Definition and Nature of Economics
Economics is that branch of social science which is concerned with the study of how individuals, households, firms, industries and government take decision relating to the allocation of limited resources to productive uses, so as to derive maximum gain or satisfaction.
Simply put, it is all about the choices we make concerning the use of scarce resources that have alternative uses, with the aim of satisfying our most pressing infinite wants and distribute it among ourselves.
Nature of Economics
There is a great controversy among the economists regarding the nature of economics, whether the subject ‘economics’ is considered as science or an art.
If it is a science, then either positive science or normative science.
- Economics as a Science
Before we start discussing whether economics is science or not, it becomes necessary to have a clear idea about science. Science is a systematic study of knowledge and fact which develops the correlation-ship between cause and effect. Science is not only the collection of facts, according to Prof. Poincare, in reality, all the facts must be systematically collected, classified and analyzed.
There are following characteristics of any science subject, such as;
(i) It is based on systematic study of knowledge or facts;
(ii) It develops correlation-ship between cause and effect;
(iii) All the laws are universally accepted
(iv) All the laws are tested and based on experiments;
(v) It can make future predictions;
(vi) It has a scale of measurement.
A. Economics and Positive Science
The following statements can ensure economics as a positive science, such as;
(i) Logically based
The ideas of economics are based on absolute logical clarifications and moreover, it develops relationship between cause and effect.
(ii) Labour Specialization
Labour law is an important topic of economics. It is based on the law of specialisation of labour Economists must concern with the causes and effects of labour-division.
(iii) Not Neutral
Economics is not a neutral between positive and normative sciences. According to most economists, economics is merely positive science rather than normative science.
B. Economics and Normative Science
The following statements can ensure economics as a normative science, such as,
(i) Emotional View
A rational human being has not only logical view but also has sentimental attachments and emotional views regarding any activity. These emotional attachments are all coming under normative statements. Hence, economics is a normative science.
(ii) Welfare Activity
Economics is a science of human welfare, All the economic forwarded their theories for the development of human standard of living Hence, all the economic statements have their respective normative views.
(iii) Economic Planning
Economic planning is one of the main instruments of economic development. Several economists have given their personal views for the successful implementation of economic plan. Hence, economics is coming under normative science.
All these lead us to the conclusion that ‘Economics’ is both positive and normative science. It does not only tell us why certain things happen however, it also gives idea whether it is right thing to happen.
- Economics as an Art
According to Т.К. Mehta, ‘Knowledge is science, action is art.’ According to Pigou, Marshall etc., economics is also considered as an art. In other way, art is the practical application of knowledge for achieving particular goals. Science gives us principles of any discipline however, art turns all these principles into reality. Therefore, considering the activities in economics, it can claimed as an art also, because it gives guidance to the solutions of all the economic problems.
Therefore, from all the above discussions we can conclude that economics is neither a science nor an art only. However, it is a golden combination of both. According to Cossa, science and art are complementary to each other. Hence, economics is considered as both a science as well as an art.