LECTURE : 01
INTRODUCTION TO ECONOMICS
History
and Scope
The word Economics is
derived from the Greek words ‘Oikos’ means house and ‘Nomos’ means custom or
laws. So it means management of a household especially in those matters which
are relating to the income and expenses of the family.
Adam Smith (1776) considered to be the founding father of modern
Economics, defined Economics as “the study of the nature and causes of
nation’s wealth or simply as the study of wealth”.
According to A.J. Brown, “An economy is a system by which people get living” or it is a framework
where all economic activities are carried out.
It is a way through country’s resources are owned and the way that
country takes decisions as to what to produce, how much to produce and how to
distribute what has been produced determine the type of economic system that particular country
practices.
Marshall’s Definition
“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 with the use of the material requisites of well being”
Robbin’s Definition
“Economics is the
science which studies human behaviour as a relationship between ends and scarce
means which have alternative users”
J.M. Keynes’s Definition
(Modern)
“The study of the
administration of scarce resources and of the determinants of income and
employment”
Economics in Law
Curriculum:
Law is
a discipline which comes in social science. It is a study of system of rules
that are enforced through social institutions. Similarly, Economics is also a discipline of social science
which is concerned with the
proper utilization and allocation of resources for the achievement and
maintenance of growth with stability. Crafting policies, rules, regulations and
establishing institutions by legislative bodies are for the welfare of a
society. Similarly economic system plays a pivotal role in managing the scarce
resources in proper manner. In context of various social aspects knowledge of
Economics is equally important for law students/professionals.
How Law is related to Economics?
Legal
constraints on the allocation, distribution of resources, on labour and housing
markets affects the economic activities in the market. These aspects have
become vital in the globalization of the economy and revival of the markets
with privatization as the focal point. Prof Paul Burrow said that, “Economics
and Law can provide insights in places where traditional legal analysis fails
to penetrate”.
If the problem of the
economist is to determine what has been, what is, and what ought to be the
governing principles in "wealth-getting and wealth-using";' if
"economics is a study of men as they live and move and think in the
ordinary business of life"" it would seem that past and existing
legal systems constitute material of prime importance deserving to be
considered extensively and critically.
Some Examples:
SCHOOLS OF THOUGHT IN ECONOMICS
There is no one single
definition of economics on which all economists has agreed; therefore, after
examining various definitions, economists have divided economics into three
major groups;
1. Classical View (Science of Wealth)
Classical
economics (also
known as liberal economics) asserts that markets function best with
minimal government interference. It focuses on production, consumption, distribution and
exchange of wealth.
2. Neo Classical View (Science of Welfare)
Neoclassical
economics is
a set of solutions to economics focusing on the determination
of goods, outputs, and income distributions in markets through supply and
demand.
3. Modern View (Science of Scarcity)
It is based on three
fundamental facts:
• Ends are unlimited
• Means are limited
• Means can be put to
alternative uses
Readings: Fundamentals of Economics by Habibullah Vaseer
(For Concept Building)
Modern Economic Theory by K. K. Dewett (For
in-depth understanding)
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