Explain Marshall's definition of Economics. In what respect it is better than Adam
Smith's approach?
Answers
Many have agreed with Alfred Marshall, a leading 19th-century English economist, that 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 the material requisites…
The main features of Marshall's definition of economics are: ... Concentrates on the ordinary business of life: It shows that Economics deals with the study of man in the ordinary business of life. Thus, Economics enquires how an individual gets his income and how he uses it
Paul Samuelson, Faculty. Called the father of modern economics, Samuelson became the first American to win the Nobel Prize in Economics (1970) for his work to transform the fundamental nature of the discipline.
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Answer:
Economics comes from the ancient Greek word “oikonomikos” or “oikonomia.” Oikonomikos literally translates to “the task of managing a household.” French mercantilists used “economie politique” or political economy as a term for matters related to public administration.
Economics
Adam Smith’s Definition of Economics
Adam Smith was a Scottish philosopher, widely considered as the first modern economist. Smith defined economics as “an inquiry into the nature and causes of the wealth of nations.”
Criticism of Smith’s Definition
The wealth-centric definition of economics limited its scope as a subject and was seen as narrow and inaccurate. Smith’s definition forced the subject to ignore all non-wealth aspects of human existence.
The Smithian definition over-emphasized the material aspects of well-being and ignored the non-material aspects. It was assumed that human beings acted as rational economic agents who mindlessly strived to maximize their own well-being.
The Smithian definition prevents the subject from exploring the concept of resource scarcity. The allocation and use of scarce resources are seen as a central topic of analysis in modern economics.
Alfred Marshall’s Definition of Economics
British economist Alfred Marshall defined economics as the study of man in the ordinary business of life. Marshall argued that the subject was both the study of wealth and the study of mankind. He believed it was not a natural science such as physics or chemistry, but rather a social science.
Explanation: