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Home » Definition and Explanation of Economics » Economics as a Science of Wealth


Economics as a Science of Wealth/Classical View:


Definition of Economics By Adam Smith:


There is no one definition of Economics which has a general acceptance. The formal roots of the scientific framework of economics can be traced back to classical economists. The pioneers of the science of economics defined economics as the science of wealth.


Adam Smith (1723 -1790), the founder of economics, described it as a body of knowledge which relates to wealth. Accordingly to him if a nation has larger amount of wealth, it can help in achieving its betterment. He defined economics as:


“The study of nature and causes of generating of wealth of a nation”.


Adam Smith in his famous book, “An Enquiry into the Nature and Causes of the Wealth of Nations” emphasized the production and expansion of wealth as the subject matter of economics.


Ricardo, another British classical economist shifted the emphasis from production of wealth to the distribution of wealth in the study of economics.


J.B. Say, a French classical economist, described economics as:


“The science which treats of wealth”.


J.S. Mill in the middle of 19th century looked upon economics is as:


"Practical science of production and distribution of wealth”.


According to Malthus:


“Man is motivated by self Interest only. The desire to collect wealth never leaves him till he goes into the grave”.


The main points of the definitions of economics given by the above classical economists are that:


(i) Economics is the study of wealth only. It deals with consumption, production, exchange and distribution aspects of wealth.


(ii) Only those commodities which are scarce are Included In wealth. Non-material goods such as air, services etc., are excluded from the category of wealth.


Criticism on the Classical Definition of Economics:


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'. The main criticisms on these definitions are as under:


(i) Too much importance to wealth: The definitions of economics give primary importance to wealth and secondary importance to man. The fact is that the study of man is more importance than the study of wealth.


(ii) Narrow meaning of wealth: The word ‘wealth’ in the classical economist’s definitions of economics means only material goods such as chair, book, pen, etc. These do not include services of doctors, nurses, soldiers etc. In modern economics, the word ‘wealth’ includes material as well as non-material goods.


(iii) Concept of economic man: According to wealth definitions, man works only for his self-interest Social interest is ignored. Dr. Marshall and his followers were of the view that economics does not study a selfish man but a common man.


(iv) No mention of man’s welfare: The 'Wealth' definitions ignore the importance of man’s welfare. Wealth is not be all and the end all of all human activities.


(v) 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 which are scare for the earning of wealth.


(vi) Defective logic: The definitions economics given by classical economists were unduly criticized by the literacy writers of that time. The fact is that what Adam Smith wrote in his book ‘Wealth of Nations' (1776) still holds well. 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 is also being practiced and advocated throughout the capitalistic world. Since the word 'wealth' did not have clear meaning, therefore the definition economics became controversial. It was regarded unscientific and narrow. At the end of 19th century, Dr. Alfred Marshall gave his own definition of economics and therein he laid emphasis on man and his welfare.

Relevant Articles:

» Economics as a Science of Wealth or Definition of Economics By Adam Smith
» Economics as a Science of Material Welfare or Definition of Economics By Alfred Marshall
» Economics as a Science of Scarcity and Choice or Definition of Economics By Robbins
» Economics as a Science of Growth and Efficiency or Definition of Economics By Modern Economists
» Is Economics Neutral Between Ends
» Economics Problems
» Scope of Economics
» Nature of Economic Laws
» Methods of Economic Analysis
» Economic Analysis and Economic Policy
» Micro and Macro Analysis
» Importance of the Study of Economics


Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance

History of Money

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