defination according to adam smith of wealth
Answers
According to J.B Say Economics is the science which treats wealth. ... Adam smith classified his books “An Inquiry into the Nature and Causes of the Wealth of Nations”into four divisions i.e. consumption, distribution, production and exchange of wealth.
Explanation:
Adam smith is a Scotland economist. He born in 1723A.D and died into 1790A.D. He published a book named “An inquiry into the nature and causes of the wealth of nation” in 1776A.D. Later he published another book “Wealth of the nation” which became popular among people. After publication of this book economics got it’s independence identify. That’s why Adam smith is known as Father of economics.
He has defined economics as the science of the wealth in his book .According to him,” Prosperity of the individuals constitute the prosperity of the nation. Gain of wealth or after acquiring the man can achieve his satisfaction”
Therefore, Economics is a science which deals with wealth. Economics provides the guide lines to the individuals and society or nation.
Several great economists such as J.B.Say, David Ricardo, J.S. Mill etc. supported and followed Adam smith definition. So, they are called classical economists.
Criticism of the Adam smith definition
· Narrow definition
Adam smith considered that economics is the science that deals only with wealth and material goods. Contrary to this concept, the critics pointed out the economics studies not only material goods and wealth but also some non-material things such as services of doctors, teachers, engineers which also fulfill human needs and wants. Therefore, services produced by professional human resources also constitute important aspects of wealth. Therefore, services rendered by people should also regarded as a part of wealth.
· Unnecessary emphasis on wealth
Adam smith highly emphasized the importance of wealth in economic life rather than human beings. He assigned primary role to wealth and only secondary place to mankind. On the contrary, the critics pointed out that human life cannot be sacrificed for wealth rather wealth should be used for the betterment of mankind.
· Single source of wealth
In the view of Adam smith, the amount of wages that is earned by employed labourers could be the only one sources of wealth of a nation. The critics of the definition are however of the view that natural resources, human resources, capital resources and physical resources also as sources of wealth. All these resources put together can be utilized to earn maximum wealth by nation.
· Assumption of economic-man is wrong
Adam smith assumed that every human being who wants to earn money by hook or crook is known as an economic man. The critics of the definition instead point out that almost all human beings also own the qualities of human life such as feelings of love, respect, self-esteem, sympathy, co-operation, friendship, trust which might provide greater satisfaction rather than wealth in their lives.