Welfare Definition of Economics: Features and Criticisms of Welfare Definition

 

Welfare Definition of Economics

Alfred Marshall is a pioneer neo-classical economist.

He has given more comprehensive definition economics in his famous book ‘Principle of Economics’ which was published in 1890 AD.

His definition of economics is also known as welfare definition of economics.

According to Marshall, “Political Economy or Economics is 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 material requisites of well-being”.

This definition clearly states that Economics is on the one side a study of wealth and on the other most important part is study of the mankind.

 

Marshall’s followers like Pigou, Cannon and Beverage also defined Economics in terms of material welfare.

According to A.C. Pigou, “Economic studies that part of social welfare which can be brought directly or indirectly in relation with measuring rod of money”.

According to Cannon, “Economics is study of material welfare”.

 

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Features of Welfare Definition of Economics

The welfare definition of Economics has the following features:

Primary place to man

The welfare definition keeps the man in the primary place and wealth in secondary place.

Wealth is only the means of human satisfaction.

According to this definition, “Economics is on the one side a study of wealth and on the other, the most important part, is the study of mankind.” 

Therefore wealth is only a means to the fulfillment of ends, which is human welfare.

So, Marshall has given more importance to the man and secondary importance to the wealth.

 

Study of an ordinary and social man

Economics deals with ordinary men who are rational.

It means economics deals with the activities of normal man only.

It studies the activities of the people living in society.

But, activities of abnormal man like drunkards, gamblers, drug addiction etc. does not fall under the scope of economics.

It does not study the activities of isolated persons like Robinson Crusoe’s.

 

Study of material welfare

Economics is concerned with the material welfare of mankind. It studies only ‘material requisites of well-being’ or material welfare.

In the view of Marshall, welfare can be increased from the acquisition of material or physical goods like, water, air, clothes, shelter, computer, mobiles vehicles etc.

 

Normative science

According to Marshall, economics is the normative science which deals with what should be or what ought to be?

It gives moral lesson to the human being.

Welfare of man itself is related to the ethical decisions.

 

Criticisms of Welfare Economics

The definition of Alfred Marshall was generally accepted for a long time.

It enlarges the scope of economics by emphasizing the study of wealth and man rather than wealth alone.

In the book ‘Nature and Significance of Economic Science’ Robbins criticized welfare definition of economics. These criticisms are explained below:

 

Classification and impractical

Robbins rejected Marshall’s definition as being classifications because it makes a distinction between material and non-material welfare and says that Economics is concerned only with material welfare.

Classification into material and non-material welfare, individual and social actions and ordinary and extra ordinary men is not practicable.

 

Narrow the scope of economics

According to Robbins, the use of the word “material” in the definition of economics narrow down the scope of economics.

There are many things which are non- material but they are very useful to satisfy our wants and are scarce in nature like the services of doctors, lawyers, teachers, dancers, engineers, professors etc.

This definition has restricted to the service sector.

 

Relation between economics and welfare

Welfare definition has established the relation between economics and welfare but in the view of Robbins there are many activities which do not promote human welfare, but they are regarded economic activities.

Like, cigarette, alcohols etc are the economic goods that cannot promote the welfare to all people.

 

Welfare is a vague concept

The fourth criticism raised by Robbins was on the concept of “welfare”.

In his opinion welfare is a vague (unclear) concept.

It varies from man to man, from place to place and from age to age.

 

It involves value judgment

Finally, the word ‘welfare’ in Marshall’s definition involves value judgment and made normative science to the economics.

According to Robbins economics is neutral as regards ends.

It is not supposed to be its function to pass moral judgments and say what is good and what is bad.

 

Economics is not only social science

In the Marshall view economics is the social science.

It studies the behaviour of social man but for Robbins economics study the human behaviour of all man related to unlimited ends and scarce means whether they live in the society or not.

 

Difference between Wealth Definition and Welfare Definition

Bases	Wealth definition	Welfare definition
Concept	Economics is the science of wealth.	Economics is the science of material welfare.
Economic man	This definition is based on the concept of economic man.	This definition is based on the concept of ordinary man.
Primary concern	Adam Smith has given primary place to the wealth.	Marshall has given primary place to the man.
Sources of  wealth	Labour as a single source of wealth of a nation.	Labour and other resources are source of wealth of a nation.
Nature of wealth	Adam Smith deals simply with wealth in material form.	Marshall deals with wealth in both material and non-material form.

 

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