Wealth Definition of Economics

Wealth Definition : Adam Smith

The wealth oriented definition of economics was given by Adam Smith. Adam Smith was a economist, philosopher and author, who was born is Scotland. He is termed as the father of economics. He was the man behind all the basic laws of modern economics. Adam Smith carved out economics as a separate subject. In his famous book “An Inquiry into the Nature and Causes of Wealth of Nations”, he explained how a nation’s wealth is created. The Scottish economist said that, “Economics is the science of wealth.” Economics is the science of the wealth that studies the process of production, consumption and accumulation of wealth. His wealth oriented definition of economics was supported by other classical economists like J.S. Mill, J.B. Say, F.A. Walker, etc.

Features present in Adam Smith’s definition are as follows:

Laissez faire

Adam Smith introduces laissez faire policy. Laissez faire refers to freedom of occupation to people and no government’s intervention in people’s profession.

Capital and wealth accumulation

In Adam Smith’s opinion, whole human race should be involved in earning activities. His definition is also regarded as the concept of economic man. Economics suggests people in wealth earning process.

Nature’s law in economic affairs

Adam Smith considered that aim of people is to earn wealth. Wealth can only bring economic satisfaction to human being. He had given first priority to wealth. He had given first priority to wealth and second priority to human beings.

Division of labor as an aspect of growth theory

According to Adam Smith, labor is the only source of wealth and ages earned by labor force can be possible to increase the wealth of nation through the division of labor in different parts of production and distribution.

Only material goods constitute wealth

The wealth definition emphasis that only material goods can produce wealth. Non- material goods do not play any role in creation of wealth in the society