Alfred Marshall provides a still widely-cited definition in his textbook Principles of Economics (1890) that extends analysis beyond wealth and from the societal to the macroeconomic level:
"Economics
is a study of man's action 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 actions which is mostly closely connected with the attainment and with
the use of material requisites of wellbeing. Thus economics is on one side a
study of wealth and on the other and important side a part of the study of man
".
Features
of Marshall’s definition:
1)
Economics is interested in human welfare
not in wealth
2)
It is a social science. A person who is
cut away from the society is not the subject of study of economics.
3)
Economics does not study of all the
activities of man. It only studies ordinary business of life.
4)
Economics is a concerned with the ways
in which a man works on natural resources for the satisfaction of material
wants.
Criticisms of
Marshall’s Definition: In 1931, Lionel Robbins published
his book “Nature and Significance of Economics Science”, following are the
grounds of his criticism of neoclassical economics definition by Alfred
Marshall.
1.
Narrow down the Scope of Economics: According to
Prof. Lionel Robbins the use of the word “Material” in Marshall’s definition
narrows down the scope of economics. There are many things in the world, which
are non material but they are very significant for promoting human welfare.
For example the
services of doctors, lawyers, teachers, engineers, professors etc. these thing
satisfy our wants and are scarce in supply. If we exclude these services from
the economics, then its cope will be very much restricted. Therefore, in the
actual study of economics principles, both the material and immaterial things
are taken into accounts.
2.
Classificatory Type of Definition: Marshall’s
definition was rejected by Robins as being classificatory because it makes a
distinction between material and immaterial welfare and says that economic is
concerned only with material welfare.
3.
Relation between Economics and Welfare: Robbins hardly
criticized Marshall’s definition due to the reason of the relation between
economics and welfare. Robins said that there are many activities which do not
promote human welfare but they can satisfy their wants and therefore, can be
regarded economic activities, for example the manufacturing and sale of alcohol
goods or opium etc. here Robins says “whey talk of welfare at all? Why not
throw away the mask along altogether?”
4.
Welfare is a Vague Concept: Professor Robins raised another
objection about “Welfare”. In Robbins opinion, welfare is a vague concept. It
is purely subjective. It differs from man to man, from place to place and from
age to age. Robins says that what is the use of a concept which cannot be
quantitatively measured and on which two persons cannot agree as to what is
conducive to welfare and what is not.
5.
Involves Value Judgment: Robins object that the word “Welfare”
involves value judgment. According to Robbins the work of the economists is not
to judge the value of a commodity whether it promotes welfare or not.
Economists are forbidden to pass any decision.
6.
Impractical: The definition of economics by Alfred Marshall is
of theoretical nature. Alfred Marshall definition of economics is not possible
in practice to divide human activities.