Till recently Economics was regarded as a branch of the general science of the State, as is shown by its older name, Political Economy, as it was called formerly. Adam Smith, the father of classical economics, says in his famous book, The Wealth of Nations, that it deals with two objects: -(i) to provide sufficient revenue or substance for the people, and (ii) to supply the State with a revenue sufficient for public service. Political Economy, he said, proposes to enrich the people and the sovereign.’
Modern economists, however, believe that Economics is a separate science, which meets Political Science at certain points, but it is an independent science in its own rights. Dr. Marshall defines it as the study of man in the ordinary business of life. It inquires how he gets his income and how he spends it Thus it is on the one side a study of wealth and, on the other, and more important, a part of the study of man”. Economics, therefore, is the study of human welfare and includes discussion on consumption, production, exchange and distribution, the four departments of this science. We shall see that Economics and Political Science have, firstly, many common points in each of the four departments of Economics; secondly, they have many common topics and problems, and, lastly, have some common basis in their philosophy and methodology.
(i) Economics and political peace and order:
Being social sciences, both of them study man and strive to foster and promote his well-being. It is commonplace to say that economic activities of man are possible only when the State has created conditions of peace and order. Anarchy and misgovernment will hinder economic work, prosperity and progress.
(ii) Promotion of economic well-being, prosperity and progress:
Classical economists in the eighteenth and nineteenth centuries asserted that the State should do nothing more than maintain law and order. They believed that the State should be nothing more than a police State. This was what, the laissez faire economists demanded of the State in the past. But this view led to great social misery and poverty. That was the reason why this individualistic view was discarded in the middle of the nineteenth century and the more collectivisdc views were adopted since then. Nowadays, every State seeks to promote the economic well-being of the individual and general welfare and prosperity of the nation and country.
For instance, if prices rise abnormally, or necessaries of life become scarce, the State devises price control and rationing system. It regulates working hours, conditions of labour, etc. Modem State is becoming a welfare State. In socialist and communist countries, the State used to undertake far more economic activities than those mentioned above.
(iii) Economic exchange, banking and consumption and politics:
Modern State has to interfere in all phases of economic activity. Money-is the medium of exchange and measure of value. State coins money and issues currency notes to supplement it and makes them legal tender. The amount of money in people’s pockets determines the prices of the commodities. Too much money means high prices and inflation which is a great danger to a nation’s economy and stability. The State must therefore control the circulation of money with a view to prevent the rise in prices and inflation with all its attendant evils. This is really one of the most troublesome economic problems which confront every government of the world today. The State must follow such policy which increases production. In the developing countries, therefore, it has to undertake plans for the industrialisation of the country and also to increase agricultural production. In must regulate banking to facilitate credit