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Nature and Methodology of Economics

MD Siyam HossainMD Siyam HossainBangladesh Institute of Business & Technology.Bangladesh Institute of Business & Technology.Narayangonj,DhakaNarayangonj,DhakaDhaka,BangladeshDhaka,Bangladeshwww.facebook.com/mdsiyamhossain

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1. Defining Economics

Study in economics should begin with definition of economicsRegarding definition following questions should be answered: What is Economics? What is the definition of economics?Regarding Definition view of the following authors should be discussed: Adam Smith (1776) Ricardo (1817) Robinson, Marshal and Lord J.M KeynesSome economists, however, have the view that: Question of definition of economy aside (Richard Jones and Comte) Defining economics is unnecessary and waste time (Pareto, Myrdal and

Hutchin) Macfie said lack of distinct definition of economics could be harmful However, students of economics must have clear knowledge definitions of

economics We must distinct idea what economics is, even it is difficult to define

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1.1 Early Definitions

Adam Smith An Enquiry into the Nature and Causes of Wealth of NationsJ.E. Cairns Economics deals with the phenomenon of wealthJ.B Say Economics as a science that treats wealth

1.1.1 Critics of the early Definitions

These definitions were harshly defied by religious leader and philanthropists

Social reformers Carlyle and Ruskin called it “pig science”

Even religiously liberal peoples saw this:

They denoted this as “dismal science” (black science), this degraded human

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1.1.2 Background of the Critics

During the time religious sentiment was dominant

Natural science was under developed

Natural calamity, epidemics and poverty dominated the society

Wealth was mal-distributed

Wealth was seen as a cause of poverty

Concentrating wealth was termed as immoral and sinful

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2. Marshallian definition of Economics Marshal called economics as a study of wealth and man “Economics is the study of the general methods by which men co-operate to

meet their material needs and welfare.” The aim of the political economy is to explain on which the material welfare of

human being depends Marshal definition was termed as welfare definition of economics

This definition emphasis on the following points:

       Wealth is source for human welfare

       But wealth is referred to second position

       Economics deal with general peoples

       Marshal definition consider human with love, and affection

       Motivation and desire to maximise profit is not given proper emphasis

       Economics, however, prerequisites of material welfare

       And encourages materialistic philosophy of life

       In practical world Economics ignores non-materialistic aspect of life

       Marshal regarded economics as science and imperfect art

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3. Robbins’ definition of economics

Robbins tried to free the definition of economics from welfare philosophy

He said, “Economics is a science which studied human behaviour as a relationship between wants and scarce means which have alternative uses”

Robbins definition has following assumptions: Endless wants are the source of all economic activities

If there is no want, economic activity is bound to cease

Wants are unlimited but the means to satisfy wants is strictly limited

Had the means of satisfaction unlimited, no economic problems have arisen

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Robbins definition has following superior considerations

Consider all material and non-material wants

Consider well being of the peoples

Does not confine economics on wealth and related activities

Robbins considers economics as science

Limitations of Robbins definition

Economics cannot deny its responsibility for human society

Robbins definition does not include the theory of growth

It does not explain the problem of unemployment

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3. Modern Definition

Lord J.M Keynes Economics is study of the administration of scarce resources and

of the determination of income and employment

Benham Economics is “a study of the factors affecting the size,

distribution and stability of a countries national income.”

Significance of Modern Economics Compare to earlier definitions revolution has been made in

economic thinking Growth has got central importance in the definition of the

economics Stability in economic development