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Economic Theory

Let us explain a few important definitions frequently referred to in the
economic theory.
The early economists like J. E. Cairnes, J. B. Say, and F. A. Walker
have defined economics as a science of wealth. Adam Smith, who is also

regarded as father of economics, stated that economics is a science
concerned with the nature and causes of wealth of nations. That is,

economics deal with the question as to how to acquire more and more
wealth by a nation. J. S. Mill opined that it is the practical science dealing
with the production and distribution of wealth. The American economist
F. A. Walker says that economics is that body of knowledge, which relates

to wealth.
Thus, all these definitions relate to wealth. However, the above
definitions have been criticized on various grounds. As a result,

economists like Marshall, Robbins and Samuelson have put forward more
comprehensive and scientific definitions. Emphasis has been gradually
shifted from wealth to man. As Marshall puts, it is “on the one side a study
of wealth; and on the other, and more important side, a part of the study of

man”. Thus according to Marshall, economics not only analysis the aspect
of how to acquire wealth but also how to utilize this wealth for obtaining
material gains of human life. In fact, wealth has no meaning in itself unless

it is used to purchase all those things which are required for our sustenance
as well as for the comforts necessary for life. Marshall, thus, opined that
wealth is a means to achieve certain ends.
In other words, economics is not a science of wealth but a science of

man primarily. It may be called as the science which studies human
welfare. Economics is concerned with those activities, which relates to

wealth not for its own sake, but for the sake of human welfare that it
promotes. According to Cannan, “The aim of political economy is the
explanation of the general causes on which the material welfare of human
beings depends”. Marshall in his book, “Principles of Economics”,

published in 1890, describes economics as, “the study of mankind in the
ordinary business of life; it examines that part of the individual and social
action which is most closely connected with the attainment and with the

use of the material requisites of well being”.
On examining the Marshall’s definition, we find that he has put
emphasis on the following four points:

 Economics is not only the study of wealth but also the study of
human beings. Wealth is required for promoting human welfare.

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