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:
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(a)
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Economics
is not only the study of wealth but also the study of human beings. Wealth
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is
required for promoting human welfare.
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(b)
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Economics
deals with ordinary men who are influenced by all natural instincts such as
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love,
affection and fellow feelings and not merely motivated by the desire of
acquiring
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maximum
wealth for its own sake. Wealth in itself is meaningless unless it is
utilized
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for
obtaining material things of life.
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(c)
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Economics
is a social science. It does not study isolated individuals but
all individuals
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living
in a society. Its aim is to contribute solutions to many social problems.
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(d)
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Economics
only studies ‘material requisites of well being’. That is, it studies the
causes
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of
material gain or welfare. It ignores non-material aspects of human life.
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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:
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(a)
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‘Ends’
are the wants, which every human being desires to satisfy. Want is an
effective
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desire
for a thing, which can be satisfied by making an effort for obtaining it. We
have
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unlimited
wants and as one want gets satisfied another arises. For instance, one may
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have
the desire to buy a car or a flat. Once the car or the flat is purchased, the
person
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wishes
to buy a more spacious and designable car and the list of his wants does not
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stop
here but goes on one after another. As human wants are unlimited, we have to
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make
a choice between the most urgent want and less urgent wants. Thus the problem
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of
choice arises. That is why economics is also called as a science of choice.
If wants
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had
been limited, they would have been satisfied and there would have been no
economic
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problem.
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(b)
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‘Means
’or resources are limited. Means are required to be used for the satisfaction
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of
various wants. For instance, money is an important means to satisfy many of
our
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wants.
As stated, means are scarce (short in supply in relation to demand) and as
such
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these
are to be used optimally. In other words, scarce or limited means/resources
are
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to
be economized. We should not make waste of the limited resources but utilize
them
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very
judiciously to get the maximum satisfaction.
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(c)
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Robbins
also said that, the scarce means have alternative uses. It means that a
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commodity
or resource can be put to different uses. Hence, the demand in the aggregate
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for
that commodity or resource is almost insatiable. For instance, if we have a
hundred
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rupee
note, we can use it either to purchase a book or a fashionable clothe. We may
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use
it in other unlimited ways as we like.
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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.
