DEFINITION OF ECONOMICS CLASS 11 ISC NOTES

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■ What Economics is about: In our daily life, we see that all members of society are engaged in various activities in agriculture, trade, business and industry. The basic idea is to earn money to satisfy human wants. These activities are concerned with production, distribution and exchange of goods and services. Thus, in simple words, Economics deals with (i) unlimited wants (ii) Scarce Means (iii) Means with alternative uses.

■ What is Economics. Adam Smith-“Economics is the study of the nature and causes of national wealth or simply as the study of wealth.” Prof. Marshall-“economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it”. Prof.L. Robbins- “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

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■ Prof. Samuelson defines, “Economics is the study of how people and society end up choosing with or without the use of money, to employ scarce productive resources that could have alternative uses to produce various commodities over time and distributing them for consumption, now or in the future, among various persons and groups in society, it analyses costs and benefits of improving patterns of resources allocation.”

■ Comparison between definitions of Adam Smith and Marshall: Both these definitions differ as Adam Smith’s definition is the study of economic man while Marshall focusses on the study of real man. Adam Smith stresses on wealth while Marshall refers to human wealth. Adam Smith considered wealth as both mean and an end while Marshall considered wealth as means and human welfare as an end.

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■ Comparison between Marshall and Robbins: Marshall has stressed on social man whereas Robbins studied human behaviour as a relationship ends and scarce means which have alternative uses. According to Marshall, every man aims at maximising his welfare and Robbins says that rational man tries to maximise his satisfaction. Both differ from each other on account of economic and non-economic activities, normative and positive science. Marshall’s definition is more practical for making economic policies while Robbin’s definition is universal.

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DEFINITION OF ECONOMICS CLASS 11 ISC NOTES

1. Give Adam Smith’s definition of Economics.

Or

Give wealth definition of Economics given by Adam Smith.

Ans. According to Adam Smith, Economics is concerned with “an inquiry into the nature and causes of wealth of nations.” It is related to the laws of production, exchange, distribution and consumption of wealth.

2. Explain Dr. Marshall’s definition of Economics.

Or

Explain welfare definition of Economics given by Dr. Marshall.

Ans. “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. Thus, it is on one side a study of wealth and on the other and more important side a part of the study of man”.

3. Discuss Prof. Robbin’s definition of Economics.

Or

Discuss scarcity definition of Economics given by Prof. Robbins.

Ans. According to Prof. Robbins, “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

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4. Give Prof. Samuelson’s definition of Economics.

Or

Give growth-oriented definition of Economics.

Ans. “Economics is the study of how people and society end up choosing with or without the use of money to employ scarce productive resources that could have alternative uses to produce various commodities over time and distributing them for consumption, now or in the future, among various persons and groups in society. It analyses costs and benefits of improving patterns of resource allocation.”

5. Give characteristics of Adam Smith’s definition of Economics.

Ans. The main characteristics of Adam Smith’s definition are, study of wealth, causes of wealth, study of material commodities and economic man.

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6. Explain main features of Marshall’s definition of Economics.

Ans. The main features of material welfare definition are study of mankind, study of ordinary man, study of individual man and study of a real man.

7. Give main elements of Robbin’s definition of economics.

Ans. The main elements of Robbins definition are: multiplicity of ends or unlimited wants, scarcity of means, alternative use of means, economic problem and science of choice.

8. Point out the main features of growth-oriented definition of Economic.

Ans. The main features of growth-oriented definitions are economic resources, efficient allocation of resources, full utilization of resources and increase in productivity.

9. Give any four merits of growth-oriented definition of Economics.

Ans. (i) Realistic explanation of economic problems (ii) More practical and dynamic (iii) Universal and (iv) Not neutral as regards ends.

LONG ANSWER QUESTIONS

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1. Define the concept of economics. Give its salient features.

Ans. Economics: Economics is the social science that studies economics activities. In other words, Economics is that branch of knowledge which studies those human activities which deal with consumption, production, exchange and distribution of scarce means of wealth.

The word “Economics” is originally derived from the ancient Greek word “Oiks”. It means household and “Nemein” which means management. Thus, it refers to managing of a household using limited funds. The Greeks then applied this term to the city-state, which they called polis. Earlier writers, the classical and the neo-classical economists developed it into `political economy’. The great philosopher, Aristotle used the term as management of family and the state. Similarly, Indian Statesman, Kautilya used the term both for economic and political activities. However, the term economics, first of all was used by Dr. Marshall in his famous book named `Principles of Economics’, in 1890.

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FEATURES OF ECONOMICS:

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1. Study of Wealth: According to wealth definitions given by the various economists, economics is the study of wealth only. Therefore, it deals with the activities of man related to production, consumption, exchange and distribution.

2. Only Material Commodities: This definition conveys the feeling that economics constitutes only material commodities while it ignores non-material goods such as air and water.

3. Causes of Wealth: Economics is considered as study of causes of wealth accumulation which brings economic development. In order to increase wealth, production of material goods will have to be increased.

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4. Much Stress on Wealth: The main aim of the political economy is to increase the riches of the economy. Thus, it gives more stress on wealth than on other factors.

5. Economic Man: These definitions are basically based on the man who is always aware of his ‘Self-interest’. Self-interest leads to material gains. Therefore, such a creature is called Economic Man.

6. Study of Mankind: Economics is the study of mankind than wealth. Wealth is only a mean of satisfying human wants.

7. Study of Ordinary Man: It studies the activities of a man who earns wealth and spends it to get the maximum satisfaction. Thus, it studies an ordinary and not extra ordinary man like sadhus.

8. Study of Individual Man: Economics studies the individual and social man who is always concerned with material gains.

9. Study of Real Man: Economics does not study a man who is selfish but studies a real man who possesses several qualities and is influenced by economic and non-economic factors in society.

10. Promotion of Welfare: It studies the material means which promote human welfare.

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11. Study of Science and Art: Material definition deals with economics, both as a science as well as an art.

12. Use of Money: This definition considers material or economic welfare as a part of social welfare which can be easily measured with the measuring rod of money.

13. Multiplicity of Ends or Unlimited Wants. By ends, Prof. Robbins means human wants. These human wants are various and numerous. When one wants in satisfied, another want crops up in its place and so on in endless succession. They grow in number with an advancement of civilisation and material progress. Since human wants are unlimited, man is compelled to select the most urgent wants for immediate satisfaction

14. Scarcity of Means. Human wants are unlimited and means to satisfy them are limited. The means refer to goods and services which we use to satisfy our wants. They are the material and non-material goods like time, money, services, resources, etc., that are at our disposal. These means are scarce. If these means are abundant like free goods, there would be then no economic problem. But they are scarce and one is forced to postpone some of one’s wants. Here we must remember the term scarcity is used not in the absolute sense but in the relative sense i.e., in relation to demand. A commodity may be available in small quantity but if nobody demands, then it is not scarce. It is therefore, the scarcity of the means which is the basis for all economic problems.

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15. Alternative use of Means. The scarce means are capable of alternative uses. They can be used for several purposes. For example, land which is scarce can be used for cultivation, house construction, playground etc. Similarly, all the economic means and resources may be put to alternative uses. Therefore, in practical life the goods can be put to alternative uses of varying importance. In other words, Robbins explains any human behaviour that is concerned with utilisation of scarce means with alternative uses for the satisfaction of given ends.

16. Economic Resources: These definitions deal with the economic resources which are natural, human or physical. They are used to satisfy human wants. They are scarce but have alternative uses.

17. Efficient Allocation of Resources: As the resources have alternative uses, the main problem lies in choice making. Thus, resources should be efficiently utilised for maximum welfare.

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18. Full Utilization of Resources: This definition acknowledges not only allocation of resources but they must also be fully utilised, too.

19. Increase in Productivity: Another feature of this definition is that it must increase productivity resulting in an increase in economic growth, employment and higher standard of living.

2. ‘Economics is a science of wealth’. Explain with arguments.

Ans. It is true that ‘Economics is a Science of wealth’ as per classical economists’ point of view.

According to Adam Smith: Adam Smith, the founder of the classical school of economics, in his famous book ‘An Enquiry into the Nature and Causes of Wealth of Nations’ defined economics as “the science of wealth.”

Economics is concerned with “an inquiry into the nature and causes of wealth of nations” and it is related to the laws to the laws of production, exchange, distribution and consumption of wealth. 

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ARGUMENTS IN FAVOUR OF ECONOMICS AS SCIENCE OF WEALTH.

1. Study of Wealth: According to wealth definitions given by the various economists, economics is the study of wealth only. Therefore, it deals with the activities of man related to production, consumption, exchange and distribution.

2. Only Material Commodities: This definition conveys the feeling that economics constitutes only material commodities while it ignores non-material goods such as air and water.

3. Causes of Wealth: Economics is considered as study of causes of wealth accumulation which brings economic development. In order to increase wealth, production of material goods will have to be increased.

4. Much Stress on Wealth: The main aim of the political economy is to increase the riches of the economy. Thus, it gives more stress on wealth than on other factors.

5. Economic Man: These definitions are basically based on the man who is always aware of his ‘Self-interest’. Self-interest leads to material gains. Therefore, such a creature is called Economic Man.

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3. Explain Marshall’s definition of Economics and give its criticism.

Or

‘Economics is the study of mankind in the ordinary business of life.’ Discuss.

Ans. According to Marshall: “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. Thus, it is on one side a study of wealth; on the other and more important side, a part of the study of man”.

“The aim of political economy is the explanation of the causes on which the material welfare of human beings depends.”

This definition implies three important aspects

(a) Economics is a study of man and his ordinary business of life,

(b) It examines the economic aspect of an individual and his social actions.

(c) The attainment of material welfare as the end of economics.

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(a) Study of Ordinary Business of Life: Ordinary business of life means earning of living. It consists of earning material means and using it for the satisfaction of the most common human wants of food, clothing and shelter. This ordinary business of life is something fundamental and common to mankind. In other words, it is fundamental and the primary concern of everybody. Even the seers and saints and philosophers who stand for noble ideals care first for their bread and butter before the pursuit of their philosophy. Thus, it includes the income earning and income spending activities of all human beings.

(b) Study of Individual and Social Action: Economics examines the individual and social actions of the people that are conducive to material welfare only. This means that Economics will study only those actions that promote welfare and it will study other actions that do not promote welfare. There may be other activities such as political, religious, social and cultural, which do not come under its purview. In this way, Marshall restricts the scope to those economic activities which are measurable with monetary standards.

(c) Only Welfare Aspect: In explaining the subject matter of Economics, Marshall has shifted the emphasis from wealth to the welfare. Wealth, as he says, is only a mean for the attainment of material welfare. So, he gave primary importance to man and welfare and secondary place to wealth. Thus, the study is confined to acquisition of wealth as well as to promote human welfare.

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Features:

Marshall’s definition is widely accepted by the economists. However, its main features of material welfare definition are as follows:

1. Study of Mankind: Economics is the study of mankind than wealth. Wealth is only a mean of satisfying human wants.

2. Study of Ordinary Man: It studies the activities of a man who earns wealth and spends it to get the maximum satisfaction. Thus, it studies an ordinary and not extra ordinary man like sadhus.

3. Study of Individual Man: Economics studies the individual and social man who is always concerned with material gains.

4. Study of Real Man: Economics does not study a man who is selfish but studies a real man who possesses several qualities and is influenced by economic and non-economic factors in society.

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5. Promotion of Welfare: It studies the material means which promote human welfare.

6. Study of Science and Art: Material definition deals with economics, both as a science as well as an art.

7. Use of Money: This definition considers material or economic welfare as a part of social welfare which can be easily measured with the measuring rod of money.

Merits:

Marshall’s welfare definition is favoured on account of its merits. These are:

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1. It means with Welfare: Welfare definition completes Adam Smith’s wealth definition by adding man and welfare to wealth as the subject matter of economics.

2. Study of Social Science: This definition has clearly mentioned economics as a social science. It is not a pure science but one among the social sciences.

3. Proper Relationship of Welfare and Wealth: Marshall defines economics as a noble science. In the hands of Adam Smith, economics (as science of wealth) remained only a dismal science. But Marshall explained the proper relation between wealth and welfare.

4. Classification of Activities: The definition makes economics not only a science but also a Social as well as Normative Science. This definition clearly classifies economic activities.

5. More Scientific: This definition clearly classifies economic activities into two parts as material welfare and non-material welfare. Thus, it is more scientific.

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Criticism:

Marshall’s welfare definition, no doubt, is superior to Adam Smith’s wealth definition. Prof. Lionel Robbins attacked Marshall’s welfare definition on the following grounds:

1. Impracticable. In his discussion, Marshall classifies the actions into those which are not conducive to material welfare. In other words, he divides activities into economic and non-economic. But such a classification is not sound because all activities in one way or the other are economic. Prof. Robbins considers the distinction in economic and non-economic as invalid.

2. Unscientific. According to Prof. Robbins, this definition is unscientific. Marshall explains one kind of behaviour as distinct from another in a haphazard manner. This makes the subject matter highly variable, indefinite and uncertain. Further the lack of analytical study renders the definition thoroughly unscientific.

3. Term ‘Welfare’ is very Vague. Generally, by welfare, people refer to the material happiness. But in reality, welfare is a mental makeup of a person which depends much upon his psychological feelings. Thus, it is highly subjective. It cannot be defined, measured and compared at all.

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4. Only Materialistic Aspect. According to Marshall, welfare is attainable only by material means. But Robbins observes that it is not proper to say that material means alone promote welfare because the services of doctors, teachers, lawyers, domestic servants etc., also do promote welfare. These services have no material in them. So, these may be called immaterial we are.

5. Uncertain Concept of Welfare. According to some critics, all material means do not always promote welfare. For example, poison, poison goods, intoxicants etc., are definite material means, but they do not promote welfare. They, on the other hand, are positively harmful to human welfare.

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6. Limited Scope. Marshall narrows down the scope of economics by making it a mere study of material means of welfare. If economists were to study the material means of welfare to the exclusion of non-material means, economics would definitely become narrow in its scope.

7. Economics is not concerned with Ends. Assuming economics as a normative science, Marshall made welfare as an end of economics. This implies that economics is concerned with ends and as such it makes judgement whether an end is noble or ignoble, desirable or undesirable and so on.

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8. No Proper Explanation. This definition fails to explain the main economic problem viz. the problem of how to satisfy the unlimited wants with limited means which have alternative uses.

9. Only Social Science. Marshall is attacked for treating Economics as a social science. As a social science economics studies all the individuals, who are the members of the society. Strictly speaking, economics should be considered more as a human science than as a social science.

10.  Impractical. This definition is of a theoretical nature, ignoring the practical aspect of human life. In real life, there is no distinction between economic and non-economic activities.

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4. Compare and contrast Marshall’s and Robbins’ definitions of Economics.

Ans. According to Marshall: “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. Thus, it is on one side a study of wealth; on the other and more important side, a part of the study of man”.

“The aim of political economy is the explanation of the causes on which the material welfare of human beings depends.”

According to Robbins: Economics is a science which studies human behaviour as a relationship between ends and scare means which have alternative uses.”

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Marshall’s Definition	Robbins’ Definition
1. Unscientific definition because it explains one kind of behaviour as distinct from another.	1. Scientific definition as it explains any behaviour under one aspect.
2. Limits the scope as it lays emphasis on material means of welfare.	2. Wider in scope as it connects any behaviour with scarcity.
3. Based on value judgement and therefore leads to confusion.	3. Considers economics as neutral between ends, therefore free from any confusion.
4. It is not of universal character.	4. It is universal in nature as it is applicable to all individuals, groups and society. It deals with limited resources and unlimited wants.
5. Economics is both a science (positive as well as normative) and an art.	5. Economics is only a positive science.
6. Marshall’s definition is classificatory.	6. Robbins’ definition is analytical.
7. Simple and analytical in nature.	7. Complex and non-analytical.

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5. Critically explain Robbins’ definition. On which ground is this definition superior to earlier definitions?

Ans. According to Lionel Robbins: formulated a new definition in his book ‘Essay on the Nature and significance of Economic Science’ published in the year 1932.

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FEATURES OF SCARCITY DEFINITION

Prof. Robbins’ definition has the following main features:

1. Multiplicity of Ends or Unlimited Wants. By ends, Prof. Robbins means human wants. These human wants are various and numerous. When one wants in satisfied, another want crops up in its place and so on in endless succession. They grow in number with an advancement of civilisation and material progress. Since human wants are unlimited, man is compelled to select the most urgent wants for immediate satisfaction

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2 Scarcity of Means. Human wants are unlimited and means to satisfy them are limited. The means refer to goods and services which we use to satisfy our wants. They are the material and non-material goods like time, money, services, resources, etc., that are at our disposal. These means are scarce. If these means are abundant like free goods, there would be then no economic problem. But they are scarce and one is forced to postpone some of one’s wants. Here we must remember the term scarcity is used not in the absolute sense but in the relative sense i.e., in relation to demand. A commodity may be available in small quantity but if nobody demands, then it is not scarce. It is therefore, the scarcity of the means which is the basis for all economic problems.

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3 Alternative use of Means. The scarce means are capable of alternative uses. They can be used for several purposes. For example, land which is scarce can be used for cultivation, house construction, playground etc. Similarly, all the economic means and resources may be put to alternative uses. Therefore, in practical life the goods can be put to alternative uses of varying importance. In other words, Robbins explains any human behaviour that is concerned with utilisation of scarce means with alternative uses for the satisfaction of given ends.

4 Economic Problem. The multiplicity of wants, the scarcity of means and the application of scarce means for the alternative uses impose an economic problem. The problem is how to satisfy the unlimited wants with limited means which have alternative uses. Robbins describes this problem as the problem of economising scarce resources. In other words, it is the choice of making of an economic activity.

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According to Prof. Cassel: “Economics is the Science of scarcity”.

5 Study of Human Behaviour. Prof. Robbins definition considers it as a study of human behaviour instead of material activities of social man. Thus, it studies the economic behaviour of every individual whether living inside or outside the society.

6 Source of Choice. Prof. Robbins’ definition is the science of choice. It means wants are numerous while means are limited. Thus, we have to choose the most urgent wants and have to satisfy on priority basis. That is why, economics is described as a science of choice.

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SUPERIORITY OF ROBBINS OVER OTHER DEFINITIONS

Robbins’ definition is superior to welfare definition on the basis of the following arguments:

1. More Scientific Definition. Since Marshall explains one kind of behaviour as distinct from another in economics, so his definition is criticised as unscientific. But the scarcity definition analysing human behaviour explains any behaviour under one aspect. In this way, this definition is more scientific.

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2. More Wider Definition: Marshall in his definition limits the scope of economics to the material means of welfare. But Robbins on the other hand by studying any behaviour connected with the problem of scarcity widens the scope of economics from the boundaries of material welfare.

3. Free from all Confusion. As Marshall claims, economics will involve value judgement. This will lead to difference of opinions and endless controversy among economists. ‘Economics would then become indefinite and fruitless’. But when economics is neutral between ends it becomes free from all these controversies and confusions.

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4. Universal. Robbins’ definition is considered universal. It is applicable to all individuals, groups, and society. Moreover, it deals with the problem of unlimited wants and scarce means. This problem is common everywhere.

5. Study of Human Behaviour. This definition gives clear cut view of human behaviour. It studies the human behaviour of an individual as well as that of a society.

6. More Logical Explanation. Robbins’ definition is more logical in explaining the economic problem. According to this, economic problem arises due to scarcity of means in relation to their demand. It is not concerned with material well-being. 

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6. (a) Compare Adam Smith’s definition with welfare definition of Marshall.

Ans. According to Adam Smith’s: Economics is concerned with “ an inquiry into the nature and causes of wealth of nations” and it is related to the laws of production, exchange, distribution and consumption of wealth.

According to Marshall: “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. Thus, it is on one side a study of wealth; on the other and more important side, a part of the study of man”.

“The aim of political economy is the explanation of the causes on which the material welfare of human beings depends.”

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Wealth Definition (Adam Smith)	Welfare Definition (Marshall)
1. Adam Smith regarded wealth as a subject matter of economics.	1. Unscientific definition because it explains one kind of behaviour as distinct from another.
2. Adam Smith provided more importance to wealth	2. Limits the scope as it lays emphasis on material means of welfare.
3. Wealth is both means and end	3. Based on value judgement and therefore leads to confusion.
4. Adam Smith has given more emphasis on production of wealth	4. It is not of universal character.
5. Economics is study of economic man	5. Economics is both a science (positive as well as normative) and an art.

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According to Marshall: “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. Thus, it is on one side a study of wealth; on the other and more important side, a part of the study of man”.

“The aim of political economy is the explanation of the causes on which the material welfare of human beings depends.”

According to Robbins: Economics is a science which studies human behaviour as a relationship between ends and scare means which have alternative uses.”

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(b) Compare Marshall’s and Robbins’ definition of economics.

Marshall’s Definition	Robbins’ Definition
1. Unscientific definition because it explains one kind of behaviour as distinct from another.	1. Scientific definition as it explains any behaviour under one aspect.
2. Limits the scope as it lays emphasis on material means of welfare.	2. Wider in scope as it connects any behaviour with scarcity.
3. Based on value judgement and therefore leads to confusion.	3. Considers economics as neutral between ends, therefore free from any confusion.
4. It is not of universal character.	4. It is universal in nature as it is applicable to all individuals, groups and society. It deals with limited resources and unlimited wants.
5. Economics is both a science (positive as well as normative) and an art.	5. Economics is only a positive science.
6. Marshall’s definition is classificatory.	6. Robbins’ definition is analytical.
7. Simple and analytical in nature.	7. Complex and non-analytical.

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7. Briefly explain the following:

(a) Explain the definition of Economics given by Adam Smith.

Ans. According to Adam Smith: Adam Smith, the founder of the classical school of economics, in his famous book ‘An Enquiry into the Nature and Causes of Wealth of Nations’ defined economics as “the science of wealth.”

Economics is concerned with “an inquiry into the nature and causes of wealth of nations” and it is related to the laws to the laws of production, exchange, distribution and consumption of wealth.

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(b) Give Marshall’s definition of welfare Economics.

Ans. According to Marshall: “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. Thus, it is on one side a study of wealth; on the other and more important side, a part of the study of man”.

“The aim of political economy is the explanation of the causes on which the material welfare of human beings depends.”

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(c) Mention Robbins’ definition of Economics based on scarcity.

Ans. According to Robbins: “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”

(d) Explain modern definition of Economics.

According to prof. Samuelson “Economics is the study of how people and society end up choosing with or without the use of money, to employ scarce productive resources that could have alternative uses to produce various commodities over time and distributing them for consumption, now or in the future, among various persons and groups in society. It analyses costs and benefits of improving patterns of resource allocation.”

According to E. Ferguson “Economics is a study of the economic allocation of scarce physical and human means among competing ends, an allocation that achieves a stipulated optimizing or maximizing objective.”   

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8. Explain the following:

(a) Give any three defects of Adam Smith’s definition.

The wealth definition is not free from defects. The economists like Thomas Carlyle, John Ruskin and William Morris called it a bastard and dismal science. Some others called it as a dismal science.

Thus, this definition has been criticised on the following grounds:

1. Totally Materialistic Definition. This definition explains that wealth is the sole end of all human beings. This preaches the worship of Mammon, the God of wealth, at the cost of all spiritual values. Ruskin and Carlyle condemned the worship of Mammon (God of wealth). Thus, it was rejected.

2. Only a Mean Science. The definition makes wealth as the only subject matter of Economics. It would become a sordid and mean science. That is why Ruskin and Carlyle criticised Economics as “a dark and dismal science.”

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3. Ambiguous. The term wealth which forms the subject matter of economics is ambiguous and meaningless. In old days wealth meant only material goods like money, gold, silver, land, cattle etc., which were visible. It ignores non-material goods such as services of doctors, teachers and artists in the category of wealth. The immaterial goods are as good a wealth as material goods.

4. Narrow view of the Scope. The definition places wealth in the forefront and means in the background ignoring the most fundamental aspect of economics viz. welfare. The definition is, therefore, incomplete as it takes into account wealth for study and omits man and welfare from the purview of economics.

5. Concept of Economic Man. Adam Smith’s wealth definition is based on the concept of economic man. But Marshall and Pigou believed that economic man who works for selfish ends alone is not found in real life. In real practice, man’s activities are not only influenced by selfish motives but also by moral, social and religious factors. Thus, economics studies a common man and not an economic man.

6. Secondary Place to Man. This gives undue stress on wealth while secondary place has been given to human beings. Wealth is a mean to human welfare. Thus, its subject matter does not remain a social science.

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(b) Explain any four characteristics of Marshall’s definition.

Ans. Marshall’s definition is widely accepted by the economists. However, its main features of material welfare definition are as follows:

1. Study of Mankind: Economics is the study of mankind than wealth. Wealth is only a mean of satisfying human wants.

2. Study of Ordinary Man: It studies the activities of a man who earns wealth and spends it to get the maximum satisfaction. Thus, it studies an ordinary and not extra ordinary man like sadhus.

3. Study of Individual Man: Economics studies the individual and social man who is always concerned with material gains.

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4. Study of Real Man: Economics does not study a man who is selfish but studies a real man who possesses several qualities and is influenced by economic and non-economic factors in society.

5. Promotion of Welfare: It studies the material means which promote human welfare.

6. Study of Science and Art: Material definition deals with economics, both as a science as well as an art.

7. Use of Money: This definition considers material or economic welfare as a part of social welfare which can be easily measured with the measuring rod of money.

(c) Give any three defects of Marshall’s definition.

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Ans. Marshall’s welfare definition, no doubt, is superior to Adam Smith’s wealth definition. Prof. Lionel Robbins attacked Marshall’s welfare definition on the following grounds:

1. Impracticable. In his discussion, Marshall classifies the actions into those which are not conducive to material welfare. In other words, he divides activities into economic and non-economic. But such a classification is not sound because all activities in one way or the other are economic. Prof. Robbins considers the distinction in economic and non-economic as invalid.

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2. Unscientific. According to Prof. Robbins, this definition is unscientific. Marshall explains one kind of behaviour as distinct from another in a haphazard manner. This makes the subject matter highly variable, indefinite and uncertain. Further the lack of analytical study renders the definition thoroughly unscientific.

3. Term ‘Welfare’ is very Vague. Generally, by welfare, people refer to the material happiness. But in reality, welfare is a mental makeup of a person which depends much upon his psychological feelings. Thus, it is highly subjective. It cannot be defined, measured and compared at all.

4. Only Materialistic Aspect. According to Marshall, welfare is attainable only by material means. But Robbins observes that it is not proper to say that material means alone promote welfare because the services of doctors, teachers, lawyers, domestic servants etc., also do promote welfare. These services have no material in them. So, these may be called immaterial we are.

5. Uncertain Concept of Welfare. According to some critics, all material means do not always promote welfare. For example, poison, poison goods, intoxicants etc., are definite material means, but they do not promote welfare. They, on the other hand, are positively harmful to human welfare.

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6. Limited Scope. Marshall narrows down the scope of economics by making it a mere study of material means of welfare. If economists were to study the material means of welfare to the exclusion of non-material means, economics would definitely become narrow in its scope.

7. Economics is not concerned with Ends. Assuming economics as a normative science, Marshall made welfare as an end of economics. This implies that economics is concerned with ends and as such it makes judgement whether an end is noble or ignoble, desirable or undesirable and so on.

8. No Proper Explanation. This definition fails to explain the main economic problem viz. the problem of how to satisfy the unlimited wants with limited means which have alternative uses.

9. Only Social Science. Marshall is attacked for treating Economics as a social science. As a social science economics studies all the individuals, who are the members of the society. Strictly speaking, economics should be considered more as a human science than as a social science.

10.  Impractical. This definition is of a theoretical nature, ignoring the practical aspect of human life. In real life, there is no distinction between economic and non-economic activities.

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9. Comment on the following:

(a) State any four features of Robbins’ definition.

Ans. Features: Prof. Robbins’ definition has the following main features:

1. Multiplicity of Ends or Unlimited Wants. By ends, Prof. Robbins means human wants. These human wants are various and numerous. When one wants in satisfied, another want crops up in its place and so on in endless succession. They grow in number with an advancement of civilization and material progress. Since human wants are unlimited, man is compelled to select the most urgent wants for immediate satisfaction

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2 Scarcity of Means. Human wants are unlimited and means to satisfy them are limited. The means refer to goods and services which we use to satisfy our wants. They are the material and non-material goods like time, money, services, resources, etc., that are at our disposal. These means are scarce. If these means are abundant like free goods, there would be then no economic problem. But they are scarce and one is forced to postpone some of one’s wants. Here we must remember the term scarcity is used not in the absolute sense but in the relative sense i.e., in relation to demand. A commodity may be available in small quantity but if nobody demands, then it is not scarce. It is therefore, the scarcity of the means which is the basis for all economic problems.

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3 Alternative use of Means. The scarce means are capable of alternative uses. They can be used for several purposes. For example, land which is scarce can be used for cultivation, house construction, playground etc. Similarly, all the economic means and resources may be put to alternative uses. Therefore, in practical life the goods can be put to alternative uses of varying importance. In other words, Robbins explains any human behaviour that is concerned with utilisation of scarce means with alternative uses for the satisfaction of given ends.

4 Economic Problem. The multiplicity of wants, the scarcity of means and the application of scarce means for the alternative uses impose an economic problem. The problem is how to satisfy the unlimited wants with limited means which have alternative uses. Robbins describes this problem as the problem of economising scarce resources. In other words, it is the choice of making of an economic activity.

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(b) Explain any four defects of Robbins’ definition.

Ans. Defects of Robbins’ definition

Though scarcity definition is more scientific than welfare definition, still it has its own limitations. Robbins’ definition has the following drawbacks:

1. Robbins’ Definition is too Wide. It does not confine the scope of economics either to the study of wealth or welfare. It extends the scope of economics to all activities of mankind that are related to the problem of choice. The problem of choice as such is found not only with social beings but also with non-social beings like Sadhus. So, their problem of choice has neither the social significance nor social implications.

2. Scarcity Definition makes Economics Meaningless. If economics is neutral between ends, as Lionel Robbins claims, economics becomes a mere theoretical science or a mere value theory.

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3. Economic Problem does not always arise from Scarcity. Some critics are of the opinion that economic problem also arises from the abundance of goods as well. For example, during the great depression of 1930’s it was not the scarcity but abundance of goods in U.S.A. that created the economic problem to the world.

4. Static Definition. According to some critics, Robbins definition is static as it studies only present means. On the other hand, it forgets the future where both ends and means are subject to change. In this way, Robbins definition ignores growth aspect of an economy.

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5. Only Deductive Method. Prof. Robbins used the deductive method of study. But he did not rely on inductive and historical methods. These methods are equally scientific in nature while studying the problems of a growing economy.

6. Link with Welfare. Prof. Robbins criticised Marshall’s definition based on welfare. Limited means are generally used to satisfy unlimited wants. Evidently, it means maximising satisfaction which leads to more welfare. Thus, Robbins’ definition has indirect link with welfare of the individual or society.

7. Impractical. According to some economists, Robbins’ definition is only intellectual exercise. But in practical life, man is always interested to solve many problems. In this way, Robbins’ definition is a departure from reality.

8. Not Applicable to Rich Countries. It is also argued that Robbins’ definition is not applicable in highly rich countries who have plentiful resources. In other words, there is no scarcity of resources.

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9. Not Applicable in Socialist Countries. Prof. Maurice has criticised Robbins’ definition on the ground that in socialist countries, this definition is not applicable. In socialistic set up, Government is responsible for providing basic necessities to the people.

(c) Point out any four merits of Robbins’ definition

Ans. Merits of the Definition

Robbins’ definition is superior to welfare definition on the basis of the following arguments:

1. More Scientific Definition. Since Marshall explains one kind of behaviour as distinct from another in economics, so his definition is criticised as unscientific. But the scarcity definition analysing human behaviour explains any behaviour under one aspect. In this way, this definition is more scientific.

2. More Wider Definition. Marshall in his definition limits the scope of economics to the material means of welfare. But Robbins on the other hand by studying any behaviour connected with the problem of scarcity widens the scope of economics from the boundaries of material welfare.

3. Free from all Confusion. As Marshall claims, economics will involve value judgement. This will lead to difference of opinions and endless controversy among economists. ‘Economics would then become indefinite and fruitless’. But when economics is neutral between ends it becomes free from all these controversies and confusions.

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4. Universal. Robbins’ definition is considered universal. It is applicable to all individuals, groups, and society. Moreover, it deals with the problem of unlimited wants and scarce means. This problem is common everywhere.

5. Study of Human Behaviour. This definition gives clear cut view of human behaviour. It studies the human behaviour of an individual as well as that of a society.

6. More Logical Explanation. Robbins’ definition is more logical in explaining the economic problem. According to this, economic problem arises due to scarcity of means in relation to their demand. It is not concerned with material well-being. 

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(d) Give four merits of growth-oriented definition of economics.

Ans. Merits of Growth Oriented Definition

1. Realistic Explanation of Economic Problems. The growth-oriented definition provides realistic explanation of economic problems. This gives rise to the problem of choice-making i.e. efficient allocation of scarce resources which accelerates the rate of economic growth.

2. Science and Art. According to Samuelson, economics is the oldest among arts and the newest among the groups of sciences. In fact, it is the Queen of Social Sciences.

3. Not Neutral as regards Ends. Economic welfare forms part of the study of economics according to these definitions. Economic welfare is that part of general welfare which is measured in terms of money. Economics studies both material and non-material means of economic welfare. These definitions are therefore wider in scope than the definitions of Marshall and Robbins.

4. Practical. These definitions are more practical. Economics not only analyses economic problems rather it suggests measures to solve them. Thus, these definitions are more near to human life.

5. Dynamic. These definitions have imparted dynamism to economics. Study of economics is not restricted to the present-day problems relating to the consumption, production, distribution etc. but it studies their future problems as well. Thus, it deals with the dynamic aspect of economic development.

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6. Universal. Growth oriented definitions are universal. These are concerned with economic problems of all types of economies, developed or underdeveloped. In developed economies, the problem is to maintain full employment. On the other hand, in under-developed economies the problem is to achieve the level of full employment and raise standard of living of the people.

Economics is thus concerned with all these issues which make it universal.

7. Study of Economic Quantities. Prof. Boulding holds the view that growth-oriented definitions make a study of the forces determining the quantities and their mutual relations. On this ground, these definitions are called more scientific and definite.

              In short, we can say that modern definition is universal. It is one of the most comprehensive definitions as it deals with the economic problems of all types of economies, developed or underdeveloped.