ICS FA ICom Notes Class XI Principles of Economics Origin of the word Economics and Early Definitions

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According to economists, the word ‘economics’ has been derived from the word ‘Political Economy’ which consist of three Latin words:

1. Polis which means state.
2. Plika which means domestic or related home.
3. Nama which means principles.

i.e. it means those principles which are adopted in a home to bring a balance between income and expenditure that can be applied to a state for the sake of balance. Most economist vise of the vices state that the Economics has been derived from the Greek word “OIKONOMOS”.'

The classical school of thought i.e. Adam Smith, N.W Senior, Hills, Malthus and Ricardo have defined economics as,

“Economics is the science of wealth”

In the words of Adam Smith,

“Science, which enquires the nature and cause of the wealth of nations”

Waller defined economics as,

“Economics is that body of knowledge which relates to wealth.”

In the words of Mills,

“Economics to the science of wealth in relation to mass.”

In short, the classical school of thought emphasized purely wealth. So we can say that

“Economics studies the production, consumption, exchange and distribution of wealth.”