Economics as an Academic Discipline

Read the text and do the tasks that follow.

Economics is as old as the human race: it is probably the first art which man acquired. When some caveman went out to hunt while others remained to defend the fire or when skins were traded for flint axes we had economics. But economics as an academic discipline is relatively new: the first major book on economics Adam Smith’s “The Wealth of Nations” was published in 1776. Since that time the subject has developed rapidly and there are now many branches of the subjects such as microeconomics, international economics and econometrics as well as many competing schools of thought.

There is an economic aspect to almost any topic we care to mention of education. Economics is a comprehensive theory of how society works. But as such it is difficult to define. The great classical economist Alfred Marshall defined economics as “the study of a man in the everyday business of life”.

This is rather too vague a definition. Any definition should take account of the guiding idea in economics which is scarcity. Virtually everything is scarce; not just diamond or oil but also bread and water. How can we say this? The answer is that one only has to look around the world to realize that there are not enough resources to give people all they want. It is not only the very poor who feel deprived, even the relatively well-off seem to want more. Thus when we use the word ‘scarcity’ we mean that:

All resources are scarce in the sense that there are not enough to fill everyone’s wants to the point of safety.

We therefore have limited resources both n rich countries and in poor countries. The economist’s job is to evaluate the choices that exist for the use of the resources. Thus we have another characteristic of economics: it is concerned with choice.

Another aspect of the problem is people themselves; they do not just want more food or clothing, but specific items of clothing and so on.

We have now assembled the three vital ingredients in our definition, people, scarcity and choice. Thus we could define economics as:

The human science which studies the relationship between scarce resources and the various uses which compete for these resources.

The great American economist Paul said that every economic society has to answer three fundamental questions, What, How and For whom.

What? What goods are to be produced with the scarce resource: clothes, food, cars, submarines, television sets?

How? Given that we have basic resources of labour, land, how should we combine them to produce the goods and services which we want?

For whom?Once we have produced goods and services we then have to decide how to distribute them among the people in the economy.

One alternative definition of economics is that it is the study of wealth. By wealth the economist means all the real physical assets which make up our standard of living: clothes, houses, food, roads, schools, hospitals, cars, oil tankers, etc. one of the primary concerns of economics is to increase the wealth of a society, i.e. to increase the stock of economic goods. However, in addition to wealth we must also consider welfare. The concept of welfare is concerned with the whole state of well-being. Thus it is not only concerned with more economic goods but also with public health, hours of work, with law and order, and so on.

Modern economics has tried to take into account not only of the output of economic goods but also of economic such as pollution. The wealth welfare connotation is thus a complex aspect of the subject.