What are the merits and demerits of Adam Smith' defination
Answers
Adam Smith was a Scottish Economist who gave the Wealth definition of Economics. According to him, " Economics is a science of wealth ".
Demerits:
Restricted Meaning of Wealth:
Only material goods were considered as wealth. Non-material goods like services of doctors, lawyers and teachers were not considered as wealth.
Neglect Human Welfare:
During the later part of the 19th century, the economists started realizing the humanistic character of economics. Adam had completely aspect of human welfare.
Ignores the Problem of scarcity and choice:
This definition by giving too much importance on wealth has completely ignored the problem of scarcity and choice.
Merits :
Control over finances :
According to Adam, viewing economics as science of wealth, would help human keep account of all their finances by letting them understand the control they have over their own wealth.
Role of government :
Regarding economics as a wealth would make the government take initiatives to do their financial duties, like, financing public projects, enforce contracts, and grant patents amongst others.
Basis of Future Economics :
Adam Smith gave the first definition of economics, hence, future terms, ideologies, theories, would all the wealth definition of economics as its base.