What is Economics ?

•   Economics is the subject that studies how to allocate limited resources to fulfill unlimited human wants.

•   Economics is a social science .social sciences study the various behaviors of human beings.

• Economics studies economic behavior of people that is a part of human behavior.

•   Theories , concepts , findings etc in Social sciences are dynamic while in pure sciences are stable.

Definitions for Economics

Ø  There is no universal or common acceptance on the subject matters in economics. Economists have been expressing their views and defining time to time.

Ø  Therefore, some economists have considered economics is an unfinished science.

Adams Smith (Father of Economics)

“An enquiry into the nature and cause of wealth of nation”

David Recardo

“Economics explains haw the production of the earth is distributed”

J.B. Say

“Economics is the science which treats wealth”

F.A Walker

“Economics is the nature of treat part of knowledge which relates to wealth”

Alfred Walker

“ Economics is the study of mankind in the ordinary business of life, and examines that part of individual and social which is most closely connected with the attainment and with the use of the material requisites of well-being ”

Arther Pigou

“ Economics studies that part of social welfare which can be brought directly or indirectly into relationship with the measuring rod of money”

Custav Cassel

“ Economics is dealing with markets prices and market exchange”

Tibor Seitovosky

“Economics is a social science concerned with the administration of scare resources”

Professor Henry Smith

“Economics is the study of how in a civilized society one obtains the share of what or other people have produced and of how the total product of society changes and is determined”

Lionel  Robbins

"Economics is a social science that studies human behaviour as a relationship between ends and scarce means which have alternative uses. That is, economics is the study of the trade-offs involved when choosing between alternate sets of decisions."

Some Great Economists - Past & Present

Adam Smith  1723 – 1790

Adam Smith is assumed to be the father of modern economics. His family book " An Inquiry into the Nature and Causes of the Wealth of Nations " ( published in 1776 ) would appear to be classic rather than a modern economic textbook.

One of his most significant contributions to economic thought was his explanation of the importance of the division of labour, and its relation with economic development.

His central theme was the value of self-interest and laissez-faire. Economic freedom was stressed and the power of the government should be minimized. The society will be better if everyone is allowed to seek and fulfill its personal desires, based on law & order.The market mechanism ( in Smith's famous words : the invisible hand ) should be allowed to operate freely so that everyone would be better off & satisfied.

David Ricardo  1772 - 1823

He was born in London. At the age of 14, he helped his father's business only after a brief education. At the age of 19, he tried on his own and in a decade, he had some 2 million pounds. He retired and in 1814 held a seat in the Parliament after buying a country estate.

One of his famous thought was the theory of rent and diminishing returns.

He went on to set forth the theory of comparative advantages in the analysis of international trade. Like Smith, he was treated as a classical liberalist of the time.

Alfred Marshall 1842 - 1924

He was an early pioneer of neo-classical economist. As the Cambridge University Professor of political economy, he was also the father of modern microeconomics. He introduced many concepts in economics - the representative firm ; the dimension of time ( short & long run ) ; consumer surplus ; the interaction of demand & supply ; and also the refining of the concept of elasticity.

To him, economics was not a body of truth but " an engine to discover the truth ".

Karl Marx  1818 - 83

He was a German revolutionary at first. He tried to build to his own philosophy - dialectical materialism - to explain the evolution of history. According to him, history was filled up with " class struggles ". History goes when one class rises up in the society by a revolution and wins over the previous ruling class. He severely attacked the evils of " capitalism " and laid down his philosophy - the so-called Marxism.

In 1848, Marx and Friederick Engels published a pamphlet - the Communist Manifesto - to declare international communist movement as well as their philosophy and social ideals.

In 1867, the first volume of Marx's great work - The Capital - was published. It analyzed the concepts of labour, labour value and capital. He supposed that under socialism the society can reach a state which :

            " from each according to his ability, to each according to his work. "

Under communism, it is a society without a state, a government and even police. The society can reach a state which :

            " from each according to his work, to each according to his need. "

All socialist nations proposed Marxism as orthodoxy until the year 1989.                                                     

John Maynard Keynes  1883 - 1946

Keynes was brilliant in contemporary economics and the father of modern macroeconomics. When the world was hard-hit by the Great Depression in the 1930's Keynes declared that the market mechanism had its failure to cause the collapse of the world economy. It could only be remedied by government action - the use of fiscal policy - which becomes an important topic in public finance.

His masterpiece - the General Theory of Employment, Interest and Money - was published in 1936 which led to the analysis of economics in a macro-view.

Milton Friedman  1912 -

As one of the leading monetarists and member of the Chicago School of economics, the 1976 Nobel Prize Laureate advocates the confinement of the role of government. He suggested that the central bank should have a stable increase in money supply to cope with economic growth, and at the same time, to maintain a monetary policy so as to prevent inflation.

In short, inflation is basically a monetary phenomenon so that money matters very much.

Paul A. Samuelson  1915 -

He was notable in his extensive application of mathematics in economics with innovative results. He won the Nobel Prize in 1970.