Definition

1
The branch of knowledge concerned
production, consumption, and transfer of wealth.

with

the

2
A social science that studies how individuals,
governments, firms and nations make choices on allocating
scarce resources to satisfy their unlimited wants. Economics
can generally be broken down into: macroeconomics, which
concentrates on the behavior of the aggregate economy; and
microeconomics, which focuses on individual consumers.
Economics is often referred to as "the dismal science.
3
The science which studies human behaviour as a
relationship between ends and scare means which have
alternative uses (Lionel Robbins, 1932).

4
Economics is the study of people in the ordinary
business of life. In short economics includes the study of
labour, land and investment of money, income and production
and taxes and government expenditures. Economist seeks to
measure well-being to learn how well-being may increase
overtime and to evaluate the well-being of the rich and the
poor( Marshal, 1920).
5
Adam Smith wrote a book in 1776 whose title was
Wealth of Nations. In his book he discussed the word
wealth through its four aspects: production of wealth,
exchange of wealth, distribution of wealth and consumption of
wealth. Therefore it can be said according to Adam Smith:
Economics is a science of wealth.

Production of wealth means the production of goods

and services by combining four factors of production
Land: It is the natural resources such as Sea, Minerals,
Live Stock and forest.
Labour: It is the mental or physical work, which is done
for the sake of reward.
Capital: It means man made resources which help to
produce goods and services.
Organization: It is the act of combing four factors of
production to produce goods and services for the sake
of profit.

After the completion of production process this

wealth is distributed among the four factors
of production for their performance. Rent is
given to land, wages to labour, and interest to
capital and profit to organization.
When people get their share from the
production, they use it to satisfy their wants.
They spent their income to purchase of goods
and services.
The surplus goods and services are
exchanged with other surplus goods and
services for the satisfaction of wants.

Dismal Science
Thomas Carlyle "the dismal science" first occurs in Carlyle's 1849
Article entitled Occasional Discourse on the Negro Question, in which he
was arguing for the reintroduction of slavery as a means to
regulate the labor market in the West Indies.
Slavery was sometimes a mandatory stage for inducing them to work and making
them useful to civilization and progress. Despotism is a legitimate mode of
government in dealing with barbarians. The Slavery is defended because of the need
of workers on plantations and the blacks unwillingness to work at the prevailing
wages and conditions. Some racial groups were inferior to the point of being subhumans.

the freedom of all men. It is not simply about the freedom of black people but about
the freedom of all people.
The sole end for which mankind are warranted, individually or collectively, in
interfering with the liberty of action of any of their number, is self-protection. That
the only purpose for which power can be rightfully exercised over any member of a
civilized community, against his will, is to prevent harm to others. His own good,
either physical or moral, is not sufficient warrant. He cannot rightfully be compelled
to do or forbear because it will be better for him to do so, because it will make him
happier, because, in the opinion of others, to do so would be wise, or even
right...The only part of the conduct of anyone, for which he is amenable to society, is
that which concerns others. In the part which merely concerns him, his
independence is, of right, absolute. Over himself, over his own body and mind, the
individual is sovereign.

Thomus S. Mill supported the Malthusian theory of

population. By population he meant the number of the
working class only. He was therefore concerned about
the growth in number of labourers who worked for
hire. He believed that population control was essential
for improving the condition of the working class so that
they might enjoy the fruits of the technological
progress and capital accumulation. Mill advocated birth
control. In 1823 Mill and a friend were arrested while
distributing pamphlets on birth control by Francis Place
to women in working class areas.

 Malthusian Theory
A theory proposed in 1798 by English economist Thomas Malthus.
The theory states that population would grow at a geometric rate
(i.e., unchecked population growth is exponential (1248)
while the food supply grows at an arithmetic rate. The theory has
been seen as flawed because of the limited factors observed when he
developed the Law. It does not include factors, such as technology,
disease, poverty, international conflict and natural disasters.
http://en.wikipedia.org/wiki/Malthus_theory
The consequence of these two principles is that eventually, population
will exceed the capacity of agriculture to support the new population
numbers. Population would rise until a limit to growth was reached.
Further growth would be limited when:
preventive checks - postponement of marriage (lowering of fertility
rate), increased cost of food etc.
positive checks - famine, war, disease, would increase the death rate.
Malthusian ideas are often supported by Western governments
because it highlights the problem of too many mouths to feed,
rather than the uneven distribution of resources;

Economic Growth is an increase in a

country's real level of national output which
can be caused by an increase in the quality of
resources (by education etc.), increase in the
quantity of resources & improvements in
technology or in another way an increase in
the value of goods and services produced by
every sector of the economy. Economic
Growth can be measured by an increase in a
country's GDP (gross domestic product).

Economic development is a normative concept i.e. it applies in the context of

people's sense of morality (right and wrong, good and bad). The definition of
economic development given by Michael Todaro is an increase in living standards,
improvement in self-esteem needs and freedom from oppression as well as a
greater choice. The most accurate method of measuring development is the Human
Development Index which takes into account the literacy rates & life expectancy
which affect productivity and could lead to Economic Growth. It also leads to the
creation of more opportunities in the sectors of education, healthcare, employment
and the conservation of the environment. It implies an increase in the per capita
income of every citizen.
Economic Growth does not take into account the size of the informal economy. The
informal economy is also known as the black economy which is unrecorded
economic activity. Development alleviates people from low standards of living into
proper employment with suitable shelter. Economic Growth does not take into
account the depletion of natural resources which might lead to pollution, congestion
& disease. Development however is concerned with sustainability which means
meeting the needs of the present without compromising future needs. These
environmental effects are becoming more of a problem for Governments now that
the pressure has increased on them due to Global warming.

Esther Boserups Theory of Population

Growth
In contrast to Malthus, instead of too many mouths
to feed, Boserup emphasized the positive aspects of a
large population;
In simple terms, Boserup suggested that the more
people there are, the more hands there are to work;
She argued that as population increases, more
pressure is placed on the existing agricultural system,
which stimulates invention;
The changes in technology allow for improved crop
strains and increased yields.

The Demographic Transition Model

The model of demographic transition suggested that a population's mortality
and fertility would decline as a result of social and economic development. It
predicted that all countries would over time go through four demographic
transition stages.

STAGE 1 High Stationary or Pre-Industrial

HIGH BIRTH RATES

Little or no family planning

Parents have many children because few survive
Many children are needed to work the land
Children are a sign of virility
Some religious beliefs and cultural traditions encourage large families

HIGH DEATH RATES

Disease and plague (e.g. bubonic, cholera, kwashiorkor)
Famine , uncertain food supplies, and poor diet
Poor hygiene, no piped clean water or sewage disposal

POPULATION GROWTH-- SLOW

STAGE 2 Early Expanding or Early Industrial

(Rapid population growth)
Ehrlich described this stage as the population explosion
HIGH BIRTH RATES
As STAGE 1

FALLING DEATH RATES

Improved medical care e.g. vaccinations , hospitals, doctors, new drugs, and
scientific inventions
Improved sanitation and water supply
Improvements in food production in terms of quality and quantity
Improved transport to move food and doctors
A decrease in child mortality

POPULATION GROWTH-- RAPID

STAGE 4 Low Stationary or Low

Fluctuating
BIRTH RATES LOW
Fertility rates plunge to below replacement rate (2.1 children per
woman) because:
Valuation of women beyond childbearing and motherhood becomes
important
Increasing value is placed on material goods over family size in modern
industrialized society
Widespread choice of contraception by families

DEATH RATES LOW

Child mortality reduced and life expectancy increased due to:
Capital ($$$) investment in medical technology
Widespread knowledge of healthy diet and lifestyle

POPULATION GROWTH SLOW OR DECLINING (due to aging

societies)

STAGE 4 (continued)
Birth Rate

Low

Death Rate

Low with spurts as a result of an aging

society

Natural Increase

Low or negative

Fertility Rate

Near or below replacement rate

Infant Mortality Rate

Low

Example Region

MEDCs, China

Other Characteristics:
Population growth no longer a social and economic issue.
Birth and death rates fluctuate minimally and natural increase stops. An
overwhelmingly urban society. Dependency load is small (large working age group).