ORIGIN OF THE WORD “ECONOMICS”
The word ‘Economics’ is derived from a Greek word “Oikonomos”, where Oikos mean Household and nomos mean rule, law or management. So Oikonomos means “household management” or “management of house affairs”-i.e., how people earn income and resources and how they spend them on their necessities, comforts and luxuries.
With the passage of time, this word “Oikonomos” was used on the state called “Polos”. This explains how the people of a state used to spend their lives and earn means of living or how a nation takes steps to fulfill its desires and preferences with the help of scarce means. That is why economics was called political economy in its early ages. However, these two words were separated and became separate disciplines. The first one became political science and later one the subject of economics.
DEFINITION OF ECONOMICS
Economics is a science, which is concerned with those aspects of social behaviours and institutions that are involved in using the scarce resources to produce and distribute goods and services to satisfy human wants.
According to Bradley R. Schiller
“Economics is the study of how best to allocate scarce resources among competing uses.’
According to Benjamin Davis
“Economics is the science that studies how scarce resources are allocated to meet competing and unlimited wants and how human beings satisfy their material wants and needs.”
According to Jackson and McIver
“Economics is concerned with the efficient use of limited productive resources for the purpose of attaining the maximum satisfaction of our material wants.”
In simple words, economics can be defined as;
“Economics is the study of those natural laws which governs production, distribution and consumption of wealth. In economics we study that individual and social behaviour of man which satisfy his desires and causes overall economic development.
There is no single definition of economics upon which all the economists are mutually agreed. Every definition is criticized by the different economists from different angles. Therefore, it is difficult to describe the subject matter of economics in a few words, and proper definition of economics is still a question mark. That’s why, perhaps, Keynes was not far wrong when he said political economy is said to have strangled itself with definitions”. Other economists like Richard Jones and Comte who would do away with the definition altogether. Similarly, Economists like Pareto, Myrdal and Hutchinson think that “Any search for a precise definition of economics is a barren enterprise.”
Pareto thinks it “a waste of time to investigate what it may be.”
According to Myrdal, “Economics is the only term regarding the precise definition of which the economist need not be concerned.”
In Hutchinson‘s opinion, “the actual assignment of a definition to the word ‘Economics’ does not appear to solve, or even help in the solution of any useful scientific problem whatsoever.”
That is why it is said that it is needless to waste words in defining Economics. It will be an exercise in futility.
Professor Robbins, however, has denied that it is a waste of time to attempt a precise delimitation of the field of Economics. According to Macfie, lack of clear definition can prove harmful.
The evolution of the definition of Economics has passed through various stages However, the definitions about economics can be classified into the following heads.
1. Economics as a science of Wealth. (Classical school of thought)
According to Adam Smith
“Economics is a subject which studies the nature of wealth and laws which governs its production, consumption, distribution and exchange.”
2. Economics as a science of material welfare. (Neo-classical school of thought)
According to Prof. Alfred Marshall
“Economics is the study of mankind in the ordinary business of life. It inquires how he gets his income and how he uses it. 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. It is on the one side, a study of wealth and on the other and more important side is a part of the study of man.”
3. Economics as a science of scarcity and choice. (Modern Definition)
According to Prof. Lionel Robbins
Economics is science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
4. Economics as a science of growth and efficiency. (Growth Definition)
According to Prof. Paul A. Samuelson
Economics is the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals. Economic efficiency requires that an economy produce the highest combination of quantity and quality of goods and services given its technology and scarce resources. An economy is producing efficiently when no individual’s economic welfare can be improved unless someone else is made worse off.
According to Prof. C. R. McConnell
Economics, which is the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
After considering the various definitions of economics, we can define as ” Economics is a social science which is concerned with the proper use and allocation of resources for the achievement and maintenance of growth with stability and efficiency”