What is definition of economics according to adam smith?
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⇒ Definition of Economics by Adam Smith
- Definition of Economics by Adam smith (1723 – 1790) a Scottish Philosopher and founder of Economics wrote a book .
- “An Inquiry into the Nature and Causes of the Wealth of Nations”
- was published in 1776.
- In the book Adam Smith defined economics as a Science of Wealth.
- Some other economists like J.B Say, F.A Walker, J.S Mills and other also declared economics as a science of wealth.
- According to J.B Say Economics is the science which treats wealth.
- F.A Walker made it clear that economics is that body of knowledge which relates to wealth.
- This view of Economics narrating economics as a science of wealth was criticized by Carlyle, Ruskin and other economists of the 19th Century.
⇒ Criticism on Adam Smith Definition of Economics
1. Too Much Importance to Wealth
Definition of Economics by Adam Smith gives primary importance to wealth and secondary to human being.
This emphasis has now shifted from wealth to human being.
Man occupies primary place and wealth a secondary one.
The real fact is that man is more important than study of wealth.
2. Narrow Meaning of Wealth
In the definition the word “Wealth” means only material goods such as vehicles, industries, raw material, Banks etc.
it does not include immaterial goods like services of doctor, lawyer and teachers.
In modern economics definition the word “Wealth” includes both material and immaterial goods.
3. Concept of Economic Man
According to this main objective of human activities is only to earn more and more wealth.
in others words he earns only for his self interest and social interest is completely ignored.
But Alfred Marshall and his followers pointed out that economics does not study a man who works only for his own interest, but a common man.
4. Man Welfare is Missing
The other objection by Marshall is that mans welfare has not been mentioned in Adam’s definition of economics.
He has stressed much on wealth. Wealth is a means to an end, the end being the human welfare.
5. It Does Not Study Means
The definition lays emphasis on the earning of wealth as an end in itself.
It ignores the means for the earning of wealth.
6. Narrow and Controversial View
Since the word “wealth” did not have a clear meaning of economics by Adam Smith, therefore, the definition became controversial.
Alfred Marshall neoclassical economist gave his own definition of economics and therein he laid emphasis on man and his welfare.