Introduction Of Dr. Alfred Marshall

Marshall’s definition of economics was the first to challenge Adam Smith’s definition. Dr. Alfred Marshall (Born. 26 July 1842, Died 13 July 1924) was the first Economist, who denied the wealth-related definitions of Adam Smith, which was in vogue for a long time, in his two books published in 1890 named Principles of Economics and Economics of Industry, and declared them wrong, and defined it as not the study of human welfare. He gave, ‘Man’ the first place and Wealth’ as secondary and clarified that wealth is for man and man is not for wealth. Wealth is not the ‘End’, it is only a ‘Means’ to attain welfare. He presented the definition of Economics in this manner in his book ‘Economics of Industry’. However, Marshall’s definition was also criticized later by a renowned Professor of ‘London School of Economics, Prof. Leonel Robbins in his book ‘An Essay of the Nature and Significance of Social Science‘ in 1932.

Marshall Definition Of Economics

Economics is the study of human activities in the ordinary course of business. It studies how man attains his income and how he utilizes it. In this way, it studies wealth, on one hand, and on the other hand, it is a part of the study of man, which is more important.
According to this definition, it becomes the science of human activities instead of the science of wealth. In his second book, “Principles of Economics”, Dr. Marshall defined it in these words

Economics is the study of humans, in relation to the ordinary business of life. It studies that portion of the personal and social activities, which are closely related to the attainment of material resources, related to welfare and its utilization.

Characteristics Of Marshall Definition Of Economics

1. Greater Emphasis on Human Aspect

Marshall has given balanced importance to Means and Ends, through his definition. He has stated in clear words, that it is on one hand is the study of wealth and on the other hand, more important to this is the study of the human aspect. In this way, he removed the defect of ignorance of the human aspect, in the old views of Adam Smith’s time, and gave more emphasis to the human aspect in clear words.

2. Material Welfare

Marshall in his definition gave more importance to the means of material gains or material welfare. According to him, it studies, those material resources, on which welfare depends. In this way, Marshall accepted the material welfare aspect. Other famous economists like – Pigou, Cannon, Beveridge, etc. also supported it.

3. Study of Social, Normal and Real Persons

According to Marshall, economics studies only social, normal, and real persons. The study of persons living outside the society or in forests, who are unusual, alone, and abnormal, is not done in it. The activities of unusual persons like – an insane, a miser, a saint or Mahatma, etc. are said to be outside the area of the subject matter of economics. According to Marshall, it studies the economic activities of only the social, normal, and real persons.

4. Study of the Ordinary Business Activities of Life

In his definition, Marshall paid emphasis to the Ordinary Business Activities. These ‘ordinary business activities’ refer to those economic activities, which are related to the attainment and utilization of wealth. In this manner, Marshall gave a clear place, to human economic activities.

5. Practical Point of View

Marshall adopted a more practical point of view, in defining economics, He gave equal importance to both theoretical and practical aspects of economic activities, and accepted the scientific and artistic aspects of economics.

6. Simple and Clear Definition

The definition given by Marshall is very simple and clear. According to him, economics studies the activities of earning and expending wealth by man.

Criticism Of Marshall Definition Of Economics

Dr. Marshall’s definition of Economics is a major improvement over the definition of Adam Smith and other ancient Economists. This definition was recognized between 1890 to 1932 and it seemed that the controversy relating to the definition of Economics had ended. But, a renowned Professor of ‘London School of Economics, Prof. Leonel Robbins in his book ‘An Essay of the Nature and Significance of Social Science’ in 1932 criticized Marshall’s definition in loud words, which are as follows –

1. Illusion of Anti-Immateriality

Dr. Marshall has restricted the relation of Economics only to the attainment of material resources and its consumption, whereas, Economics also includes the immaterial resources like services of advocates, teachers, and other employees. That is the reason Robin said

The Economist who keeps in mind only material study, cannot save themselves from the blame of being biased to one aspect.

2. Vagueness of Ordinary Business Activity

The phrase used by Dr. Marshall, “The activities relating to the ordinary business of life is unclear and vague because it is not clear, what activities of man corm under ordinary business and winch activities are outside its area.” According to Prof. Robbins, though there are several such activities that come under an ordinary business of life, yet are studied in Economics, like – the study of the economy at the time of war, conditions of Imperfect Competition, Monopoly, etc.

3. Unclear Economic Activities

Marshall has divided human activities into two parts, Economic and Non-economic, which is unfair because a similar activity of man can be economic and non-economic also at different times. Like – sweeping his own house by a servant is a non-economic activity, while sweeping his employer’s house. becomes an economic activity.

4. Unfair to Relies Economics with Human Welfare

According to Prof Robbins, Economics has no relation to human welfare, Under this, all kinds of activities must be studied, whether it is related to human welfare or not. He gives the following arguments to prove this

• Production and consumption of alcohol and other intoxicants is not beneficial for human welfare, still it is studied in Economics.
• Human welfare is not a definite idea; It keeps changing according to time, place, and conditions.
• Human welfare cannot be measured in quantitative terms.

5. Economics is not only a Social Science but also Human Science

Prof. Marshall has restricted the field of Economics, by calling it only a social science. On the contrary, according to Prof. Robbins,

Economics is a human science, whose basic rules apply to an insane, miser, sage or Mahatma in the same mariner, as it applies to all the persons living in a society.

6. Limited Scope of Economics

The welfare definitions have restricted the scope of Economics because according to these definitions only material, ordinary and economic activities are studied in Economics. All other activities are outside the scope of Economics.

7. Economics is Neutral between Objectives

According to Robbins, “Economics is neutral against objectives. Objectives may be good and also bad, but this has no relation with Economics.” In his book, Prof. Robbins writes, “Whatever Economics is concerned with; it is not concerned with the causes of material welfare”.

8. Economics is a Real Science

On the basis of the definition of Marshall, Economics has become an ideal science, whereas; according to Robbins, “Economics is real science and not an ideal science“.

From the above criticisms, it is clear that Marshall’s definition is narrow and unscientific, and is stuck in the net of immateriality.

Even after the above criticisms, Marshall’s definition is still a source of inspiration, to the readers. Economists, like – J.M. Keynes, Hyne, and Newman, etc. consider Marshall yet as a “Great knowledgeable Economist”