Chapter: 11th 12th std standard Indian Economy Economic status Higher secondary school College
Adam Smith (1723 -90) defined economics as follows : 'Economics is the science of wealth'. He is the author of the famous book 'Wealth of Nations' (1776).
Definitions of Economics
Wecan have a good idea about the nature and scope of economics by studying someof the important definitions of economics. Some of the important definitions ofeconomics are those of leading economists like Adam Smith, Alfred Marshall,Lionel Robbins and Samuelson.
Adam Smith's Definition (WealthDefinition)
Adam Smith (1723 -90) definedeconomics as follows : 'Economics is thescience of wealth'. He is the author of the famous book 'Wealth of Nations' (1776). He is knownas the Father of Political Economy because he was the first person who put allthe economic ideas in a systematic way. It is only after Adam Smith, we studyeconomics as a systematic science.
The term 'wealth' has a specialmeaning in Economics. In the ordinary language, by 'wealth', we mean money, butin economics, wealth refers to those goods which satisfy human wants. But weshould remember all goods which satisfy human wants are not wealth. Forexample, air and sunlight are essential for us. We cannot live without them.But they are not regarded as wealth because they are available in abundance andunlimited in supply. We consider only those goods which are relatively scarceand have money value as wealth.
We study about consumption,production, exchange and distribution of wealth. J.S. Mill defined economics as'the practical science of the production and distribution of wealth'. Adamsmith was of the view that economics was concerned with the problems arisingfrom wealth-getting and wealth-using activities of people. He was interestedmainly in studying the ways by which the wealth of all nations could beincreased.
Criticism
Thereis a lot of criticism against Adam Smith's definition of economics. It has gota bad name for economics. Some social scientists like Ruskin and Carlyle calledit 'a dismal science', 'a dark science'. But this criticism is unfair, becauseit is based on a misunderstanding about the nature and scope of economics. Asthis definition emphasized 'wealth', they thought it is all about money. Theyconcluded that economics taught men and women how to make money. So they calledit a selfish science as in their opinion it emphasized on 'the means to getrich'.
The above charge against economics is a false one. Ineconomics, wealth does not refer to money. It refers to the scarce goods whichsatisfy our wants. Moreover, early economists used the term 'wealth' in thesense of welfare.
A great demerit of Adam Smith's definition is that there isover-emphasis on wealth. There is no doubt that we have to study about wealthin economics. But it can be only a part of the study. There is the other side.In fact, it is a more important side and that is the study of man. Economics isa social science. Hence the proper study of mankind should be man and notwealth alone.
When we discuss Adam Smith's definition of economics, wehave to keep in mind the time in which he lived. He was writing his book at atime when England was on the eve of Industrial Revolution. The largeinvestments of capital and use of largescale machinery enabled England toproduce wealth on a large scale. So it is only natural that Adam Smithemphasized on wealth and considered economics as 'an enquiry into the natureand causes of the wealth of nations'.
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11th 12th std standard Indian Economy Economic status Higher secondary school College : Adam Smith's Definition (Wealth Definition) |
