Marshall’s Definition of Economics – Management Class 11

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Alfred-MarshallReference Notes | Commerce
Marshall’s Definition of Economics
For: Management Class 11

Many economists have realized that there are serious mistakes in the Adam smith’s definition. His definition of economics made man selfish. People started thinking about the economics as a science of getting rich etc. In order to save economics from this shiver criticism, Marshall, the leader of neo-classical economists, gave a new concept about economics by publishing his book,” Principles of economics” in 1890 A.D. Marshall enlarged the scope of economics by shifting the emphasis from wealth to man. He said that people were not for wealth but wealth was made for the people. The objective of economics is to increase human welfare. Wealth is not the end but it is only the means. So, Marshall gave primary place to man and secondary place to wealth. Many economists like A.C. Pigou, Cannon, and Beverage etc. have supported the view of Marshall. The main points or ideas in the definition of Marshall are as follows:

  1. Primary Concern to mankind.
    Economics is mainly concerned with the study of mankind in relation to wealth. Wealth is for the benefit of mankind and secondary importance should be given to mankind and secondary importance to wealth.
  2. Study to ordinary man.
    According to Marshall, economics is related to the behavior of ordinary man. Ordinary men are those who are involved not only in accumulating more wealth but also try to experience love, sympathy, good will etc. to make their social life more meaningful.
  3. Study of material welfare.
    Economics does not study the hole of human welfare but only part of it called material welfare. Material welfare means satisfaction derived from the consumption of physical goods. Any forms of goods of economic value that provide satisfaction are regarded as the subject matter of economics. Non-material welfare is outside the scope of economics.
  4. Study of social science.
    Marshall explains that economics studies those people who live in society. It does not study about an isolated people, not belonging to a society such as sadhu, priests, beggar, monks, etc.

Criticism of Marshall’s Definition of Economics
Alfred Marshall’s definition was quite popular until it was attacked by Lionel Robbins. In his book ‘An essay on the nature and significance of economic science’, published in 1932 A.D. The definition of Marshall has been strongly criticized by Robbins in the following points.

  1. The definition is not analytical.
    Alfred Marshall has divided human activities into economic and non economic, material and non-material & ordinary and extra-ordinary. But he could not able to separate these terms clearly. Therefore, his definition is only classificatory rather than analytical in nature.
  2. Economics is human science not only social science.
    According to Marshall, economics studies the economic activities of social man only. But in Robbins’s view this idea is wrong. The man who lives outside the society may be engaged in economic activities. Either the person lives in society or not, he has to face various economic problems. Hence, economics is not only social science but it is a human science also.
  3. Focus on material activities only.
    According to Marshall, economics studies only material activities which are the base of happiness. An ultimate goal of man is to increase material welfare. But in Robbins’s view, the non-material activities may also promote human welfare. Because of the services provided by doctor, teacher, etc, there is possibility of promotion of human welfare.
  4. All material goods may not provide welfare:
    According to Marshall, material goods provides welfare for person, but some of the goods like cigarette, alcoholic drinks etc. are not able to promote welfare for the user. When harmful goods are used, welfare can’t be achieved.
  5. Difficult to separate material & non-material things.
    Marshall includes only material things within the scope of economics and excludes all non-material things. But it is quite difficult to separate material and non material things. For example: – if a doctor services for fee, it is material and if he services for free, it is non-material.

Anyway, Marshall’s definition of economics as a material welfare remains popular for a long time. It considered wealth as a means to satisfy the human needs. Thus, on the basis of entire analysis, his definition of economics can be taken suitable one theoretically.

Posted By : Hari Prasad Chaudhary | Comment RSS | Category : Class XI, HSEB Notes
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