The word economics originated from Greek word ‘oikonomia’, where ‘oikos’ means household and ‘nomos’ means custom or law. Thus economics means rules of household or management of household.
A. Classical economists:
Adam Smith (1776) - father of the modern economics. Adam Smith's Book - "An Enquiry into the Nature and Causes of the Wealth of nations". Adam Smith's say - “Economics is a science of wealth”
David Ricardo, J.B. Say, T.R. Malthus - production, distribution, and exchange of wealth.
Classical economics Criticisms:
- Consider only material wealths (goods), not immaterial wealths (services e.g. education, health, good administration)
- Don’t emphasis on human behaviour/welfare.
B. Neo - classical economists:
Alfred Marshall -
Alfred Marshall's book-"Principles of Economics"
Alfred Marshall's say 1.“Economics is the study of mankind in the ordinary business of life”
2.“Economics on one side is study of wealth; and on the other and more important side a part of the study of man”
Wealth is not an end itself but it is only a means to an end; the end being the promotion of welfare.
Criticisms: (by L. Robins, 1931)
- Only material welfare
- Welfare is a subjective matter (normative/ethical). What about liquor, cigarettes, drugs!!
c) Modern economists:
Lionel Robins (1931) book - "The nature and significance of economic science"
“Economics is the science which studies human behaviour as a relationship between ends and scares means which have alternative uses”
Properties of the definition :
- Ends unlimited wants , Scarce means limited resources (e.g. natural as well as man made; time is also limited)
- Alternative uses
Economics is the science of scarcity and choice.
Modern economics Criticisms:
- No consideration of welfare impersonal.
- Neutrality between ends.
- Ignore macroeconomic problems.
- Does not cover theory of economic growth and welfare.
- Unemployment problems.(problem of abundance not scarcity)
Concluding remarks: it is very difficult to include the whole subject matter of economics in a single definition. In fact, economics is an unfinished science. The definitions are changing from time to time, as it is growing and developing continuously.
Another economists say :
Jacob Viner- “economics is what economists do”
Economics provides the guidelines for making the best use of scarce resources in every sphere of an economic person. The study of economics teaches a person five important things, viz., economic reasoning, economic terminology, economic insights, information about economic institutions, and economic policy options.
Economics is a science in the sense that it employs scientific methods of acquiring and disseminating knowledge.