Alfred Marshall (1842 – 1924) wrote the book “Principles of Economics” (1890) in which he defined “Political Economy” or Economics as a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being”.
The important features of Marshall’s definition are as follows:
a) According to Marshall, economics is a study of mankind in the ordinary business of life, i.e., the economic aspect of human life.
b) Economics studies, both individual and social actions aimed at promoting the economic welfare of people.
c) Marshall makes a distinction between two types of things, viz. material things and immaterial things. Material things are those that can be seen, felt, and touched, (E.g.) books, rice, etc. Immaterial things are those that cannot be seen, felt, and touched. (E.g.) skill in the operation of a thrasher, a tractor, etc., cultivation of hybrid cotton variety, and so on. In his definition, Marshall considered only the material things that are capable of promoting the welfare of people.
Criticisms
Marshall considered only material things. But immaterial things, such as the services of a doctor, a teacher and so on, also promote the welfare of the people.
Marshall makes a distinction between (i) those things that are capable of promoting the welfare of people and (ii) those things that are not capable of promoting the welfare of people. But anything, (E.g.) liquor, that is not capable of promoting welfare but commands a price, comes under the purview of economics.
Marshall’s definition is based on the concept of welfare. But there is no clear-cut definition of welfare. The meaning of welfare varies from person to person, country to country, and one period to another. However, generally, welfare means happiness or comfortable living conditions of an individual or group of people. The welfare of an individual or nation is dependent not only on the stock of wealth possessed but also on the political, social, and cultural activities of the nation.
