Critically examine the wealth definition of economics
The famous book ‘An Inquiry into the Nature and Causes of Wealth of Nations’ was written by Adam Smith. Adam Smith stated, “Economics is concerned with an enquiry into the nature and causes of wealth of nations, and it is related to the laws of production, exchange, distribution and consumption of wealth.” The central point of his definition is ‘wealth.
This definition further explored that the wealth of a nation included only material goods, non-material goods were not included.
Adam Smith in his definition gave too much importance to the creation of wealth in an economy. Many economists believed that economic success of any nation depended only on the accumulation of wealth.
Wealth definition of Adam Smith was criticized on the following grounds:
Materialistic Concept: This definition laid too much emphasis on wealth and did not consider human welfare.
Stressed on the concept of Economic Man: This definition is based on the concept of Economic man that emphasised the main motive of a man is to acquire wealth. However, other motivations of a man like feeling affection, emotions etc. are neglected.
Ambiguous: the definition of wealth is not very clear. In earlier days, wealth included only material goods such as money, gold, silver, land, sugar, tea and ghee which are visible. Non-material goods were not included. Hence, non-material goods such as services of teachers, doctors and engineers are not considered „wealth‟ under this definition.