Examine Marshall’s definition of economics? Alfred Marshall’s Definition (welfare Definition)

Examine Marshall’s definition of economics?  Alfred Marshall’s Definition (welfare Definition)

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Alfred Marshall (1842-1924) wrote a book Principles of Economics in 1890. In it, he defined economics as “a study of mankind in the ordinary business of life”. An altered form of this definition is: “Economics is a study of man’s actions in the ordinary business of life”.

Marshall agrees that economics studies about wealth. But he does not accept the view that economics studies about wealth alone. In the words of Marshall, “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. In economics, we do not study about all aspects of humankind. As cairn cross puts it, economics studies about man as “buyer and seller, producer and consumer, saver and investor, employer and worker”. Marshall’s definition is known as material welfare definition of economics because of its emphasis on welfare.

Criticism

There is no doubt that Marshall’s definition is a great improvement over the definition of Adam Smith. For its emphasis is on social problems. And economics is a social science. Moreover, it tells us about the link between wealth and welfare.

First, if we go by the definition of Marshall, in economics we should consider only those activities which promote material welfare. But many activities do not promote welfare but are rightly considered as economic activity.

Second, some activities promote welfare but not material welfare. For example, the activities‟ of doctors, lawyers, actors, musicians promote our welfare. But their lab our does not result in the production of material goods. If we follow the material welfare definition of economics, we cannot consider the activities of the above categories of labor as economic activity as they do not promote material welfare.

Third, Marshall’s definition is classificatory. It is not analytical. It considers the production of material goods (e.g. Charis, tables, cycles and cars, bread) alone as economic activity.

Lastly, by introducing ethical concepts like welfare, economics will become an inexact science. For it is rather difficult to measure welfare. In spite of the above criticism against Marshall’s definition, we should not forget Marshall has widened the scope of economics by establishing a link between wealth and man and his welfare. Modern definitions of economics are based on a theory of scarcity and choice