Economics as a science of wealth (Professor Adam Smith)

Adam smith and his distinguished followers called classical economists defined economics as a science of wealth. Adam smith in his famous book “An Inquiry into the nature and causes of the wealth of Nations” described economics as a body of knowledge which relates to wealth. According to him if a nation has larger amount of wealth, if can help in achieving its betterment Adam smith defined economics “as the study of nature and causes of generating of wealth of a nation.”  Adam smith emphasized the production and expansion of wealth as the subject matter of economics. J.B. say, a French classical economist, described economics as “the science which treats of wealth”.  J.S. Mill another classical economist in the middle of 19^th century looked upon economics “as the practical science of production and distribution of wealth. The main points of the definitions of economics given by the above classical economists are that (1) economics is the study of wealth only. It deals with consumption, production, exchange and distribution aspects of wealth. (2) Only those material goods which are scarce are included in wealth.

Criticism of the definitions:

The definitions given by Adam smith and other classical economists were severely criticized by social reformers and men of letters of that time Ruskin and Carlyle. They dubbed economics as a ‘dismal science’ and a ‘science of getting rich’. Ruskin called Adam smith as the “half bred and half witted man”. The main criticisms levied on these definitions are as under:-

(1)    Too much importance to wealth:-

The definitions of economics given by classical economists give primary importance to wealth and secondary importance to man. The fact is that the study of main is more important than the study of wealth.

(2)    Narrow meaning of wealth:-

The word “wealth” in the classical economists definitions of economics means only material goods such as chair, book, pen etc. these do not include non material goods such as services of doctors, nurses, soldiers etc.

(3)    Concept of economic man:-

According to wealth definitions, man works only for his self-interest. Social interest is relegated in the background. Dr. Marshall and his followers were of the view that economics does not study a selfish man but a common man.

(4)    No mention of man’s welfare:-

The “wealth” definitions ignore the importance of man’s welfare. Wealth is not the be all the end all of all human activities.

(5)    It does not study means:-

The definitions of economics lay emphasis on the earning of wealth as an end in itself. They ignore the means or resources which are scarce for the earning of wealth.

Defective logic:-

The definitions of the economics given by the classical economists were unduly criticized by the literary writers of that time. The fact is that what Adam smith wrote in his book “Wealth and Nation” in 1776 even now is widely accepted. The central argument of the book that market economy enables every individual to contribute his maximum to the production of wealth of nation still not only holds good but it also being practiced but advocated throughout the capitalistic world. Since the word “wealth” did not have a clear meaning. Therefore, the definition of economics became controversial. It was unscientific and narrow. At the end of 19^th century, Dr. Alfred Marshall gave his own definition of economics and therein he laid emphasis on man and his welfare.