that services available to the society. Beside this he also explain as to why and how wealth is produced, exchanged, distributed and consumed.

CRITISM ON THE DEFINITION

              During the late 18^th  century religious sentiments of the people were very strong and spiritual values held sway over man’s mind therefore. It was difficult for them to accept economies as a science which teaches materialism. They raised hue and cry against it. Especially the two men of letter. Carlyle and Ruskin , condemned it. They said that economics as a science of materialism is just  “a science of bread and butter”. They also termed economics as a” dismal science” as, according to them it promotes selfishness and greed. They thought that if economics was thought. The science of materialism will take mankind away from spiritualism. Hence, Carlyle even went to the extent of saying that economics is “a pig philosophy “   the  two literary figures therefore held that spiritual values as love. Sincerity , sacrifice, friendship, brotherhood, etc,  be promoted through religious in place of materialism being taught in economics.

             Regardless of what critics had been saying about Economics, the criticism was not justifiable at all. The reason is that they saw only the negative side of the picture, since everything has its pro’s and con’s and economics is no exception to it. However, gradually people discovered through observation and experiments that economics helps them to eliminate poverty. Raises their standard of living and turns them human beings. Hence , they soon realized material that wealth plays a vital role in their life.

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