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Economics.
Definition:
Economics is a social science that study that study how individual, business, government and societies allocate limited resources to satisfy unlimited wants.
economics explore he fundamental problem of scarcities.
Scarcities. Scarcity is the basic economic problem of having seemingly unlimited human wants in a world of limited resources.
Background: Economics comes from the Greek word "Oikonomos" which is a combination of two Greek words.
(Oikos), meaning "house" and (nomos), meaning "management". Oikonomos means (home rule).
The procedure is that families produce goods and services to earn income and consume them. After this
word used for 'State' means, “How state people live their lives. “Startled, 'State' called 'Polis', and state
economics said (Political Economics). Progress made changes, now we called it “ECONOMICS."
DEFINITIONS:
Economics definition is divided into three periods.
a.Classical School of Thought.
(Economics is the study of wealth).
b.Neo- Classical School of Thought.
(Economics is the study of material welfare.)
c.Modern School of Thought.
(Economics is the study of human behavior.)
Classical School of Thought.
According to Adam Smith, Economics is the study of wealth.
Founder of Classical economics, Adam Smith.
The first person who introduced ‘ECONOMICS’ as the subject is Professor Adam Smith. He is the founder
of the Classical School of thought. Adam Smith was a Scottish economist, philosopher, and author as well
as a pioneer of political economics. Also known as 'FATHER OF ECONOMICS' or 'FATHER OF
CAPITALISM' and Father of Political Economics.
He wrote his book, The Wealth of Nations (1776), Adam Smith argued that taxation should follow the
four principles of fairness, certainty, convenience and efficiency. Fairness in that taxation, should be
compatible with taxpayers' conditions, including their ability to pay in line with personal and family needs.
The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of
Nations (1776).
Adam Smith argued against Mercantilism and was a Pioneer of laissez-faire capitalism that emerged in
the mid-18th century. In his first book, “The Theory of Moral Sentiments” Adam Smith proposed the idea of an individual hand, the tendency of free markets to regulate themselves by means of competition, demand and supply, and self-interest. Contributions include division of labor, gross domestic product (GDP), and the theory of the invisible hand.
Pioneer of laissez-faire, Adam Smith.
The French phrase laissez faire literally means “allow to do,” with the idea being “let people do as they
choose.” The origins of laissez-faire are associated with the Physiocrats (a group of 18th-century French
economists) who believed that government policy should not interfere with the operation of natural
economic. Laissez-faire was "a program for the abolition of laws constraining the market, a program for
the restoration of order and for the activation of potential growth".
Laissez-faire refers to a type of leadership style that emphasizes delegation and minimal supervision.
In a laissez-faire environment, team members enjoy a high level of autonomy and are often the primary
decision-makers.
According to the classical school of thought:
“Economics is the branch of knowledge concerned with the production, consumption, and transfer of
wealth.”
According to this definition, economics is a science of the study of wealth only. It deals with production,
distribution, and consumption. This wealth-centered definition deals with the causes behind the creation
of wealth.
Adam Smith categorized wealth into four aspects.
a. How to Production of wealth.
b. How to Distribution of wealth.
c. How to Exchange wealth.
d. How to Consumption of wealth.
According to him, Economics is a science of the study of wealth only and economics is the study of wealth arise questions, Early economics called it the study of wealth and since of science of wealth. Economics is a social science concerned with the production, distribution, and consumption of goods and services.
Adam Smith's give three laws of Economics are, Law of demand and Supply, Law of Self Interest and
Law of Competition. As per these laws, to meet the demand in a market economy, sufficient goods would be produced at the lowest price, and better products would be produced at lower prices due to competition.
Adam Smith categorized four key aspects of economics.
Adam Smith assumed that wealth is the only important factor in human society. It can fulfill all the desires of human being in society. He also assumed that the entire efforts of human society are found to be directed towards earning more and more wealth.
This means no taxes, regulations,or tariffs.
CRITICISM:
At that time the religious sentiment was too strong and too much valued over men’s mind's exclusive
emphasis on wealth could only cause repulsion in the enlightened mind.
This was especially due to the pampered and degenerate way to rich.
According to Carlyle and Ruskin says that:
Economics was supposed to teach selfishness and came to be called Dismal Science.
J.E Carines in his book,
"The Character and Logical Method of Political Economy" clearly said that Economics deals with the
phenomena of wealth.
According to Walker,
'Economics is the body of knowledge that treats wealth'
According to French economist J.B. Say’s,
'Economics is the science that treats wealth'.
The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, he developed the concept of division of labor and expounded upon how rational self-interest and competition can lead to economic prosperity.
