Adam Smith (1776) who is referred to as the ‘Father of Economics’ and division of labour and specialisation defined it as “an enquiry into the nature and causes of the wealth of nations”. According to the Smithian definition of economics, the discipline deals with the study of how man uses his scarce resources to produce goods and services. This is because wealth is produced with resources. Adam Smith was mainly interested in the production of more goods and services which could generate wealth without regard to their distribution. His definition was
therefore considered not satisfactorily adequate and had to be improved upon by John Stuart Mill.
John Stuart Mills (1943) whose definition was adopted by the Oxford dictionary had it as “The practical science of production and distribution of wealth” Mill’s definition went a step further by including the problems of production and distribution.
Davenport also defined economics as “the science that treats phenomenon from the standpoint of price”. This definition implicitly talks about production and distribution because prices are yardstick for distributing scarce goods and services and scarce resources.
According to Alfred Marshall (1890), economics is “the study of mankind in the ordinary business of life". The Marshallian definition is based on also production, distribution and consumption of goods.
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All the above definitions fail to take cognizance of the concept of scarcity. Failure to emphasise the fact that economics deals with the utilisation of our scarce resources to satisfy our multiple wants. In addition, the definitions fail to acknowledge the fact that production is affected by efficient allocation of scarce resources in the face of unlimited wants.
Despite these numerous definitions, the most widely accepted and established definition of economics was the one given by Professor Lionel Robbins (1835).
Robbin’s Definition: According to Robbin’s definition, economics is “a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
. This definition is more embracing because it incorporates the most fundamental human problems such as scarcity and choice. In case of examination, this definition should be quoted
Note: Economics is the study of the efficient use or management of relatively scarce resources in the production of goods and services to achieve the maximum satisfaction of unlimited human wants. The word “resources” is used differently at three levels.
1 At the level of the individual, resource essentially refers to money or cash.
2 At the level of an organization or firm, resources refer to land, capital, labour and enterprise.
3 At the level of a nation or state, resources again refer to land, capital, labour and enterprise. '
Robbins’ definition lays emphasis on the basic concepts of economies which are explained below.
HUMAN BEHAVIOUR: The aspect of human behaviour that an economist studies is economic activity. It is human.
beings who undertake the economic activities like production of goods and Services (wealth) of ‘ the country, the distribution of these goods and services and the consumption of goods and ' services.
Since human beings are variable in their behaviour, economic activities are subject to variations ' and for that matter the economist studies their behaviour as well. The economist observes how ‘ the behaviour of individuals, firms and the government affect the economic system. ,
ENDS: Ends are our goals, aims, objectives, wants or needs that we have set for ourselves. One
characteristic of ends is that they are many and keep on increasing; as soon as one is provided .
another one emerges. Ends are therefore said to be unlimited.
1 An individual’s ends are unlimited and insatiable and may include purchasing a car, ' house, television set, radio, refrigerator etc.
2 The ends of firms may be to produce shoes, detergents, cars, electric cookers etc.
3 Similarly, the ends of government may be to provide hospitals, electricity, water, schools etc. for the people.
The needs or wants of consumers, producers and government are therefore difficult to satisfy because the resources to produce them in large quantities to satisfy everybody are scarce or limited in supply.
SCARCE MEANS: Means are the resources like machines, tools, land, labour, time and money etc. which help in
the production of goods and services to satisfy human wants. The more we have these means or resources, the more we are able to produce goods and services and hence, more wants can be satisfied. But this is not possible because we have only scarce or limited resources available with which to produce the goods and services we want. Since our wants are many or unlimited, but the resources to produce them are limited in supply there is the need to make a choice from the alternative resources that we have.
Scarce means therefore refer to our limited resources relative to the needs of an individual, a firm or governments to satisfy our many wants. Resources are scarce in the sense that there is a shortage but in sense that their supply is limited. There may be plenty of goods for sale but people may not have enough money to satisfy all their wants. This (i.e. money) in relation to our wants (goods) are scarce.
ALTERNATIVE USES:
Economic resources are scarce and therefore cannot satisfy all our wants. There is the need to choose from the alternative that we have. Economic resources have alternative uses because they can be used to produce many different kinds of goods and services.
If some of these resources are used for the production of one thing then people must forgo the output of the other things which might have produced. For example, if we use resources (i.e land) to plant cassava then the real cost of the cassava farm is the output of yam, plantain, or vegetables which have been sacrificed in order to produce cassava.
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