Economics note

 Criticisms of Wealth Definition 

 1. Narrow meaning of wealth: 

This definition has given a very narrow meaning of wealth as it has included only tangible goods. It has totally ignored non-material goods or services. But, modern economists have been using the word wealth in a much broader sense. They have included not only tangible but also intangible or services as well. 

 2. Undue Importance to wealth:  This definition has given undue importance to wealth. It has given primary place to the study of wealth and secondary place to the study of man whereas man is the center point of all activities. Wealth is simply a means to satisfy the wants of man. Therefore, economics must emphasize the study of man more than the study of wealth. 

3. Unrealistic concept of economic man: 

 This definition is based on the unrealistic concept of economic man. As per this definition, economic man is one who is guided by selfinterest alone whereas such a man does not exist in real life. 

Welfare Definition /Neo-classical Definition  Alfred Marshall, (1842-1924) an eminent English economist, recognized the incompleteness of the earlier definition of economics and brought about a fundamental change in it.  According to him, 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 his book, 'Principle of Economics' published in 1890, he defined economics as a subject concerned with those activities which promote the material welfare of mankind.  In his own words, "Political economy or economics is a study of

1. Primary concern: According to this definition, wealth is not required for its own sake. It is required for the sake of man and for the sake of his welfare. It is a means to an end, the end being human welfare. Economics is the study of wealth in relation to man and hence the primary importance is be' given to men not to wealth.  2. Study of ordinary man: According to this definition, Economics is related to the behavior of ordinary people. That means it studies about the rational man and ignores the activities of irrational man like 'Sadhu' or 'Sanyasi' (ascetics) in Hindu religion.  3. Study of material welfare: According to this definition, economics studies only those activities of a common man which are concerned with the promotion of material welfare. Material welfare is the satisfaction derived from the consumption of material goods like food, clothes, telephone, television, etc. The study of non-material