In this post we are going to discuss about the definition of economics. Definition of economics is not fixed it has evolved with the time and different economists defined economics as per their studies and challenges they faced to understand economics. Initially economics was not a separate subject it was studied as a part of Political Science but in 1776 there was a Scottish economists Adam Smith defined economics for the first time in his book “An Enquiry into the Nature and Causes of Wealth of Nations”. That is why he is considered as the Father of Economics.

After that many Economics came into existence and defined economics in different ways but it is mainly categories in four parts-

1. Wealth Based definition of Economics
2. Welfare Based definition of Economics
3. Scarcity Based definition of Economics
4. Modern Definition of Economics

We will discuss all of the one by one in this article

Wealth Based Economics

• There have been great differences among economists regarding the subject matter of economics from time to time many economists have tried to define economics.
• Adam Smith a scotish economist also called the father of economics , defined economics in his book ‘An Inquiry into Nature and Causes of Wealth of Nations (राष्ट्र के धन के स्वरूप तथा उसके कारणों की खोज )’ in 1776.
• He defined economics as a science of money.
• According to him – We study in economic theories that “how humans produce and consume money”.
• Economic theory emphasized more on the laws of money.
• Another famous classical economist David Ricardo laid more emphasis on the distribution of wealth than on the production and consumption of wealth.
• According to him, the main problem of economics is to determine the rules regarding the distribution of wealth produced or national income among the landowners, workers and capitalists.
• The emphasis on the study of money by classical economists led to many misleading ideas about economics. From this it was understood that economic theory describes man as a person who is fascinated by money or whose main objective is to increase wealth and economic power. That’s why famous English writers like Carlyle and Ruskin called it the Mammoth Worship and dismal science. But it is not so, In fact, in economics, earning money by man is his desire to make his own living. and therefore if economics studies how man solves the problem of his livelihood, then there is nothing wrong in it.

Welfare Based Economics

• We do not completely agree with this that economics is the study of wealth only. Money has been given much importance in the previous definitions, which is not right.
• A well-known English economist Alfred Marshall emphasized on “Study of Man and his economic welfare” in economics
• According to him money is only a means and the welfare of man is the end.
• Money is a resource because its consumption and use increases the economic welfare of man .
• Man’s satisfaction is achieved by the consumption of money.
• Therefore, welfare of man is more important than wealth.
• Marshall has rightly said that “Economics is the study of money on the one hand and what is more important, on the other hand, it is a part of the study of man. So now in economics, more importance is given to man than to money”.
• Marshall emphasized the material well-being of man in the study of economics .
• He defined economics as “The study of human activities in the ordinary course of life”. “It examines that part of the individual and society that are closely related to the acquisition and consumption of material resources necessary for happiness and well-being.”

• “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 material requisites of well-being ”                                                                                                                                         – Alfreed Marshall, Principles of Economics- 1890
• Wealth is for man and not man for wealth.
• According to Marshall’s definition economics studies “how man earns and uses it”.
• In addition, it is clear from Marshall’s definition of “material requisites of well-being for a happy life (सुखी जीवन के लिए आवश्यक भौतिक साधन )” that he has emphasized the material well-being of man in the study of economics. ]
• Therefore, according to Marshall, economics is concerned only with the material part of human welfare, it has nothing to do with the non-material welfare.
• The material welfare of man refers to the satisfaction which he gets from the consumption of material things.
• Apart from Marshall, many other famous economists like Pigou, Cannon, Beveridge etc. have also called economics as “the study of human material welfare”.

Scarcity Based Economics

• The famous British economist Lord Robbins gave the definition of economics in his book ‘Nature and Significance of Economic Science in 1932.
• Robbins challenged the prevailing view of the nature of economics.
• He said that earlier accepted and well-known definitions of economics are classificatory and unscientific.
• According to him, the term “physical” has unnecessarily confined economics and the notion of welfare in economics lacks comprehensiveness and precision.
• Robbins firmly believes that none of these errors are found in his definition. The definition is as follows:
• “Economics is a science which studies human behavior as a relationship between ends(unlimited wants) and scarce means which have alternative uses“.
• Robbins emphasized on some one major economic problem in his definition, which is the problem of choice, let us discuss “how this problem arises?”

  a) Unlimited Wants:-

• The first important fact is that human needs are innumerable or unlimited.
• If one need is satisfied, another need arises immediately.
• The word ends in this definition means human wants and needs.
• If somewhere our desires were limited, then there would be no financial problem. Then, like animals, we would be completely satisfied by fulfilling our primary needs and we would not have to make any more effort or labor related to livelihood.

          b) Scarce Means:-

• The second fact is that the means we have to meet our needs are scarce or limited.
• If the resources were unlimited like our desires, then there would not have been any economic problem.
• In the case of unlimited resources, whenever and wherever we want, we can get whatever quantity we want, because in such condition all things would be free goods. But in reality most of the things we desire are scarce and we have to pay a price or work hard to get them.
• When we say that resources are scarce, we do not mean only by their quantity or quantity.
• Wheat, coal etc. materials are available in very large quantities, but our demand for them by their quantity…is far more. This is the reason why such substances are considered rare or limited.

           c) Alternative Uses of the Means :-

• The third fact is that all our resources have many alternative uses.We can use it for many different purposes,
• Example- coal is used for cooking, factories and trains, and many more.
• If an object has only one use, then the problem of choice will not arise because the choice has to be made when the object has many alternative uses.
• Unless these three conditions are not there, no financial problem will arise. Unlimited wants or scarcity of resources or alternative usability of scarce resources alone cannot create economic problems.
• According to Robbins, economic activity is the use of scarce means by man to accomplish a number of ends.
• Means means time, money or any other kind of property. They are all limited.
• Many other economists, like Robbins, have defined economics as the attainment of the maximum possible satisfaction of needs by scarce means.
  

  “Economics is the study of the rules according to which the resources of a society are to be arranged and organized so that social goals can be achieved without

                                                                                                               –Wickstead

  “Economics is the study of those principles. which determine the distribution of scarce resources among competing goals, whereas the purpose of distribution is to achieve the maximum possible achievement of goals

                                                                                                                 – Stigler

  Modern Definition of Economics

• Many modern economists have presented new definitions of economics Robbins’ definition failed to reveal the correct subject area of ​​economics . Some of them are as follows-
• According to Benham–

“Economics is the study of those factors which affect employment and standard of living”

• Determination of national income and employment and the principles of economic development come under the definition, but in this the subject of allocation of scarce resources does not come directly, but the subject of distribution of scarce resources indirectly comes under it that also determines the standard of living of the people and the amount of employment.
• But in the definition of Benham, the topic of how national income is distributed among different people of the society is also included because the distribution of income affects the standard of living of the people. Economists like Ricardo, Marx etc. have given great importance to this distribution problem.
• Mr. Henry Smith has more correctly defined economics.

  According to him-

  “Economics studies how in a civilized society an individual derives his share from the materials produced by other individuals and how the total output of the society changes and determines the total output.”

• Considering the above definition of economics presented by Henry Smith, it will be known that it includes three main problems of economics.

  1.How is the distribution of national output or income among the different individuals of the society takes place.

  2.How is total output or national income determined?

  3.How the total output of the society changes, that is, on which factors the economic development of the country depends.

  In other words, the distribution of national output, determination of national income and employment and economic development are important subjects of economics, which must be included in the definition of economics.