04) and others wrote on Political rcon representative

(1723-1790), the Seottist cconomist is the England Malthug

France, arealso
classical economics, JB Say (1 767-1832) in
(1766-1834)asand David Ricardo (1772-1823) in
considered classical economists. were made
In the early attempts
to bestow new
part of the 19th century Whately suggested
names upon economics.
Heart called it 'plutolE
or the science of exchanges chremnantics'
Or 4ulcs
Or the science of wealth. and Ingram called it the original
the science of money
money-making. Despite these attempts,
name Political Economy" continued to survive the eary
middle part of the 19th century. definite
Mowards the close of the 19th century there was a
Change from Political Economv to Rconomics'. The dropping
the word 'political' emphasizes that our ultimate concern n
individual human beings, not with 'States.)
1Modern economics deals with wealth and man. Ely describes
the development of modern economics as occurring in three step
He writes,"Writers of the first class regard political economy
a science which has to do with external valuable thingS Or
conomic goods-that is with wealth: writers of second class, as
the science which has to do with economic goods in their relation
to man; writers of the third class, as the science which has to
do with man in his relation to economic goods."
Economists like Adam Smith, Marshall, Pigou, Robbins, etc.
considered economics as science and defined economics in their
OWn way.
(B) DEFINITIONS OF ECONOMICS
(1) Adam Smith's Wealth Definition
Adam Smith, the classical economist defines economnics as
science of wealth in his book, 'An Enquiry into the Nature and
Causes of the Wealth of Nations'. He says thus
"Political Economy, considered as a branch of science of
statesman or legislator, proposes two distinct objects, first, to
provide a plentiful revenue or subsistence for the people, or more
properly enable them to provide such a revenue or subsistence
 lON
for
themselves, and
Commonweal
1t th secondly, to supply the
with the revenue
prop0ses enrich both the sufficient for the
to State OT

Ricardo, J.B. Say, J.S. Mill.people

Adam and Sovereign public services
Smith's definition
phenomenon of wealth. of NW. Senior, etc.
supported the
J.B. Say, in his
economics
which deals with the
aim of political Traite d'Economie
economy is to Politique' (1803)
produced, distributed
J.S. Mill and consumed.
show" the way in which says The
wealth is
says, "Political (1805-1873) his Principles of
in
of wealth and the Economy profess to teach or Political Economy
laws of its investigate the nature
Ricardo (1772-1823) in hisproduction its distribution."
and
and Taxation' says thus: Principles of Political
the earth is "Economist studies how Economy
of income anddistributed". Thus economics deals the produce of
wealth. with distribution
Main features of the
wealth definition
The main points of the
wealth definition are
(1) Economics is the study of wealth only. It deals with
consumption,
wealth. production, exchange and distributiontheof
(2) Only such material
are scarce and useful.commodities constitute wealth as
and free goods like air Non-material
goods like services
and water are not wealth.
(3) Economics studies the causes of
wealth changes which
means economic development. To increase wealth,
production of material goods will have to be increased.
Expansion of production depends on division of labour.
Expansion of production requires more investment and
increase in demand. Investment will be maximum when
there is a free economy.
Criticism
(1) Too much importance to wealth.-Wealth has been
given the primary place in economics. Hence, Carlyle branded
economics as 'pig philosophy' because of its support to acquisition
of riches. John Ruskin characterised economics as a 'bastard
science', the science of getting rich. Carlyle considered economies
as the Gospel of Mammon'. Further, economics was branded as
science'.
'a science of bread and butter' and a 'dismal
(2) Restricted meaning of wealth,--Material goods only
taken as
are not
are considered as wealth. Non-material services
F-3
 4 PRINCIPLES OF ECONOMICS FOR LAW STUDENTS

wealth. But modern cconomists use the word 'wealth' for both
xoOds and services. "Thus by restricting the wealth to material
goods only, this definition narrowed the scope of economics.
(3) No mention of man's welfare.-This definition gives
no importance to the economic welfare of society. It emphasizes
only the accumulation of wealth. It pays no attention to equitable
distribution.
(4) No study of means, This definition makes the
earning of wealth an end in itself. It does not tell us the propriety
of means for earning wealth.
(6) Concept of economic man.The wealth definition is
based on the assumption that every man works more to satisty
his self interest. It does not deal with a common man but the
selfish economic man.
As the wealth definition is unscientific and narrow, later
economists expanded the scope of economics by giving weltare
definition.
(2) Marshall's Welfare Definition
Adam Smith's definition of economics as a science of wealth
was criticised as dismal science. In order to save
economics from
severe criticism, Marshall (1842-1924) gave a new definition of
economics in his Elements of Economics'. He gives more
emphasis to human welfare than to wealth.
Alfred Marshall says, "Political Economy or Economics is a
study of man's action in the ordinary business of life; it
how he gets his income and how he uses it," "Thus it isinquires
on the
one side study of wealth, and on the other and more important
side a part of the study of man".
Marshall in his "Principles of Economics" says thus
"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."
A.C. Pigou (1877-1959), Edwin Cannam, Sir William
Beveridge, etc. supported the welfare definition.
A.C. Pigou in his 'Economic Welfare says, "Economics is the
study of economic welfare.. Economic welfare is that part of
welfare which can be brought directly or indirectly into relation
with the measuring rod of money".
Edwin Cannan in his Elementary Political Economy' says,
"The aim of Political Economy is the explanation of the general
INTRODUCTION 5

cause on which the material welfare of human being depends".

Sir William Beveridge in his "Economics as a Liberal
Education' says, "Economics is the study of the general methods
by which men co-operate to meet their material needs".
Thus, "Economics was a science of wealth. Now it is a
science of welfare'.
Main features of welfare definition
The welfare definition has the following main features :
(1) A study of mankind.-Economics studies the
economic activities of man which are concerned with
the material welfare of man.
(2) Ordinary business of life.-An ordinary man works
mostly to earn wealth and spends his earning to get
maximum satisfaction out of it. Economics studies
economic activities of an ordinary man.
(3) Study of individual and social action.-Economics
studies man not in isolation but as a member of a social
group. It studies the personal and social activities of
man which are concerned with his material welfare.
(4) Study of material welfare,-Economics is a subject
which studies the welfare of man which is of the
material type. The study of non-material welfare is
outside the scope of economics.
Merits of the welfare definition
The welfare definition has the following merits :
(1) Avoids criticism made against Adam Smith.--This
definition emphasises man and his welfare. Marshall
gives preference to man and wealth ater on. Now,
economics is no more a dismal science.
(2) Classifies the economic activities.-Marshall's
welfare definition classifies the economic activities of
man into-material welfare and non-material welfare.
Further, economic actions are classified as individual
and social. Thus, Marshall's definition served to put
economics as a class by itself, distinguished from other
sciences.
(3) Clear about the nature of economics,-This
definition considers economics as a social science. It is
not a pure science. It is also not an art. It is one among
the social sciences like politics, sociology, etc.
 ECONOMICS FOR TAW SIODENJS
PRINCIPLES OF
cconomics,-The seope of
scope of delinition is
() Cloar on the wellire
(Onomis, according toman only. It iN lhe sudy of
of
material activities as as they re
relatod
the society
ndividuals as well activities.
through the cconomie
(riticism of welfare definition
Marshall's detinition as under
leon Robbins criticised economies.-Marshall's definition
() Limited scope scope of
the of economics to the study of
has limited But there are non-material sorvices
material goods only,
doctor, a teacher or a lawyer which have
ot asinger, a scope of economics should
CCOnomic value, Hence the
included all oods and services which are economic
be
in nature.
the activities of
(2) Restrietion of economics to definition restricts
man.-Marshall's
ordinary busincss
(Conomics to the study of man in the ordinary choice.
of life. All men are faced with the problem of
Theretore, economics is the study of all men whether
ordinary or otherwise.
(3) Lack of a clear concept of welfare.-Whatever
economics is concerned with, it is not concerned with
the causes of material welfare as such. The idea of
welfare itself is vague, uncertain and unstable. The
concept of welfare changes according to time, place and
circumstances. Welfare depends on the feeling of
individual.
(4) Welfare cannot be quantitatively measured.
Welfare cannot be measured as it depends on the
feelings of persons. Though Prof. Pigou regards money
as an instrument tor the measurement of economic
welfare, but it is not a satisfactory measure. No two
persons get the same satisfaction with the same
quantity purchased by spending equal amount of
money. Poor man may get much more than a rich man.
(5) Cla ssificatory rather than analytical,The division
of human activities into 'economic' and
'non-economic'
is completely unscientific and illogical. Even an
economic activity has a non-economic aspect,
(6) Pure science is considered as a social
science. The definition based on
material welfare
tonds to show that economics is a social science. This
INTRODUCTION
idea is
SCience. lt wrong. Economi
is a pure cs is not 7

(7) uniPositive
versally science
applicableisscience
laws. like physicssimplybecausea human
it has

science,Marshall's
normative
entirely
as the neutral
considered
science. Indefnition
Robbins'
as a
makes
view
normative
economi cS a
of between ends. It is economics 1s
science study
is ends is outside its a positive science
After criticisingtreated as a normative scope. Thus a positive
science.
scarcity
definition of Marshall's definition, Robbins
(3)
Robbins' economics. gives his
Scarcity Definition
Robbins Lionel Charless
Nature and Significance of (1898)in his 'An Essay on the
Economic
Marshall for his normative view of Science' (1931) criticised
economics asthus : "Economics is the science
economics. Robbins defines
behaviour a
have alternativerelationship
uses". between ends and
which studies human
scarce means which
Main Features of Robbins' Definition
(1) Unlimited wants or
the ends.-Robbins
ends. Those concerned with the calls wants as
goods and services may be called consumption of
Economnic wants or ends are unlimited. economic wants.
It is not possible
to satisfy all the wants. Wants are endless. Each of
his
wants may be satisfied separately. Wants are repetitive
in nature. They have priority in satisfying them.
(2) Limited or scarce means.-Most of the means or
resources which carn be used to satisfy wants are
limited in supply. We call such a resource as limited
or scarce as their supply is less than their demand.
Therefore, we cannot satisfy our wants fully.
(3) Means have alternative uses.-The same resource is
used in more than one use. Some resources have a
large number of uses. Others have a few uses. Man is
always faced with the problem of allocation of limited
resources.

(4) Wants are of different intensity.Some wants need

immediate satisfaction, others can be postponed. A man
due to their different
is forced to ch00se between wants
intensity. neutral
between ends.-Economics is
(5) Neutral
 PRINCIPLES OF ECONOMICS FOR LAW
8
between ends. Neither the ends alone nor the means
STUDENTS
An economist :
alone are of interest to the economist.
expected to be in different as to the ends. He cannot
judgments on them. He is not expected to ne
pass
judgments on the most appropriate uses of the means
for reaching the ends themselves. Thus economics is
indicate
free from value judgment. His real task is to
how the means at one's disposal can be used t0 attain
those ends in the best possible way. According to
Robbins, the economics consists laws of the various
results of the act of choice in particular cases.
maximising the achievement of ends or minimising the
use of means is the general criterion on which choices
are based, given the restrictions on the choices.
(6) Problem of Choice.Choice is really an economic
activity. If resources are in plenty and goods are free
there would be no problem of choice. As the means are
scarce and at the same time they have alternative uses,
the problem of choice arises. The consumer has to
choose which 'end he has to attend immediately.
Generally, consumers have limited money, basing on their
income, to spend on day-to-day transactions. He has to choose
whether he has to spend his money on household needs, medical
care, children's education, social expenditure such as presenting
gifts to relatives and friends in functions, purchase of
entertainment or luxury goods, etc. If he spends his income on
particular item, he cannot get other items with his limited means.
Every consumer faces the problem of choice in satisfying his
wants throughout his life.
The problem of allocation of resources is also concerned with
the choice between the production of capital goods or consumer
goods. After solving the problem of allocation of resources, a
choice has to be made among the methods of producing goods.
Then another problem arises regarding the choice of techniques,
ie.. labour-intensive technique or capital intensive technique.
Later the choice of the scale of production arises. The problem
of choosing the method of production also deals with the choice
of the location of production units. Finally, the returns make the
producer to choose whether to exist in the industry or to exit from
the industry. Thus economics deals with the problem of choice.
Other scarcity definitions
Similar scarcity definitions are given by many other
INTRODUCTION

(cononmists.
Georage J. Stigler in his Theory of Price' (1947) says,
"Eeonomics is the study of the principles governing the allocation
of scarce means among competitive ends when the objectives of
allocation is to maximise the attainment of ends."
Wicksteed in his Commonsense of Political Economy says,
"Economics is the study of those principles on which the resources
of a community should be so regulated and administered as to
secure the communal ends without waste." Prof. T. Scitovsky in
his Welfare and Competition' says, "Economics is a social science
concerned with the administration of scarce resources".
Chander says, Economics is the study of the process of
arising
making a living and the problems of econ omics are those
from the fact of scarcity."
of scarcity
Merits of scarcity definition or superiority
definition over welfare definition
welfare definition due
Scarcity definition is superior to the
to the following merits : definition is morescientific than
(1) Scientific.-Robbins' since it is not based on artificial
Marshall's definition and non-material. It
classification of wants as material
such classification. He has made the
is independent of analytical.
study of economics economics.-Marshall had
the scope of to wealth and
(2) Clearer on scope of economics
restricted the material welfare of man
related to the
activities which economics by
widened the scope of
only. Robbinssubject-matter of economics the choice
making the being scarce
due to the resources
problem which arises unlimited.
being
and the wants science,--Robbins made economics
positive a
(3) Status of whereas Marshall regarded it as
science
a positive science. subject to be a
Robbins wanted the
normative
a science which has nothing
is,
positive science, that or
ends. He
bad nature of bringing
goodness
to do with the economic activities
without
all of
wanted to study
mankind. No charge of preaching
in the welfare of be levelled against it.
Mammonism' can
raised economics to the level
science.-Robbins regard it
(4) Pure whereas earlier economists
of pure science and an art.
both a science
 PRINCIPLES OF ECONOMICS FOR LAW
STUDENTS
10
definition.-Robbins definition
universal concerned with unlimited
(5) A everywhere. It is
applicable resources which is the problem
wants and limited
The laws depending upon this
facing everywhere.applicable to all societies.
definition shall be problem of economics.
central
(6) Points out the was defective due to the failure e
Marshall's definition
definition in identifying the central problemof
the that the central problem
Robbins laid down
valuation.
economics is choice and
Wider content.-According to Robbins, economics
(7) types of human wants, material
takes into account all
types of persons whether
or non-material, as well as all
living in society or not. behaviour for
conception of human
(8) Clear behaviour for
economnics.-He told that it is human It takes no
choice between ends and means.
ends may be
responsibility for selecting the ends. The Wherever the
good or bad, economics is not concerned.
Scarce, economics is
ends are many and the means are
directly concerned.
Criticism of Robbin's Definition
(1) Concealed concept of welfare.-Robbins rejected
Marshall's definition for its welfare content. According
to critics his ends' are related to welfare and his
definition has a concealed concept of welfare. It is only
an old wine in new bottle.
(2) Self-contradictory.-Robbins has contradicted himself
by his two views about choice between ends. In the
first place, he contended that economics is neutral as
regards ends. Secondly, he considers economics as the
science of choice. These two contentions are mutually
contradictory.
(3) Absence of human touch.-In Robbins' definition, the
buman touch is entirely missing as he neglected the
welfare of the human beings.
(4) More abstract,Robbins made economics more
abstract and complex and hence it became difficult and
unfruitful. This detracts from its utility for the common
man.
(B) Reduced to valuation theory.-His definition has
INTRODUCIION

reduced cconomics merely to 11

Hays, "Bconomics is valuation theory. Fraser
more than
(G) Cquilibrium
a value
Static in analysis resource allocation."
or theory or
definition iscontent.The greatest defect in Robbins'
that it is static
(7)
suffers from inadequateness. in Content and as such
Choice of individuals as
individuals as such has no
subject-matter.-Choice
study choices if they particular significance. We
of
have social repercussions.
Individual
form the choices havingofno social implications cannot
subject-matter
(8) Ineffective economics.
attempt to make
science.Critics have economics a
also charged Robbinspositive
trying in vain to make with
(9) Does not explain economics a positive science.
the problem of
Robbins' definition of
economics unemployment.
does not explain the
problem of unemployment. This definition has no use
to under-developed countries.
(10) Does not cover the economic
growth.-Economics
of growth explains how an economy grows and the
national income increases. Robbins takes the resources
as given and discusses only their allocation.
Inspite of all these criticisms, Robbins' definition is
considered by many economistS as the best one.
Comparison of Robbins' and Marshall's Definitions
There are some similarities and differences between Robbins
and Marshall's definitions of economics. They are :

Similarities
the word
(1) Wealth and scarce means.Marshall used 'scarce
'wealth' and Lord Robbins used the words
same. In
resources'. The meaning of these two is the
scarce.
economics, wealth is only that good which is
man,--Both Marshall and Robbins
(2) Primary place to and both the definitions
assigned primary place to man
behaviour and man's action.
stress the study of human
Rational man,-Marshall assumed that the man aims
(3)
maximising his welfare, whereas Robbins believed
at tries to maximise his
satisfaction.
that the rational man
rational man for their study
Both the definitions take welfare.
of
as satisfaction is a sign
 12 PRINCIPLES OF ECONOMICS FOR LAW STUDENTS
Differences
(1) Distinction between economic and non-economic
activities,-According to Marshall, economics activiti
are divided as material and non-material and he deale
with material goods, promoting material welfare. For
Robbins, difference between material and non-material
welfare activities is of no use.
(2) Social and human science.-According to Marshall.
economics is a social science which studies norma!
social human beings. In Robbins' view economics is a
human science concerned with the economic activities
of all men, whether ordinary or extraordinary, since
everyone faces the economic problem.
(3) Normative and positive science,--Marshall's
definition clearly made economics a normative science
by including human welfare. Robbins wanted economics
to be positive science. He made the economics neutral
between ends.
(4) Classificatory and analytical definitions.
Marshall's definition is classificatory in nature. He
separated the material activites from non-material
activities. Robbins, on the. other hand, gave an
analytical definition which was centred on the basic
economic problem of scarcity.
(5) Practical and theoretical
definition considers economic
view.-Marshall's
policies. Robbins'
definition is of an abstract nature.
(6) Difference regarding man and his welfare.-In
Marshall's definition emphasis is on man in sharp
contrast to the emphasis on the economic problem in
Robbins' definition. Marshall's definition has a
element while Robbins' definition, being scientifichuman
lacks
the human touch.
(7) Applicability to different economic
systems.Marshall's definition is relevant only for a
monetary capitalist economy where individual choice is
free, Robbins' definition is relevant for all
systems whether primitive or advanced. economic
Modern economists extended the Robbins' definition bv
incorporating economic development and growth.
ENTS
INTRODUCTION
nic (4)
Modern or Growth
es
als Robbins' definition excludes
ccononmic Definition
Or dynamic growth. takes an
lt from its purview the
al
definition problenm. entirely static view of an problem of
in his bookProf. Samuelson gave modern oressentially
isEconomics'
as growth
with "Economi
or cs follows
the study of how
without the use of men and society choose,
productive resources which couldmoney,
produce
to employ Scarce
for various commodities over time,
have alternative uses,
andconsumption now and in the and distribute themto
groups of society". future among various
people
Similar growth
economists also. definitions are given by other modern
Spencer,is a Milton, H in his
"Economicsof social science Contemporary Economics' says,
allocation resources for theconcerned with the proper uses and
growth with stability." achievement and maintenance of
is a Frederick
study of Benham
in his book
the factors affecting Economics' says,"Economics
stability of country's national income." the size, distribution and
The main features of
(1) Like Samuelson's definition are :
Robbins, Samuelson has
Scarcity of means in relation tostressed the problem of
unlimited ends.
(2) Unlike Robbins,
Samuelson has made
dynamic by including the element of timehisindefinition
it. Such
phrases as "to produce various commodities over time"
and "distribute them for
consumption now and in the
future" were intended to stress the dynamic nature
his definition. of
(3) Samuelson's definition is not only dynamic in
content,
it is also wider in scope. It is applicable even to a
barter economy where money is conspicuous by its
absence.
(4) The main thing about Samuelson's definition is that it
deals with the problem of choice in its dynamic setting.
(5) It is an exhaustive, comprehensive and expansive of
Robbins' definition. Economics is considered as the
study of the allocation of scarce resources and of the
determinants of income, output, employment and
economic growth.
(6) The growth definition of Samuelson has also auniversal
 14
PRINCIPLES OF ECONOMICS FOR LAW STUDENTS

appeal. It is applicable to all sorts of economics-past.

present andfuture. The growth definition' also
transcends all ideological differences, being equally
applicable to capitalist., socialist and communist, and
mixed economies because the problem of choice in its
dynamic setting arises in all.
Samuelson's definition is the most acceptable definition of
Economics at the moment.
(C) NATURE AND SCOPE OF
I. ECONOMICS
Economics as a
science
Lord Robbins, Walras,
Senior, Nassau William Cournot, Antoine Augustin and
considered economics as a scien ce. A
science is a systematic and
explain the cause and effect comprehensive study of facts which
the following features : relationship. A science must have
(i) A science is a
systematised study of a subiect.
(ii) Science establishes
the
effect of a fact.
(iii) Laws of science are
relationship between cause and
Prof Robbins says, universal.
"The
propositions of propositions
all of
economics
other sciences are on all
that the last three ".
letters of the
nresent a clear proof that 1t 1s word
a
dynamics which have -ics' at the end SCience like
Robertson
says
'economics',
i.e., -ics'
as economics. physics and
Arguments in favour of
economics as
(1) Systematised study.-In a
science
economic facts. Th economics, there
systematised collection, classification
is a