Welfare Definition / Marshall’s Definition/ Neo-Classical Definition: (1890-1932) (Economics as a science of welfare)
Alfred Marshall, the leader of Neo-classical economists, gave a new concept of economics by publishing his book “Principle of Economics” in 1890 A.D. In his book, Marshall enlarges the scope of economics by emphasizing on the study of wealth to mankind together. In his view, people are not made for wealth, wealth is made for people. In the words of Marshall, “Man earns money to get material welfare.”. The objective of economics is to increase the material welfare of mankind. Wealth is only the means to achieve material satisfaction. Wealth is not end but it is only means. So, Marshall gave primary importance to mankind and secondary to wealth. This view of Marshall was supported by many economists like, A.C. Pigou, Canon, Beveridge etc.
The main points/ideas of welfare definition are as follows:
1.Primary concern to mankind:
Economics is mainly concerned with the study of mankind in relation to wealth. Wealth is for the benefit of mankind but mankind is not for wealth. Wealth is sought for promoting human welfare. So, Marshall suggested that primary importance should be given to mankind and secondary importance to wealth.
2. Study of ordinary man:
According to Marshall, economics is related to the behavior of ordinary man not economic man. i.e., a man whose only motive is to acquire wealth for its own sake and who is not influence by human consideration in the pursuit of wealth. Rather, economics deals with ordinary human beings who are involved not only in accumulating more wealth but also try to experience love, sympathy, goodwill etc. to make their social life more meaningful.
3. Study of material welfare:
Economics does not study the whole human welfare but only part of it called material welfare. Material welfare means satisfaction obtained from the consumption of physical goods. Non-material welfare is outside the scope of economics. According to this definition, wealth is used for material welfare. Material welfare refers to the economic prosperity and wellbeing which is achieved through earning and spending wealth.
4. Study of social science:
Marshall explained that economics studies only those people who live in society. It does not study about an isolated person, not belonging to a society such as sadhu, sanyasi, beggar, hermit, priest, monk etc.
5. Economic aspects of life:
According to Marshall, economics studies only economic aspects of human life and leaves out the other aspects of social, religious, political etc. Economic aspects relate to how a man earns his income and how he spends it. Economics does not study all the activities of man.it concerned with those activities which can be brought directly or indirectly with the measuring rod of money.
6. Study of Physical activities:
According to this definition, economics studies only material activities such as those of carpenters, masons etc. the activities of teacher, doctor, engineers i.e., non-material activities/ services have been neglected.
7. Classificatory:
This definition has divided activities of man into economic and non-economic activities; welfare into material welfare and non-material welfare; and person into ordinary and extra-ordinary.
8. Money is the measure of material welfare:
According to Marshall, material welfare is that part of social welfare which can be measured directly or indirectly with the measuring rod of money.
Criticisms/Limitations of Welfare definition:
Marshall’s definition was quite popular until it was attacked by Lionel Robbins. His definition has been strongly criticized by Robbins in the following points:
1. Classificatory in nature:
Alfred Marshall had divided human activities into economic and non-economic, welfare into; material and non-material; and person into ordinary and extra-ordinary. But he was not able to separate these terms clearly. The human activities may be material yielding wealth or non-material yielding satisfaction. In the view of Robbins, in the actual study of economic principles, both material and non-material are taken into account. Thus, Marshall’s definition is classificatory only rather than analytical.
2. Economics is human science, not only social science:
According to Marshall, economics study the economic activities of social man only. But in Robbins’ view, this idea is wrong because the man who lives outside the society may also be engaged in economic activities. Whether the person live in society or not, he has to face various economic problems. Thus, economics is not a social science only but, it is human science.
3. Narrow scope of economics:
According to Marshall, economics only studies only material activities which are the base of human happiness and the ultimate goal of man is to increase material welfare. But, according to Robbins, the use of word material in the definition of economics narrows down the scope of economics. There are many things, which are non-material but they are very useful to promote human welfare. For example, services of Doctors, Layers, teachers, engineers etc.
4. All material goods may not provide welfare:
According to Marshall, all material goods provide welfare for people. But some of the goods like cigarette, alcoholic drinks etc. are not able to promote welfare for the user. When harmful goods are used, welfare cannot be achieved.
5. Welfare is a vague concept:
According to Robbins, welfare is a vague concept in economics because it is subjective. It varies from person to person, from place to place and from time to time. Moreover, welfare cannot be quantitatively measured.
6. Economics is only a positive science:
Economics is not related with Ethics. It is neutral between ends. It is wrong to call normative science. A person is free to use his wealth the way he likes in order to maximize his satisfaction.
7. Impractical:
Marshall’s definition is theoretical in nature. But according to Robbins, it is not possible in practice to divide human activities into material and non-material. Economics studies all those activities of man which are related to income spending by man, whether they promote his wellbeing or not.