Define various definitions of Economics.

Definition:- Many economists have given various definition of economics we can classify them into three broad categories.

Classical view 1776

The science of wealth (Admn Smith, Ricardo & J.Smill)

Neoclassical view 1890

The science of material welfare (Alfred Marshall, Pigou &    canon).

Modern view 1932

The science of scarcity (Robbins)

Economics as a science of wealth                                  

Adam Smith was the founder of economics and was a pioneer of the classical school of thought. In his famous book “An enquiry into the nature and causes of wealth of nation” in 1776 described economics as a science of wealth. His follower also described economics as a science of wealth.

And this concept has the following pillars.

Economics as a science of material welfare:  

The Neo classical economist led be Alfred Marshall gave Economics a respectable place among social science. He was the 1st Economist who lifted Economics from bad repute. Professor A. Marshall in his book “Principles of Economics” in 1890 defined “Economics as a study of mankind in ordinary business of life.  It examines that part of individual and social actions which is most closely related with the attainment and with the use of material requisites of well being”. This definition clearly states that Economics is on the one side a study of wealth and the other and most important side a part of the study of man. Marshall followers like Pigou, Canon, and Pareto have also defined Economics as “a study of causes of material welfare” and are called as welfare economists.

Economics as a science of scarcity—Robbins view

In 1932, Lionel Robbins challenged the welfare view of the nature of economic science. He rejected the definition given by Marshall and other welfare economists as unsatisfactory and unscientific. He defined economics as:

“Economics is the science, which studies human behavior as a relationship between ends and scarce means, which have alternative uses”.

Robbins definition provides us a clear understanding of the basis of the economic problem. He considers that four fundamental facts of human life create this problem.

Ends are unlimited.  Human beings have wants which are unlimited in number. They are constantly making efforts to satisfy these wants. The nature of these wants is such that if one want is satisfied another want arises. It is impossible that a person has all of his wants fulfilled. So the struggle to produce more goods or get more income continues for the whole life.

Ends are of unequal importance. Some ends (wants) are more important than others. People arrange their wants in order of preference. For example, food is more necessary than a pen. So efforts to get a pen can be made only when one has no fear to go hungry. Everybody tries to satisfy those wants first, which are more pressing or urgent. Since enough resources are never available, less important wants are given up.

Means are scarce. Goods and services for the satisfaction of human wants are not produced by magic lamps but by using resources. But compared to limitless wants, the means to satisfy them are scarce. The means include time, money, capital or any form of property. These are limited and insufficient to meet all of our needs. When used to produce one good they connote be used to produce another. Scarcity of means is a relative term. If a commodity is scarce, it does not mean that the quantity available is small. A commodity is called scarce if it is not free and carries a price.

Means have alternative use. Means can be used for different purposes e.g. a piece of land may be used to grow crops or to build a house or as a playground. A piece of wood can be used to make many things. A given amount of money can be spent in many different ways to satisfy our wants.

According to Robbins, unless all these conditions are present, economic problem will arise.

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