There are different views about the definition of economics which are the following:
1. Classical view by Adam Smith.
2. Neoclassical view by Alfred Marshall.
3. Modern view by Lionel Robbins.
CLASSICAL VIEW BY ADAM SMITH
According to this “Economics is a science of wealth”.
Adam Smith is the founder of economics. He wrote a book in 1776 named
“Nature and causes of wealth of nation”.
According to Adam Smith:
Economics is a science of wealth and it studies four important aspects of wealth which are the following.
1. Production of wealth.
2. Consumption of wealth.
3. Exchange of wealth.
4. Distribution of wealth.
Production of wealth means How to produce wealth??.
Four factors of production “Land, labor, capital and organization produces goods and services which are called as production of wealth.
Consumption of wealth means “How to consume wealth after getting it”.
People consume wealth to achieve their necessities of life.
Distribution of wealth means that wealth which is produced by four factors is distributed among the four factors.
i.e labor gets wages, land obtains rent, interest to capital and organization gets profit.
Exchange of wealth means that the wealth which is received by the four factors in term of reward will be consumed on the purchase of goods and services.
In this way, exchange occurs.
NEOCLASSICAL VIEW BY ALFRED MARSHALL
According to Alfred Marshall;
Economics is a science of Material welfare.
Alfred was another great economist wrote a book in 1880. “The Principles Of Economics”
He modified the old definition and stated that:
“Economics is on the one side, a study of wealth, and on the other, a study of man, but more importantly the study of man.
Alfred Marshall said that “Economics is 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 material requisites of life.
MODERN VIEW BY LIONEL ROBBINS
Lionel Robbins rejected the concept of Material welfare because it is defective and unscientific.
Robbins presented his own definition in his book “ Nature and significance of economics science” in 1932.
According to Robbins:
Economics is a science which studies human behavior as a relationship between ends and scarce means, which have alternative uses.