Definitions of Economics:

1. According to Adam Smith: “Economics is a science which discusses the production of wealth,
consumption of wealth, distribution of wealth.”

There are 4 aspects to explain Adam Smith’s definition of Economics:

 Production of Wealth: this means how wealth is produced. There are 4 factors which
produces wealth. Land, Labor, Capital and Organization. The combination of these four
factors produces goods and services which are called wealth.
 Consumption of Wealth: means how wealth is spent or consumed. The part of wealth which
we spend the necessities of life, is called consumption of wealth.
 Distribution of Wealth: Wealth is produced by the combination of 4 factors of production
and it is distributed among them. The factors are given rewards as rent to land, wages to
labour, interest to capital and profit to entrepreneur.
 Exchange of Wealth: It means how wealth is exchanged. In other words, how wealth passes
from one person to another person or how it shifts from one country to another country
through international trade. To know about this is called exchange of wealth.

Objections:

 It makes the people greedy, selfish and unsympathic.

 Classical economists have limited the scope of economics ignoring human services
 Classical economists called it a science of wealth but they could not explain what the
objective of the study of wealth is.

Answer to Objections: If we critically examine the above mentioned objections, it becomes clear
that the critics on the economics could not understand the real meaning of wealth. They took the
word wealth only as ‘money’. So they criticized the people who learnt the science of economics. In
true sense, all the necessities of life are “wealth” and their attainment is not unfair. Thus, the
struggle to attain them cannot be named as selfishness and greed. Furthermore, wealth itself is not a
bad thing, its use mat be good or bad. For example, if it is spent on constructions of hospitals and
schools, then it’s a good act. On the contrary, if its spent on gambling, then it’s a bad act. Therefore,
wealth is not bad but the person who has option to spend it. So, it is not a sin to call economics a
science of wealth

2. According to Dr. Alfred Marshall: “Economics is a science of wealth which studies human behavior
in the ordinary business of life; it examines the part of individual and social action which is most
closely connected with the attainment and win the use of material requisites of wellbeing. Thus
economics is on one side of a study of wealth and on the other and more important side, a part of
study of man.

Important Points of the Definition:

 Useful Science: Economics is related with the daily life of a man, therefore, it is an important
and useful science.
 The Study of People Living in Society: In economics, the efforts of the people who take part
in economic activities living in the society are studied. Therefore, economics is not
concerned with the activities of saints, hermits and mads.
  The Study of Efforts Concerned with Material Requisites: In economics, the individual and
collective efforts, which are concerned with material welfare, are discussed.
 Not the Study of Wealth for the Sake of Wealth: Economics does not study wealth for the
sale of wealth rather it studies wealth so that the basic necessities which increase human
welfare, may be purchased.

Advantages:

 Comprehensive and Clear: Marshall’s definition is very simple, clear and comprehensive. It
defines that a man wants to lead a prosperous life and to attain this objective he needs
material requisites and he struggles to attain and use them. This struggle is discussed in
economics
 Importance of Wealth: Marshall’s definition explains the importance of wealth. Man
struggles to get wealth because wealth helps to attain material welfare and prosperity. So
we can say that man desires to het wealth to make his life prosperous.
 Closer to Practical life: Marshall’s definition is closer to practical life. The focus on this
definition is on the man living in the society and it is very necessary to study the efforts of
man living in the society.

Disadvantages:

 It does not cover all economic problems: He only includes those efforts which attain
material requisites in his definition. For example, efforts of farmer and carpenter etc. he
excludes those people who work and serve for the satisfaction of non-material needs. These
efforts are made by teachers and doctors etc. it is not right. So, Marshall’s definition covers
some problems and ignores others.
 The problem of Likes and Dislikes: According to Robbins, Marshall’s definition has created
the problem of likes and dislikes because this definition indicates that purpose of economics
is to increase material welfare. Robbins is of the view that economics should have no
concern with the problem of likes or dislikes. The choice of selection or rejection of desires
should be left to the free-will of the people.

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

Basis of Robbins definition:

 Human wants are unlimited: Man is always after his wants to satisfy and wants to keep on
rising again and again without having to end. Had the human wants be limited, they would
have been satisfied easily.
 Wants are not equally important: Man’s wants do not have the same importance for him.
Some wants are more important than the others. For example: you cant live your life
without food, clothing and shelter, so these wants are important. On the contrary, television
and sofa-set are less important than the wants mentioned above because man can sustain
himself without them. Owing to the difference in the importance of wants, man always faces
the problem of choice.
 Means are limited: it means that man’s resources or means (income and wealth) are less as
compared to his wants. In this way, the aggregate resources of production are less than the
 needs or wants of the people. Therefore, man has to use his resources sparingly to satisfy his
wants.
 Resources have alternative uses: Man can make an alternative use of his resources. For
example, a student having ten rupees can either buy a pen or a watch a film. He examines
the importance of his wants keeping in view the alternative use of the resources and satisfy
the most important of them and he postpones the rest of them for the future. In this way, a
man keeps on using his resources sparingly keeping in view the importance of wants and it is
possible because the resources can be used alternatively.

Advantages:

 Comprehensiveness: the definition is very comprehensive because it is based on the facts

and realities which can never be denied. These facts have been proved true every time and
everywhere, such as the human wants are unlimited while the resources are limited.
Therefore, everyman faces the problem of how he should satisfy his unlimited wants with
the help of his scarce means/resources.
 Extension of the Scope of Economics: his definition has widened the scope of economics.
Prof. Marshall included in economics only those problems which are related with material
requisites and prosperity. While, according to Robbins, every problem which is related with
the unlimited wants and scarcity means is the topic of discussion in economics.
 Determination of Limits of Subject Matter of Economics: his definition has determined the
limits of subject matter of economics. All the problems which rise up because of the
satisfaction of unlimited wants with the limited means, can be discussed in economics

DisAdvantages:

 The meaning of objectives and means are not clear: his definition does not clarify the
meaning of objectives and means. In practical life an objective assumes the shape of a
means later on. For example: the student’s objective is to gain knowledge but the same
knowledge becomes a means which it helps him in getting a job.
 It does not fulfil the modern requirements: in modern age, “economic development and
planning” are very important components of economics. The reason is that it is impossible to
increase national income and speed of economic development without economic planning.
But there is no mean mention of concepts of economic development and planning in
Robbins definition. In this way Robbins definition does not meet the demands of modern age