Wealth Definition of Economics

In 1776 A.D., Adam Smith published a book entitled "An Inquiry into the Nature and Causes of Wealth of Nation". In short, this book is also called "Wealth of Nation". The name of book itself defined what economics is and the study area or subject matter of economics that it covers. This is also considered as the Bible of the science of economics. The meaning of wealth as used by A. Smith refers to abundance of money. Smith was among the first to describe how a free, competitive economy can function without central planning or government intervention to allocate resources efficiently. He recognizes that the virtues of the 'invisible hand' that leads the people's private interest of firm and he was popularly suspicious of firms that are sheltered from competition. Since, he recognized the potentially undesirable effects on resources allocation.

Logical Explanation:

• Significance of Wealth:

A.Smith assumed that wealth is the only important factor in human society. It can fulfill all the desires of human being in society. He also assumed that the entire efforts of human society is found to be directed towards earning more and more wealth.

• Role of Economic Man:

Smith claims that economics studies behavior of those human beings who have only one objective. That objective is the earning of more and more wealth at any cost by any means. Human being of such nature in the words of Smith is an "Economic Man".

• Priority Given in Definition:

In the definition of economics first priority is given to wealth and the second priority to mankind. He assumes that mankind is for wealth but wealth is not for mankind. He also believed and argued that wealth and only wealth can give higher satisfaction to all mankind. Therefore, wealth is of a primary importance in his definition.

• Sources of Wealth:

A. Smith in his definition of economics assumed that, wages earned by active human resources is to be the only one and most important source of income of a nation. He also suggested that the active labors can earn high amount of wages only through the division of labor in production and distribution of goods and services.He conclude that apart from wages, there is nothing else which can be regarded as sources of wealth of a nation.

Criticisms

The wealth definition of economics given by Adam Smith has been criticized on several grounds. It is strongly criticized by eminent scholars like Carlyle Ruskin, Alfred Marshall, etc. In short, the critics dubbed economics as the "Bread and Butter Science", "the Gospel of Mammon" and " a Dismal Science". The major points of criticisms of wealth definition are discussed below:

• Narrow Definition

A.Smith considered that economics is the science that deals only with wealth and material goods. Contrary, to this definitions concept the critics pointed out that economics studies not only material goods and wealth but also some non-material such as services of doctor, teacher, lecturer also fulfill the human wants. Therefore, services provided by professional human resources also constitute aspects of wealth. Therefore, services regarded by people should also be regarded as a part of wealth.

• Unnecessary Emphasis on Wealth

A. 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 A. Smith, the amount of wages that is earned by employed labors could be the only one source of wealth of nation. The critics of the definition are however of the view that natural resources, human resources, physical resources and capital resources also as sources of wealth. All these resources put together can be utilized to earn maximum wealth by a nation.

• Assumption of Economic Man is Wrong
  

Smith assumed that every human being who wants to earn money by hook or crook is known as economic man. The critics of the definition instead pointed out that almost all human beings also own the qualities of human life such as feelings of love, respect, self-esteem, sympathy, c0-operation, friendship, trust which might provide greater satisfaction rather than wealth in their lives.

Conclusion

In conclusion, A. Smith considered human wants as unlimited. It is important that these wants be fulfilled and wealth is the only thing that can fulfill human needs or wants.
The definition of economics as the 'science of wealth' has been supported by classical economists such as: F.A. Walker, J. B. Say, J.S. Mill and David Ricardo. According to F.A. Walker, "Economics is that body of knowledge which relates to wealth." Similarly, J.B. Say defines,"Economics is that science which treats of wealth."
In conclusion, each and every classical economists defines economics in similar view as Adam Smith that economics is the body of knowledge which relates to wealth.