Economics Greek word : Greek word : “Oikonomos” means to “manage the house” Or management of household especially in those matters which are relating to.

EconomicsEconomics

Greek word :Greek word :

““Oikonomos” means to “Oikonomos” means to “manage manage the housethe house””

OrOr management of household management of household especially in those matters which are relating especially in those matters which are relating to the income and expenses of the family.to the income and expenses of the family.

Economics definitionEconomics definition

Adam smith(1723 – 1790)Adam smith(1723 – 1790)

The father of Economics. The father of Economics.

Classical economistClassical economistAdam SmithAdam Smith Western PhilosophersWestern Philosophers 18th century 18th century

Birth: June 5, 1723 Birth: June 5, 1723 ScotlandScotland

Death: July 17, 1790 Death: July 17, 1790 (age 67) Edinburgh, (age 67) Edinburgh, Scotland.Scotland. Father of EconomicsFather of Economics

Definitions Definitions According to Adam smith According to Adam smith ‘‘Economics is the science of wealth’. Economics is the science of wealth’. Adam smith a Scotland economist wrote a book in 1776 named Adam smith a Scotland economist wrote a book in 1776 named

‘'An inquiry into the nature and causes of wealth of nations’’.‘'An inquiry into the nature and causes of wealth of nations’’. In which he declared economics as all about the wealth. By In which he declared economics as all about the wealth. By

wealth he means Goods and Services.wealth he means Goods and Services. Others early economist like F.A.Walker an American Economist Others early economist like F.A.Walker an American Economist

said that body of knowledge which relate to wealth is said that body of knowledge which relate to wealth is economics.economics.

French economist J.B.Say also favors smith’s view.French economist J.B.Say also favors smith’s view.

Continued Continued

The main features of Adam Smith definition areThe main features of Adam Smith definition are Production of wealthProduction of wealth Consumption of wealthConsumption of wealth Exchange of wealthExchange of wealth Distribution of wealthDistribution of wealth

Criticism Criticism In this definition there are some drawbacks which is pointed out In this definition there are some drawbacks which is pointed out

by various philosopher of that time. Carlyle and Ruskin was by various philosopher of that time. Carlyle and Ruskin was most important of them. They think economics is dismal most important of them. They think economics is dismal science means preacher of wealth, they also called economics a science means preacher of wealth, they also called economics a pig science. But followers of Adam smith, including J.B Say, pig science. But followers of Adam smith, including J.B Say, J.S mill, Chapman defend smith’s view.J.S mill, Chapman defend smith’s view.

Last quarter of 19Last quarter of 19thth century schaffle in Germany and Droze century schaffle in Germany and Droze from French placed the role of man in economics higher than from French placed the role of man in economics higher than wealth. No undue importance is now attached to wealth, wealth wealth. No undue importance is now attached to wealth, wealth is only means to an end, and end is human welfare. Thus is only means to an end, and end is human welfare. Thus emphasis has now shifted from wealth to man. emphasis has now shifted from wealth to man.

Marshall Definition of EconomicsMarshall Definition of Economics

Prof. Marshall(1842 – 1924) famous economist at the Prof. Marshall(1842 – 1924) famous economist at the Cambridge university who wrote a book namedCambridge university who wrote a book named

“ “principle of economics”principle of economics” published in 1890 one published in 1890 one of the great Economist define Economics as “a study of of the great Economist define Economics as “a study of mankind in the ordinary business of life. It examines mankind in the ordinary business of life. It examines that part of individual and social action which is most that part of individual and social action which is most closely connected with the attainment and use of closely connected with the attainment and use of material requisites of well being.” material requisites of well being.”

Prof. MarshallProf. Marshall

Explanation Explanation

Marshall redefine economics and eliminate the Marshall redefine economics and eliminate the drawbacks of Adam smith definition.drawbacks of Adam smith definition.

Marshall gives important to the following pointsMarshall gives important to the following points 11 economics study routine lifeeconomics study routine life 22 economics deals with material welfareeconomics deals with material welfare 33 man is more important than wealthman is more important than wealth

Criticism Criticism

The definition is concerned with material welfare only The definition is concerned with material welfare only and ignores non material services which makes an and ignores non material services which makes an important contribution.important contribution.

As welfare vary from person to person and from time As welfare vary from person to person and from time to time. Therefore measurement of welfare is difficult.to time. Therefore measurement of welfare is difficult.

According to Robbins ’whatever economics is According to Robbins ’whatever economics is concerned with it is not concerned with the causes of concerned with it is not concerned with the causes of material welfare’. material welfare’.

RobbinsRobbins(1889 – 1984)(1889 – 1984) Definition Definition

Robbins was an English economist wrote the book Robbins was an English economist wrote the book named “Nature and significance of Economic named “Nature and significance of Economic science” in 1932 and occupied the chair of London science” in 1932 and occupied the chair of London school of economics in 1929.school of economics in 1929.

Marshall settled the matter of definition of economics Marshall settled the matter of definition of economics long ago and large consensus of expert opinion has long ago and large consensus of expert opinion has been mobilized behind him, but Robbins set the ball been mobilized behind him, but Robbins set the ball of controversy rolling once again. of controversy rolling once again.

Definition Definition

““Economics is the study of human behavior as Economics is the study of human behavior as a relationship between unlimited wants and a relationship between unlimited wants and limited resources which have alternative uses” limited resources which have alternative uses”

Explanation Explanation

In according with the Robbins definition, the In according with the Robbins definition, the human behavior covers following aspecthuman behavior covers following aspect

1.1. Wants are unlimitedWants are unlimited

2.2. Wants are different in intensityWants are different in intensity

3.3. Means are scare Means are scare

4.4. Alternative uses of means Alternative uses of means

Wants are unlimitedWants are unlimited

Man, from birth till death, continues to pass Man, from birth till death, continues to pass through the jungle of wants. As unending through the jungle of wants. As unending chain of wants keeps continues to expanded chain of wants keeps continues to expanded every day. Man needs milk at time of birth and every day. Man needs milk at time of birth and coffin at the time of death and his entire life is coffin at the time of death and his entire life is consumed in making untiring efforts for consumed in making untiring efforts for satisfying the unlimited wants. satisfying the unlimited wants.

Means are scarce Means are scarce

Means are scare in relation to demand for Means are scare in relation to demand for satisfaction. The scarcity problems faces by satisfaction. The scarcity problems faces by every man, not concerned poor or rich because every man, not concerned poor or rich because the person is rich the wider would be range of the person is rich the wider would be range of his wants.his wants.

If there no scarcity there would no need of If there no scarcity there would no need of economics, that is why man adopted economic economics, that is why man adopted economic behavior. behavior.

Alternative use of meansAlternative use of means

One characteristic of scarce means is that we One characteristic of scarce means is that we can use it for different purpose, e. g money can use it for different purpose, e. g money could purchases food and also bread, and also could purchases food and also bread, and also wine.wine.

So from Robbins definition we can conclude So from Robbins definition we can conclude that through scarce means we will satisfy that through scarce means we will satisfy unlimited wants through efficient use of unlimited wants through efficient use of resources. resources.

Criticism Criticism

Less importance to human beingLess importance to human being.. The definition is focusing on resources more The definition is focusing on resources more

than on human being.than on human being. Ignores macro aspectIgnores macro aspect.. Difficult to understand.Difficult to understand.

ConclusionConclusion Robbins definition is the most popular one.Robbins definition is the most popular one. In spite of objections, most of the modern In spite of objections, most of the modern

economists use Robbins view, which describe economists use Robbins view, which describe and explain the nature of economics.and explain the nature of economics.

It is now universally accepted that scarcity of It is now universally accepted that scarcity of resources and the consequent need for choice resources and the consequent need for choice is the essence of economic science. is the essence of economic science.

ConclusionConclusion The modern economists define economics as a The modern economists define economics as a

science of growth and efficiency.science of growth and efficiency. In the words of C. R. McConnell:In the words of C. R. McConnell:

Economics as a science of efficiency in the Economics as a science of efficiency in the

use of resources so as to attain the greatest use of resources so as to attain the greatest

or maximum fulfillment of society’s or maximum fulfillment of society’s

unlimited wants.unlimited wants.