Welfare definition of economics
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Alfred Marshall, a pioneer neoclassical economist, reoriented economics towards the study of humanity and provided economic science with a more comprehensive definition. Marshall, in his famous book Principle of Economics published in 1890, defines economics as follows:
- "Political Economy or Economics is a study of mankind in the ordinary business of life. It examines that part of individual & social action which is most closely connected with the attainment & with the use of material requisites of well-being".
The following are the implications of this definition:
- Economics is a study of mankind;
- Human life has several aspects -- social, religious, economic and political -- but economics is concerned only with the economic aspect of life;
- Promotion of welfare is the ultimate goal, but the term welfare is used in a narrow sense to meet material welfare only.
Besides Marshall, there are other economists who have defined economics in terms of welfare. According to Pigou, "the range of enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money".
According to Edwin Cannan, "the aim of political economy or Economics is the explanation of the general causes on which the material welfare of human beings depend".
Marshall clearly explains that economic activity is different from other activity. For example,
- If a student visits a friend who is ill, it is a social activity,
- If a person give his vote in an election, it is a political activity.
- If a person goes to church/temple it is a religious activity.
Marshall says that economic activity is different from above mentioned activities. A farmer going to the field or a worker going to the factory to work is an economic activity -- they are working to earn money. With that money they will buy things to satisfy their wants. In other words, economics deals with wants, efforts and satisfaction.
In the words of Marshall, "man earns money to get material welfare." Marshall gives importance to welfare and man. This definition came to be called the welfare definition.
