Livestock Economics, Marketing and Business Management

DEFINITIONS

• Economics is the term derived from a Greek word, OIKOS (a house) and NEMEIN ( to manage ) which in effect meant managing a household using limited funds available in the most economical manner possible.
• Four Important definitions are,
  • Wealth definition of Adam Smith - Father of Economics
  • Science of Material Welfare definition of Alfred Marshall
  • Scarcity definition of Lionel Robbins
  • Growth definition of Paul Samuelson
• Adam Smith defined economics as a science, which studies the nature and causes of wealth of nations.
• Criticism on wealth - Many philosophers like Dickens, Ruskin, Carlyle and Mathew Arnold strongly criticised the wealth definition. They said that the science which concentrates only on the study of wealth is a “Selfish Science”, “Mundane Science”, “Bastard Science”, “Bread and butter Science”, “The Science of getting riches”, “the gospel of mammon” (song of the devil), “a science of illth and not wealth” etc. These philosophers were highly critical of the wealth definition because they at that time were highly influenced by the religious sentiments and spiritual values. They considered that mere acquisition of wealth is not the object of all human activity and they looked at acquiring wealth with great contempt.
• Defects of wealth - Stress in the wealth definition is only on acquiring wealth. But in reality the human life and activity consists of other considerations like love, affection, charity, social obligation, family obligation etc. Wealth is only a means and not an end to human activity. End of human activity is his welfare i.e. welfare of man. Wealth definition did not include the services of various professionals like teachers, doctors, veterinarians, lawyers etc.
• Alfred Marshall (1819) defines economics as: "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 the use of material requisites of wellbeing."
• Marshall defined there is a shift of emphasis from wealth to human welfare. In his view wealth is not an end by itself, it is the means to promote the economic well being of the people. The term ordinary business of life denotes among various people and groups of society.
• Lionel Robbins (1931), defined economics as the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

Limitations of Scarcity definition

• Resources are limited, but scarcity definition has not taken into account the possibility of improving resources due to scientific and technological development.
• Scarcity definition is silent about the role of resources towards human welfare.
• Problems can arise not necessarily due to scarcity of resources but also due to abundance. For example more production of eggs and milk than the demand will bring down the price to such an extent that even the production cost may not be met.
• Scarcity definition does not discuss about employment, economic growth, determination of value or price etc.
• Paul Samuelson defined "Economics is the study of how men and society choose with or without the use of money, to employ scarce productive resources which could have alternative uses to produce various commodities over time and distribute them for consumption now and in the future among various people and groups of society.