OMTEX CLASSES: Wealth Definition & Welfare Definition & Scarcity Definition

Wealth Definition & Welfare Definition & Scarcity Definition

Wealth Definition

The early economists like J.E. Cairnes, J.B.Say, and F.A.Walker have defined economics as a science of wealth. Adam Smith, who is also regarded as father of economics, stated that economics is a science concerned with the nature and causes of wealth of nations. That is, economics deal with the question as to how to acquire more and more wealth by a nation. J.S.Mill opined that it is the practical science dealing with the production and distribution of wealth. The American economist F.A.Walker says that economics is that body of knowledge, which relates to wealth. Thus, all these definitions relate to wealth.

However, the above definitions have been criticized on various grounds. As a result, economists like Marshall, Robbins and Samuelson have put forward more comprehensive and scientific definitions. Emphasis has been gradually shifted from wealth to man. As Marshall puts, it is “on the one side a study of wealth; and on the other, and more important side, a part of the study of man.”

Welfare Definition

Thus according to Marshall, economics not only analysis the aspect of how to acquire wealth but also how to utilize this wealth for obtaining material gains of human life. In fact, wealth has no meaning in itself unless it is used to purchase all those things which are required for our sustenance as well as for the comforts necessary for life. Marshall, thus, opined that wealth is a means to achieve certain ends.

In other words, economics is not a science of wealth but a science of man primarily. It may be called as the science which studies human welfare. Economics is concerned with those activities, which relates to wealth not for its own sake, but for the sake of human welfare that it promotes. According to Cannan, “The aim of political economy is the explanation of the general causes on which the material welfare of human beings depends.” Marshall in his book, “Principles of Economics”, published in 1890, describes economics as, “the study of mankind in the ordinary business of life; it examines that part of the individual and social action which is most closely connected with the attainment and with the use of the material requisites of well being”.

On examining the Marshall’s definition, we find that he has put emphasis on the following four points:

Economics is not only the study of wealth but also the study of human beings. Wealth

is required for promoting human welfare.
Economics deals with ordinary men who are influenced by all natural instincts such as

love, affection and fellow feelings and not merely motivated by the desire of acquiring

maximum wealth for its own sake. Wealth in itself is meaningless unless it is utilized

for obtaining material things of life.
Economics is a social science. It does not study   isolated individuals but all individuals

living in a society. Its aim is to contribute solutions to many social problems.
Economics only studies ‘material requisites of well being’. That is, it studies the causes

of material gain or welfare. It ignores non-material aspects of human life.

This definition has also been criticized on the ground that it only confines its study to the material welfare. Non-material aspects of human life are not taken into consideration. Further, as Robbins said the science of economics studies several activities, that hardly promotes welfare. The activities of producing intoxicants, for instance, do not promote welfare; but it is an economic activity.

Scarcity Definition

Lionel Robbins challenged the traditional view of the nature of economic science. His book, “Nature and Significance of Economic Science”, published in 1932 gave a new idea of thinking about what economics is. He called all the earlier definitions as classificatory and unscientific. According to him, “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” This definition focused its attention on a particular aspect of human behaviour, that is, behaviour associated with the utilization of scarce resources to achieve unlimited ends (wants). Robbins definition, thus, laid emphasis on the following points:

‘Ends’ are the wants, which every human being desires to satisfy. Want is an effective

desire for a thing, which can be satisfied by making an effort for obtaining it. We have

unlimited wants and as one want gets satisfied another arises. For instance, one may

have the desire to buy a car or a flat. Once the car or the flat is purchased, the person

wishes to buy a more spacious and designable car and the list of his wants does not

stop here but goes on one after another. As human wants are unlimited, we have to

make a choice between the most urgent want and less urgent wants. Thus the problem

of choice arises. That is why economics is also called as a science of choice. If wants

had been limited, they would have been satisfied and there would have been no economic

‘Means ’or resources are limited. Means are required to be used for the satisfaction

of various wants. For instance, money is an important means to satisfy many of our

wants. As stated, means are scarce (short in supply in relation to demand) and as such

these are to be used optimally. In other words, scarce or limited means/resources are

to be economized. We should not make waste of the limited resources but utilize them

very judiciously to get the maximum satisfaction.
Robbins also said that, the scarce means have alternative uses. It means that a

commodity or resource can be put to different uses. Hence, the demand in the aggregate

for that commodity or resource is almost insatiable. For instance, if we have a hundred

rupee note, we can use it either to purchase a book or a fashionable clothe. We may

use it in other unlimited ways as we like.

Let us now turn our attention to the definitions put forward by modern economists. J.M.Keynes defined economics as the study of the management of scarce resources and of the determination of income and employment in the economy. Thus his study centered on the causes of economic fluctuations to see how economic stability could be established. According to F. Benham, economics is, “a study of the factors affecting the size, distribution and stability of a country’s national income.” Recently, economic growth and development has taken an important place in the study of economics. Prof. Samuelson has given a growth oriented definition of economics. According to him, economics is the study and use of scarce productive resources overtime and distribute these for present and future consumption.

In short, economics is a social science concerned with the use of scarce resources in an optimum manner and in attainment of desired level of income, output, employment and economic growth.