The new classical definition or Marshal’s definition of economics says that:
“A study of man kind in the ordinary business of life. It examines the part of individual and social action which is most closely connected with the attainment and use of material requisites of well being”
In simple words, he said
“Economics is a link between wealth and welfare”
This definition has generally regarded economics as
“Science of material welfare”
Generally this definition is considered to be the finest of all since it encircles man’s activities performed by him for earning and spending of his income.
ATTRIBUTES OF THE DEFINITION
Marshal’s definition of economics contains the following attributes:
1. Study of Mankind:
According to this definition economics is the study of human beings. It emphasizes on man. It excludes the study of plants animals and beasts. But it does not study the activities of all human beings. Despite it studies only the activities of real, social and normal man.
2. Material Welfare:
According to this definition, wealth is achieved for material welfare. Material welfare refers to the economic prosperity and well being which is achieved through earning of wealth. Of course, the aim of a man’s life is to attain the welfare, which is possible through wealth.
3. Economic Aspect of Life:
In the light of this definition economics studies only the economic aspect of life and leaves out the other aspects of social, religious, political etc. economic aspect relates to how a man earns his income and how he spends it.
4. Studies of Physical Activities:
According to this definition, economics studies only material activities such as that of carpenters, masons etc. The activities of teachers, doctors engineers i.e. services have been neglected.
5. Economics is a Social Science:
Economics is a social science and not one which studies isolated individuals. In economics we study persons living in a society, influencing other people and being influenced by them.
CRITICISM OF THE DEFINITION
Prof. Lionel Robbins criticized strongly Marshals definition of economics. He pointed the following defects in the definition:
1. Narrow Concept of the Subject:
Since marshal concentrated mainly on material welfare as a result of the material goods therefore according to marshal’s definition only those activities, which produce material goods, are studied in economics and the service sector of the business has been entirely neglected. This proved to be a major criticized part of the definition.
2. It is Classificatory:
Marshal’s definition is classificatory. It has classified economic phenomenon in to material and non-material. The definition how ever recognizes only the satisfaction of material needs in to the subject of economics.
3. Ambiguity in Definition:
The distinction made in this definition between ordinary business of life and extra ordinary is not clear.
4. Welfare cannot be measured:
Welfare is a state of mind and is unquantifiable i.e. it cannot be quantitatively measured. The correct amount of welfare cannot be measured and the satisfaction derived from the purchases or performance or activities cannot be calculated in exact figures. Only the assumption can be made. For instance if two friends purchase the same commodity, it would almost be impossible to identify, measure or even assume that how much welfare they are going to gain through their purchases.
5. Economics is not Purely a Social Science:
Marshals have defined economics as a social science. According to him that all men being members of the society is the concern of the subject but a man living in jungle does not fall within its orbits. But Robbins argued that economics studies all human beings whether or not they are members of society. Thus it is better to call economics as “human science”.
6. Objection on Welfare:
The objection is not merely to the word material but also to welfare. If economics is made to welfare rather than wealth it gives rise to anomalies e.g. Intoxicants come under wealth but their use is not conducive to human welfare. There are on the other hand, many things like love and affection, which are highly conducive to welfare but are not regarded as wealth. In deed about welfare vary from time to time, person-to-person and place-to-place.