Brief History of Economics Economics is a social science that studies the production, distribution, and consumption of goods and service. The word’s ‘economics’ is from the Greek word ‘oikos’ ( house ) and ‘nomos’ (law), hence “laws of the house (hold).”
Brief history of Economics:
Although discussion about production and distribution have a long history, economics in its modern sense is conventionally dated from the publication of Adam Smith’s “An Inquiry into the nature and causes of the Wealth of Nations in 1776, (known as wealth of nations).” In this work, Adam Smith (generally regarded as the father of Economics) defines the subject in practical terms. Political economy, considered as a branch of the science of a statesman or legislator, proposes two unmistakable items: first, to supply a plentiful revenue or product for individuals, or more properly, to empower them to provide such a revenue or subsistence for themselves; and furthermore, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign. Smith alluded to the subject as ‘political economy’, however that term was progressively supplanted in everyday use by ‘Economics’ after 1870.
The term economics was begat around 1870 and promoted by influential “neoclassical” economists such as Alfred Marshall (Welfare definition), as a substitute for the previous term political economy, which alluded to “the economy of politics”- competing state. The term political economy was used through the 18th and 19th centuries, with Adam Smith, David Ricardo and Thomas Malthus as its main thinkers and which to day is frequently referred to as the “classical” economic theory.
Economic thought might be generally isolated into three stages. Premodern ( Greek, Roman, Arab), early modern ( Mercantilist, physiocrats) and modern (since Adam Smith in the late 18th century).
In economics, we study that part of the human activity according to which individuals co-operate with each other to satisfy their basic wants like food, clothing, accommodation and etc. Various definitions of economics have been introduced by various economists. First of all, Adam Smith defined economics in 1776 in the words:
“Economics is a study of Causes of Wealth of Nations” .
Some other economists like senior, J.S. Mill, Ricardo., etc. also defined economics is the terms of wealth. However, these definitions were scrutinized by Ruskin and Carlyle the premise that economics being a science of wealth teaches selfishness and misguides human beings. They also stated that it is a science of ‘bread and butter.’
At the end of 19th century, Marshall defined economics in the terms of welfare. In the words of Alfred Marshall:
- Economics is a study of mankind in ordinary business of life.
It examines that part of individual and social action which is
Most closely connected with the attainment and the use of
Material requisite of well being.
Some other economists like Pigou, Beveridge and J.B. Clark, defined economics in terms of human welfare.
Robbins criticized Marshall’s definition on the following grounds:-
1. It is incomplete, because Marshall expressed that economics related to only material requirements whereas Robbins has expressed that material as well as irrelevant wants are equally important for human welfare.
2. It is unscientific because according to this definition, welfare is the main object of human life, but welfare cannot be measured.
3. Robbins has stated that we are not concerned with the welfare as such. He has expressed that our anxiety ought to accompany genuine realities of human life.
After rejecting Marshall’s definition, Robbins defined economics in 1993 in the words:
- Economics is a science which studies human behavior as a
relationship between ends and scarce means which have
alternative uses.
The main characteristics of Robbins’s definition are the following:
- Unlimited wants
- Limited or scarce resources
- Alternative uses of resources
- Different importance of wants
According to Robbins, economic problems arise due to the above reason. The main objectives is to allocate the scarce resources in such a way that maximum satisfaction may be achieved. The scarcity of resources is the subject matter of economics.