Economics as a Science of Material Welfare/Neo-Classical
View:
Marshall’s Definition of Economics:
The neo-classical school led by Dr.
Alfred Marshall gave economics a respectable place among social
sciences. He was the first economist who lifted economics from
the bad repute it had fallen. Dr. Alfred Marshall (1842 - 1924)
in his book, 'Principles of Economics' defined Economics as:
“Study of mankind in the ordinary business of life; it examines
that part of individual and social actions which is closely
connected with the attainment and with the use of material
requisites of well being”.
This definition clearly states
that Economics is on the one side a study of wealth and on the
other and more important side a part of the study of man.
Marshall’s followers like Pigou, Cannon and Baveridge (the
Neo-classical writers) have also defined Economics as:
“Study
of causes of material welfare”.
For example, according to
Cannon, the aim of Political Economy is the explanation of the
general cause’s en which the material welfare of the human being
depends.
Characteristics:
The definitions given by Welfare
School of Economists have the following main features of
Economics as Material Welfare:
(i)
Wealth
is not the be all and the end all of human activities:
Economics does not regard wealth as the be all and the end all
of the human activities. It is only a mean to the fulfillment of
an end which is human welfare. Welfare and not wealth is;
therefore, of primary importance to man.
(ii) Study
of an ordinary man: Economics is a study of an ordinary man
who lives in free society. A person who is cut away from the
society is not the subject of study of Economics.
(iii)
It
does not study all activities of man: Economics does not
study all the activities of man. It is concerned with those
actions which can be
brought directly or indirectly with the measuring rod of money.
(iv)
Study
of material welfare: Economics is concerned with the ways in
which man applies his knowledge, skill to the gifts of Nature
for the satisfaction of his material welfare.
For a long time, the definition of
Economics given by Alfred Marshall was generally accepted. It
enlarged the scope of economics by taking emphasis that its
studies wealth and man rather than wealth alone.
However,
Marshall’s definition was criticized by Lionel Robbins.
He in his book “Essay on the Nature and Significance of Economic
Science” gave a critical review of the welfare definitions of
economics. These criticisms are summed as under:
Robbins's Criticism:
(i)
Narrows
down the scope of economics: According to Robbins, the use
of the word “Material” in the definition of Economics
considerably narrows down the scope of Economics. There are many
things in the world which are not material but they are very
useful for promoting human welfare. For example, the services
of doctors, lawyers, teachers, dancers, engineers, professors,
etc., satisfy our wants and are scarce in supply. If we exclude
these services and include only material goods, then the sphere
of economics study will be very much restricted.
(ii)
Relation
between economics and welfare: The second objection raised
by Robbins on welfare definition is on the establishment of
relation between Economics and Welfare. According to him, there
are many activities which do not promote human welfare, but they
are regarded economic activities, e.g., the manufacturing and
sale of alcohol goods or opium, etc. Here Robbins says, “Why
talk pf welfare at all? Why not throw away the mask altogether”?
(iii)
Welfare
is a vague concept: The third objection levied by him was on
the concept of ‘welfare’. In his opinion welfare is a vague
concept. It is purely subjective. It varies from man to man,
from place to place and from age to age. Moreover, he says 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. For example, the manufacturing and sale
of guns, tanks and other war heads, production of opium, liquor
etc., are not conducive to welfare but these are all economic activities. Hence, these cannot be excluded from the
study of economics.
(iv)
Impractical:
The definition of welfare is of theoretical nature. It is not
possible in practice to divide man’s activities into material
and non-material.
(v) It involves
value judgment:
Finally, the word ‘Welfare' in the definition involves value
judgment and the economists according to Robbins, are
forbidden to pass any verdict.
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