Important Question-Answers:
Q-1 Explain the definition of economics given by Prof. Marshall. (6 Marks – December 2012)
Ans:
Introduction:
Though the definition given by Adam Smith prove to be a guiding star in development of the economics the definition was not sufficient to define subject matter of economics. Wealth is there but more importance was given to man. Emphasis was shifted from wealth to man after Alfred Marshall’s views about economics.
Definition:
According to Alfred Marshall, “Economics is a study of man in the ordinary business of life. It inquires how he gets his income and how he uses it. Thus, it is on one side the study of wealth and on the other and more important side a part of the study of man.”
Important points of Marshall’s Definition:
- Man is at the center: Marshall gave primary importance to man and wealth was given secondary importance. He says economics is concerned mainly with how wealth is used by man. It is the study of men’s ordinary business of life which means his wealth getting and wealth using activities.
- Study of economic aspect : An individual has several aspects of his life viz. (namely) social , religious , political and economic. Economics studies only economic activities related with earning and spending income and leaves other activities.
- Deals with social actions: Economics studies economic behavior of people living in society. But actions of isolated individuals are outside its scope.
- Material Welfare : Only those activities which are related with well-being of individual form part of study in economics. In other words, economic studies only material welfare. Hence, his definition is known as ‘welfare definition’.
Criticism: Prof. Lionel Robbins of the London School of Economics criticized the definition given by Prof. Marshall on the following basis:
- Human science: Marshall considered economics as a social science rather than as human science. A social science studies individual as a member of society, so activities of isolated person are not counted. A human science, on the other hand, will include every human being of the society whether living in society or away from society.
- Only material goods: Marshall emphasized on material welfare which means only physical goods he excluded services. Prof. Robbins criticized Marshall saying that services of doctors, lawyers, teachers etc. are also economic activities because they are scarce and they satisfy human wants.
- Activities not conducive (Anuku5) to human welfare: Alfred Marshall included only those goods which give rise to human welfare. Robbins criticized him by saying that activities like production and sale of alcohol and tobacco products does not give rise to human welfare but are part of economic study which was ignored by Marshall.
- Difficult to measure welfare: Robbins said that it is very difficult to measure welfare because two persons purchasing the same article many not necessarily derive the same level of utility and satisfaction. A poor person generally derives more satisfaction from the same article than a rich person. Thus, Robbins rejected the idea of considering money as a satisfactory measure of welfare.
- Economics has nothing to do with welfare: Robbins was of the opinion that economics has nothing to do with material welfare. He said that economics is only concerned with means, the study of ends is not part of study of economics. Robbins suggested that economics is purely a positive science and its function is to explain and explore, not to recommend and condemned.
- Classificatory rather than analytical: The definition classifies human activities in economic and non-economic activities. According to Robbins this classification is unscientific and illogical. The definition does not analyse and suggest how welfare can be promoted.
Conclusion : Despite of above criticism against Marshall’s definition, we must not forget that Marshall has broadened the scope of economics by establishing a link among wealth and man and his welfare. Marshall’s definition formed the basis for new definitions of economics.
jeegarbhatt 