Economics has been defined in different ways by different economists.Some of the differences may reflect evolving views of the subject or different views among economists.

I] The classical definition-

The philosopher Adam Smith, the father of economic science, in his book “ The Wealth of Nations” , published in

Adam Smith

1776, has defined what was then called political economy as “an inquiry into the nature and causes of the wealth of nations”,

And in particular as: “a branch of the science of a statesman or legislator [with the twofold objectives of providing] a plentiful revenue or subsistence for the people … [and] to supply the state or commonwealth with a revenue for the public services”.

Economics, according to him is a science of wealth; therefore this definition is known as the “wealth-oriented” definition of economics

II. The neo-classical definition -
At the turn of the century, ie in 1890, Dr Alfred Marshall’s “Principles of Economics” the most influential textbook in economics was published. Marshall provides a still widely-cited definition in his book that extends

Dr Alfred Marshall

analysis beyond wealth and from the societal to the microeconomic level:
According to him, “economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. It enquires how man gets his income & how he uses it. Thus it is on one side the study of wealth & on the other, more important side, a study of man.”
Economics, according to him is a science of welfare; therefore this definition is known as the “welfare-oriented” definition of economics

III].The modern definition-

Prof Lionel Robbins developed implications of what has been termed as perhaps the most commonly accepted

Prof. Lionel Robbins

current definition of the economics in his book “An Essay on the Nature and Significance of Economic Science.” published in 1932 (and second edition published in 1935) defined economics as “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

Economics, according to him is a science of scarcity & choice, therefore this definition is known as the scarcity-oriented definition of economics.

IV].Today economics is much more than a theory of value & resource allocation, it deals with how the level of income & employment are determined.

“The General Theory of Employment, Interest and Money” was written by the English economist, Lord John Maynard Keynes,Lord J.M.Keynes 1st Baron of Tilton. The book, generally considered to be his “magnum opus”, is largely credited with creating the terminology and shape of modern macroeconomics. Published in February 1936 it sought to bring about a revolution, commonly referred to as the “Keynesian Revolution”, in the way economists thought– especially in relation to the proposition that a market economy tends naturally to restore itself to full employment after temporary shocks. It had a major impact on modern economic and political theory and on many governments’ monetary and fiscal policies.

According to him, “economics is the study of administration of scarce resources & of determinants of employment & income.”

V].The recent view is that the productive capacity of the economy can be increased. Therefore eco problem can be effectively delt with by increasing the availability of resources. In fact in the last half century labour power has increased, new sources of raw materials have been found, new techniques & machinery have been introduced, quality & quantity of goods has improved, education, productivity etc have increased.

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Posted in General Economics