Classical Economist Adam Smith had given the wealth definition in 1776 A.D. He was a citizen of Scotland. He has separated from other social science and defined Economics for the first time. So, everyone know him as the ‘Father of Economics’ as well as the leader of Economics.
He is only responsible for the birth of the modern school of Economics which name was Classical Economics. He published his book ‘An Inquiry into the Nature and Causes of Wealth of Nations’ or ‘Wealth of Nation’.
According to Adam Smith, “Economics is the science of wealth”. In other words, Economics is the study of earning and spending of wealth; ways, and means of increasing wealth of a nation.
Many Classical Economists like J.B. Say, T.R. Malthus, Debid Ricardo, J.S Mill, F.A. Walker, etc. supported this definition.
Features/Characteristics of Wealth Definition:-
- Study of wealth;-
According to Adam Smith, Economics is only concerned with the study of wealth-related to production, consumption, exchange, and distribution. Wealth is everything that can fulfill all needs of human beings.
2. Study of Economic Person:-
According to this definition, Economics studies activities of Economic persons who have only one purpose to earn more and more wealth at any cost and by any means.
3. Secondary place to mankind:-
Adam Smith gave first priority to wealth and second priority to mankind. He claimed that mankind is for wealth but not wealth for mankind.
4. Source of wealth:-
This definition assumed that wages earned by laborers are the only source of wealth. It claims that apart from wages, there is nothing else that we can take as the source of wealth.
Criticisms of Wealth Definition:-
- Narrow definition/Limited Scope:-
The critics said that this definition is unable to include those activities which are not involved in earning wealth like social workers.
2. Over emphasis on wealth:-
The critics said that human life can’t be sacrificed for wealth unlike this definition; rather wealth should be used for the betterment of mankind.
3. Single source of wealth:-
In the view of critics, apart from wages, natural resources, human resources, capital resources, and financial resources are also the sources of wealth.
4. Unrealistic concept of Economic person:-
According to critics, human beings have also their own qualities of life such as feelings of love, respect, sympathy, self-esteem, etc. regarding earning wealth.
Principle of Economics of Grade 11
We hope it helped you to know a little bit about wealth definition.